Court Finds Online Data Collection Legal Under California’s Song-Beverly Act

While California’s Song-Beverly Credit Card Act (Song-Beverly) prohibits the collection of personal information in connection with many in-store transactions, courts have found it to have limited applicability to online purchases. Although the plaintiff Michael Ambers did collect the purchased goods in person, the court found that the transaction was completed online and, thus, that defendant BevMo had not violated the law by asking him to provide his address and telephone number. 

This case is the latest in an ongoing effort by California courts to determine the scope of Song-Beverly—adopted in the 1971—in the digital economy. 

Song-Beverly prevents retailers from requiring a consumer to record “personal identifying information” (PII)—which includes, but is not limited to, an individual’s address and telephone number—as a condition for using a credit card to make a purchase. The law provides a few exceptions to this general prohibition. For example, retailers are permitted to require reasonable forms of positive identification, such as a driver’s license or photo ID card, so long as no information is recorded. Importantly, the law makes no reference to credit card transactions conducted over the internet, which is unsurprising given that it was adopted over forty years ago. 

Given the absence of any relevant statutory language, California courts have faced difficult questions about the applicability of Song-Beverly to online purchases. In Apple v. Superior Court, the California Supreme Court examined the law’s text and legislative history in finding that it did not prevent Apple from requesting PII when customers purchase songs and other downloads from the iTunes store. Crucial to the court’s decision was the fact that anti-fraud mechanisms available to brick-and-mortar establishments—such as asking customers to display a photo ID—cannot be utilized during online transactions. 

In Ambers v. Beverages & More, Inc., the court was faced with a variation on the fact pattern in Apple v. SuperiorCourt. Michael Ambers made an online purchase from BevMo, a West Coast-based liquor retailer. During the transaction, the BevMo online store required him to submit his address and telephone number. Ambers subsequently picked up the liquor he had purchased online at a local BevMo store, at which point he was required to show a photo ID as proof of purchase. Ambers claimed that requiring the online submission of PII violated Song-Beverly and entitled him to damages.

Ambers argued that the reasoning in Apple v. Superior Court was inapposite because he ultimately picked up the purchased liquor in person, at which point BevMo had an opportunity to—and in fact did—require him to provide identification. The court disagreed, finding that although Ambers went in person to a BevMo store to collect the liquor, the transaction was technically completed online. The court pointed to the terms of service on the BevMo website, which stated that consumers become the owners of any goods purchased online as soon as their credit card is charged. Consequently, the court held, BevMo had no way—aside from requiring Amber’s PII—of ensuring that the transaction was not fraudulent prior to conveying title to the goods.

In Ambers v. Beverages & More, Inc., the court was forced to determine the applicability of Song-Beverly in a scenario that would have been unforeseeable to the legislators who passed the law. When adopted in the 1971, nearly all credit card transactions were done on paper, and it would be more than twenty years before internet purchases became commonplace. Both Ambers v. Beverages & More, Inc. and Apple v. SuperiorCourt show California courts hesitating to apply the law to online purchases, especially given the fraud-related concerns apparent in the law’s text. Despite this trend, it is important to recognize that the breadth of the law remains unsettled. Accordingly, California retailers are encouraged to be cautious before requesting any PII covered by the law, and to ensure that any collection is compliant with Song-Beverly.