Siding with Apple, California's highest court ruled on Monday that online merchants aren't covered by a law that bans retailers from collecting and storing the addresses of credit card users.
A four-judge majority of the California Supreme Court accepted Apple's argument that applying the Song-Beverly Act to online transactions would hinder efforts to fight identity theft. "While it is clear that 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," the majority wrote.
Three judges -- Joyce Kennard, Marvin Baxter and Barbara Jones -- dissented from the ruling. Kennard called the decision "a major loss for consumers, who in their online activities already face an ever-increasing encroachment upon their privacy."
The ruling stemmed from a potential class-action lawsuit against Apple filed in 2011 by David Krescent. He contended that Apple violated California's law by requiring him to provide his address when he purchased media from the company. Krescent argued that the law, which dates to 1990, applies regardless of whether consumers make purchases in person or on the Web. But Apple countered that online retailers like itself need the ability to collect personal data from customers for security purposes.
The California court agreed with Apple on that point. "Unlike a brick-and-mortar retailer, an online retailer cannot visually inspect the credit card, the signature on the back of the card, or the customer‘s photo identification," the judges wrote.
The judges said that the decision was limited to online sales of electronically downloadable products. "We express no view on whether the statute governs mail order or telephone order transactions, as that issue is not presented and has not been briefed in this case," the majority wrote.
In 2011, the California Supreme Court ruled that the Song-Beverly Act prohibited brick-and-mortar retailers from asking consumers to provide their Zip codes.