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California court finds for Apple in credit card suit

The Apple logo hangs in a glass enclosure above the 5th Ave Apple Store in New York, September 20, 2012. REUTERS/Lucas Jackson
The Apple logo hangs in a glass enclosure above the 5th Ave Apple Store in New York, September 20, 2012. REUTERS/Lucas Jackson

By Dan Levine

SAN FRANCISCO (Reuters) - Apple Inc and other online retailers did not break California law by requiring consumers to provide their address and phone numbers as a condition of accepting credit card payments, the state's high court ruled on Monday.

In a split decision, the California Supreme Court said state privacy protections for credit cards do not apply to online purchases that are downloaded electronically.

The ruling comes after the same court in 2011 said that those privacy protections do apply to brick and mortar retailers, finding that they could not request a customer's ZIP code during a credit card transaction.

Apple was the defendant in the latest lawsuit, brought as a proposed class action by a consumer who purchased downloads from iTunes. Online retailers eBay Inc and Wal-Mart Stores Inc also filed briefs supporting Apple.

An Apple spokeswoman declined to comment, and an attorney for the plaintiff could not be reached.

Three dissenting California Supreme Court justices argued that the ruling represents "a major win for these sellers, but a major loss for consumers, who in their online activities already face an ever-increasing encroachment upon their privacy."

But the four justices in the majority disagreed. "These ominous assertions, though eye-catching, do not withstand scrutiny," Justice Goodwin Liu wrote.

Other state and federal privacy laws protect against disclosure of personal identification information, Liu wrote for the majority. Additionally, electronic retailers need more safeguards against fraud than traditional shops.

"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," Liu wrote.

The case in the Supreme Court of California is Apple Inc vs. The Superior Court of Los Angeles County and David Krescent, S199384.

(Reporting By Dan Levine; editing by Carol Bishopric and Bob Burgdorfer)

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