Court Rules Online Retailers Can Require Personal Data
The California Supreme Court ruled that online merchants like Apple can require consumers to give personal information, such as home address and phone number, for verification when they make credit card purchases.
The court was divided 4-3 as it ruled that a California consumer protection law which prevents traditional retailers from asking for this information does not apply to online commerce.
The proposed class action suit was originally filed against Apple in 2011 by David Krescent. He alleged that Apple was requiring him to provide his telephone number and address in order to purchase a downloadable product, a violation of the Song-Beverly Credit Card Act.
Apple argued that the law applied to brick-and-mortar businesses, not online transactions, and that this personal information was needed to help prevent online theft and identity fraud.
The justices agreed with Apple that personal data can be given to verify a credit card when buying a downloadable product from Apple. The court said the law did not foresee online commerce when it was passed two decades ago, and Justice Goodwin Liu suggested lawmakers change the law if they want it to cover online purchases.
“While it is clear the Legislature enacted the Credit Card Act to protect consumer privacy, it is also clear that the Legislature did not intend to achieve privacy protection without regard to exposing consumers and retailers to undue risk of fraud,” Liu wrote.
The Song-Beverly Credit Card Act was amended in 2011 to allow gas station owners to require ZIP codes for credit card purchases at the pump in order to help detect fraud.