California Supreme Court Holds Online Download Purchase Transactions Not Covered By Song-Beverly Credit Card Act


On February 4, the California Supreme Court held, in a 4-3 split ruling, that the personal privacy protections afforded consumers by the Song-Beverly Credit Card Act do not apply when the item purchased is downloaded via the Internet. Apple Inc. v. Sup. Ct. Los Angeles Cty., No. S199384, 2013 WL 406586 (Cal. Feb. 4, 2013). However, the court did not consider whether the Song-Beverly Act privacy provisions apply to the broader category of online transactions that do not involve a downloadable product. In this case, a customer filed a putative class action against an online digital media retailer, alleging that the retailer’s practice of requiring customers to provide their telephone number and address before accepting credit card payment for downloadable media purchases violates Section 1747.08 of the Song-Beverly Act, which prohibits retailers from requiring personal information as a condition to completing credit card transactions. Citing the statutory language and legislative history, the court explained that while Song-Beverly was intended to protect personal privacy, it was not meant to do so at the risk of increasing fraud. Further, the court determined that fraud protections provided in Song-Beverly, which allow retailers to request proof of identification, are not available to online retailers selling downloadable products. The court also reasoned that in later enacting the California Online Privacy Protection Act, the state legislature demonstrated that it can unambiguously address online transactions, and that it sought to strike a different balance between privacy protections and online commerce than did the Song-Beverly Act. Therefore, the court held, online transactions involving downloadable products fall outside the scope of Song-Beverly. The court invited the legislature to revisit consumer privacy in connection with online transactions.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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