November 9, 2012
eBay, Others Watching Apple Credit Card Lawsuit
On November 7th, California's Supreme Court is set to hear arguments in a lawsuit concerning Apple and interpretation of the Song-Beverly Credit Card Act. At issue will be a fundamental question of ecommerce and transactions: does the Act, which was enacted in 1971, preclude modern day online retailers from recording personal customer information when accepting a credit card number for payment?
Apple's position, one that the Mercury News noted is supported by eBay and others, contends the Act applies only to the conventional brick and mortar retailer. Where an offline retailer can view the physical credit card and a corresponding form of personal identification, an online seller simply can't do that.
That report also cited a Williams-Sonoma case in February 2011, where the California Supreme Court claimed collecting zip codes from credit card customers violated the Act. Additional lawsuits against other retailers on privacy grounds followed.
According to the law firm Pillsbury Winthrop Shaw Pittman, one such case involving Craigslist produced this ruling from the bench:
"Judge (Loretta M.) Giorgi ruled that Section 1747.08 on its face does not apply to online transactions, and the applicable case law, legislative intent and public policy indicate that such transactions are not, and should not be, encompassed by Section 1747.08. This ruling is consistent with the U.S. District Court for the Central District of Californias decision in Saulic v. Symantec Corp., 596 F. Supp. 2d 1323 (C.D. Cal. 2009) (online transactions are not covered by the Act because of unique fraud concerns associated with online transactions)."
Privacy advocates worry about consumer information being used for purposes beyond the authentication for which it's being collected. But it appears no one has proposed a solution for ecommerce to verify credit card information in a manner that satisfies security concerns as well as protecting privacy rights.
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