With A Focus On Fraud, California Federal Court Finds Song-Beverly Act Does Not Apply to Online Transactions

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The California Supreme Court’s February 2011 decision in Pineda v. Williams-Sonoma Stores, Inc. spawned hundreds of lawsuits against brick-and-mortar retailers complaining that retailers collected customers’ “personal identification information” (PII) in violation of the Song-Beverly Credit Card Act (the “Act”). Pineda also triggered a wave of lawsuits against online businesses, raising the question of whether the Act applies to online transactions. In a case brought against Microsoft Corporation, a California federal court has recently answered that question in the negative — reasoning that Pineda supports the conclusion that online transactions are outside the scope of the Act.

On January 6, 2012, the United States District Court for the Central District of California dismissed a case against Microsoft Corporation on the grounds that the Act does not apply to online transactions. On the same day, the Court dismissed a similar case against Redbox Automated Retail, LLC holding that the Act does not apply to transactions involving self-service DVD kiosks. The Court’s analysis in both cases was similar, focusing on the statutory language and purpose of the Act.

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