On Wednesday, the California Supreme Court will hear oral arguments in Apple v. Krescent, a case which pits e-commerce giants against consumer rights and invasion of privacy advocates over whether the Song-Beverly Act, enacted in 1991, applies to Internet transactions. The Song-Beverly Act, a California state statute, places limits on the personal information that can be collected from a credit card owner during a transaction and states that a retailer cannot:

1. Request that the cardholder write personal information on the credit card transaction form;
2. Condition a credit card transaction upon a request that the retailer list the personal information of the purchaser on the credit card transaction form; or
3. Utilize a pre-printed form that contains spaces for the purchaser to include his or her personal information.

E-commerce retailers, in this case Apple, argue that their collection and use of personal information prevents against fraud and that, if the statute is applied to the Internet, fraud will be increased. In contrast, consumer rights groups argue that their collection and use of personal information is for marketing purposes. This case is not without precedent, however, as in 2011 Williams and Sonoma was was found liable for violating the Act because it collected zip codes, which the Court ruled was unnecessary to prevent against fraud.

 

If e-commerce retailers are prevented from collecting this information, it may result in a substantial change in the way that retailers do business online. Revision Legal will continue to watch this area of law as it develops and will advise our e-commerce clients accordingly.