Court Upholds Apple’s Right to Gather Addresses, Phone Numbers in E-Commerce Transactions

Feb. 19, 2013

A legal challenge that could hamper antifraud efforts by e-commerce merchants was struck down by the California Supreme Court. The high court recently ruled that Apple was not in violation of the state’s Song-Beverly Credit Card Act when it asked iTunes customers for their addresses and phone numbers. Apple argued that the information was vital for preventing fraud in e-commerce and that online transactions should be exempt from the California law because its framers could not have anticipated using a credit card to make purchases on a computer. Justice Goodwin Liu, who wrote the majority opinion in the 4-3 decision, agreed.

“There can be no doubt that retail commerce has changed dramatically since [the Credit Card Act] was enacted,” Liu wrote. “In 1990, the idea of computerized transactions involving the sale and purchase of virtual products was beyond any legislator’s imagination. We are unable to find the clarity of legislative intent or consistency with the statutory scheme necessary to conclude that the Legislature in 1990 intended to bring the enormous yet unforeseen advent of online commerce involving electronically downloadable products — and the novel challenges for privacy protection and fraud prevention that such commerce presents — within the coverage of the Credit Card Act.”

The court acknowledged the original plaintiff’s privacy concerns, but said those concerns must be balanced against the realities of a mode of commerce not even imagined when the law was written.

“The statutory scheme, considered as a whole,” Liu wrote, “reveals that the Legislature intended to safeguard consumer privacy while also protecting retailers and consumers against fraud.”