California Supreme Court – Apple Not Guilty In The Credit Card Privacy Lawsuit

Credit Cards California Supreme Court Apple Not Guilty In The Credit Card Privacy Lawsuit

At the beginning of this week, on Monday, the California Supreme Court ruled for Apple in the credit card privacy lawsuit and decided that Apple is not to be found guilty of breaking any state laws for asking its customers to offer personal information (such as telephone number and address) for credit card transactions. Thus the California Supreme Court ruled that credit card privacy protection will not apply for digital purchases. We mention that credit card protection will not apply only for digital purchases because it does apply to brick and mortar retailers, as the same California Supreme Court ruled in 2011 that credit card privacy protection does apply to brick and mortar stores and they cannot ask customers for personal information (such as a zip code for example) during a credit card transaction.

In this lawsuit, Apple was accused of privacy protection infringement, the proposed class action being brought in June 2011 by accuser David Krescent. Krescent bought digital products from iTunes; because during the credit card transaction Apple required the accuser to provide his phone number and mailing address in order to be able to purchase the digital products, Krescent accused Apple of privacy protection infringement. During this lawsuit, Apple received support from other major online retailers (Wal-Mart Inc and eBay Inc).

The Supreme Court’s decision was split, as of the total of seven justices, four found in Apple’s favor while the remaining three found in the plantiff’s favor. The majority of Supreme Court justices that found in Apple’s favor, decided that the Song-Beverly Credit Card Act of 1971 (which is an act that stipulates the use of credit card and which does not permit any retailer to require personal information from their customers in order complete a transaction) does apply to brick and mortar retailer but it does not apply to online retailers, which was the case in this lawsuit. After the ruling, the three California Supreme Court justices that found in David Krescent’s favor said that it is “a major win for these sellers, but a major loss for consumers, who in their online activities already face an ever-increasing encroachment upon their privacy”.

The argument of the four Supreme Court justices in the majority was that online retailers are not able to check a customer’s identity similarly to how a brick and mortar retailer can identify a customer’s identity visually via a photo: “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 majority of Supreme Court justices also mentioned that an online retailer will need more protection against fraud than a brick and mortar retailer.

 

  • By Corina Coman
  • February 6th, 2013
  • News