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Apple leads legal fight for eCommerce vs. privacy rights in CA Supreme Court

Privacy? In today’s world? :-)

Or, in the words of one of my former CEOs, Scott McNealy of Sun Microsystems (now a part of Oracle :-) ), back in 1999…

“You have zero privacy anyway,” Scott McNealy told a group of reporters and analysts Monday night at an event to launch his company’s new Jini technology.

“Get over it.”

Well, Scott may have been right, or merely part of a self-fulfilling prophecy…. :-) I personally found his exuberant support for RFID tags and for putting an IP address on everything, amusing! (That was in the days before we started running out of old-style IP addresses. :-) ) Scott also thought that it was great that everyone knew where his Mercedes was, in case it broke down. :-) Or, at least that was what he told US…. :-)

On Wednesday, the California Supreme Court will take on the issue of whether a decades-old law, the Song-Beverly Credit Card Act (last revised in 1991), which was designed to restrict the amount of personal information consumers must provide to make a credit card purchase, applies to online credit card transactions as well as to brick-and-mortar stores.

Apple (backed by retailers from eBay to Walmart) argues that the law applies only to brick-and-mortar stores and NOT eCommerce over the Net, where retailers “…insist that applying the law could heighten the risk of credit card fraud and identity theft because it would hamper their ability to verify credit card information.

On the other hand, “…consumer rights advocates say the law clearly applies to any credit card commerce, including in the online world. And they argue online merchants can protect against fraud without trampling on the privacy rights of cyberspace consumers by forcing them to fork over everything from addresses to phone numbers.” Many critics argue that Apple, eBay, and other retailers merely wish to gather personal information for marketing, not fraud detection.

I think that the privacy advocates may have something there. :-) Having been exposed to methods for fraud detection at VeriSign, my last place of employment in high tech, and having been exposed every day to efforts from the government, telecommunications companies, online hubs, and retailers to consolidate and store personal information, the arguments of privacy advocates seem quite reasonable. After all, convenience and security are two ways that we give up our freedoms.

MercuryNews.com had this to say:

“This case is an early warning sign about what we’re going to be seeing,” said Pam Dixon, executive director of the World Privacy Forum, which is not involved in the legal battle. “There is a balance that needs to be found between the prevention of fraud and the overcollection of consumer information.”

The Supreme Court case is the latest in a line of legal tangles over the issue. In 2011, the state’s high court ruled that traditional stores, in that case Williams-Sonoma, violated the Song-Beverly Act by collecting ZIP codes from customers, saying it was unnecessary to verify credit card purchases. That led to dozens of class action lawsuits against retailers accused of collecting that information.

For such real world stores, verifying a credit card is as simple as eyeballing the card and a driver’s license. But online credit card verification is murkier. Gas station owners, caught somewhere in between, were able to withstand legal challenges to requiring ZIP codes to use credit cards at the pump because they could prove that information was necessary in California to detect fraud.

The consumer privacy advocates argue that online merchants might need information such as a zip code, the demand for addresses and phone numbers goes beyond what any business needs to validate a credit card. So they have taken their case to the courts….

Last year, lawyers filed class actions against Apple, eHarmony and Ticketmaster, seeking to apply the same law to online commerce. In the Apple case, a Southern California man, David Krescent, became the lead plaintiff when he alleged he was forced to provide his address and phone number to establish an iTunes account, saying it was not necessary to confirm his credit card information and thus violated the 1991 California law.

“Consumers have a right to privacy,” said Eric Shrieber, Krescent’s attorney. “If a business doesn’t need it, why should a consumer be forced to give it up?”

Lawyers for consumers say the Supreme Court’s 2011 decision in the Williams-Sonoma case applies to the Apple online case. Legal experts tend to agree.

“I think it’s a pretty high hurdle (for Apple) to overcome,” said Susan Friewald, a University of San Francisco law professor and online privacy expert.

Although Daniel Kolkey, a former state appeals court justice who is now representing Apple, did not respond to a request for comment, Apple called the Song-Beverly Credit Card Act “incompatible” with modern online commerce needs and asked the Supreme Court to shield online merchants from its reach. Says MercuryNews.com:

The consumers’ position “would threaten to produce unintended and absurd results, including the facilitation of fraud against e-retailers who have no way to confirm the customer’s right to use the credit card,” Apple attorneys wrote.

One or two of my lawyer friends (yes, some lawyers ARE capable of friendship :-) ) might enjoy reading the “Opening brief on the merits” (72 pages) and the “Answer brief of the merits” (69 pages) that MercuryNews.com has thoughtfully provided. I am almost certain that, read in combination, the two documents would put me to sleep, even without the recent change from Daylight Savings Time. :-)

As with many things these days, including the U.S. election, we shall see. For my part, I am melancholic that the transition of the U.S. from what it used to be to what it is now as the result of surveillance technologies, occurred on the watch of my own Baby Boomer generation, and that of the Gen-Xers.

On the other hand, in California, people love to sue, which is why so many lawyers live here. :-)

-Bill at

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