Here’s Apple’s Big Win

Apple (NASDAQ:AAPL) and other Internet-based sellers of music and programs can ask for personal information, such as addresses and phone numbers, from users, according to a ruling by the California Supreme Court. The court, in a 4 to 3 ruling on Monday, said these companies were not covered by a 22-year-old consumer law that stops businesses from collecting such information.

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That law, the Song-Beverly Credit Card Act, prevents businesses in California from collecting information as a condition of accepting credit card payments. However, according to the court, Apple and other Internet retailers don’t have the same safeguards against fraud as traditional stores and hence need this information for verification purposes.

“While it is clear that the Legislature enacted the Credit Card Act to protect consumer privacy, it is also clear that the Legislature did not intend to achieve privacy protection without regard to exposing consumers and retailers to undue risk of fraud,” Justice Goodwin Liu wrote. “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.”

Apple was the defendant in the lawsuit that was brought as a proposed class action by a consumer who bought media from iTunes. Apple’s defense was supported through briefs filed by eBay (NASDAQ:EBAY) and Wal-Mart (NYSE:WMT). In 2011, the court had ruled that traditional stores violated the credit card act by collecting ZIP codes from customers, which led to numerous class-action lawsuits.

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The dissenting side called the decision a “major loss for consumers,” insisting that it would leave “Internet retailers free to demand personal identification information from their credit-card-using customers and to resell that information to others.”

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