Apple: Enemy of consumer privacy

Since 1991, the Song-Beverly Credit Card Act has prohibited businesses from requesting personal identification information such as a cardholder’s address and telephone number in a purchase using a credit card. But this February, in a case alleging that Apple violated the privacy of consumers purchasing iTunes downloads, the California Supreme Court ruled that the Act does not apply to transactions relating to the multibillion-dollar online commerce world.

In a narrow 4-3 decision, the Court majority stated that the remote nature of the transaction creates a heightened risk of fraud that was not contemplated when the privacy provisions were enacted. The Court reasoned that fraud prevention required online merchants to gather personal information from their customers. But instead of carving out a narrow fraud prevention exception, the Court voided credit card privacy rights in their entirety for online businesses. As a result, these merchants are free to require customers to divulge all kinds of personal information, and they may use that information for any purpose, including marketing or sale to strangers.

As technology enables marketers to collect and aggregate data on our every move online, the speed of selling information is accelerating. The simple act of surrendering a telephone number can set in motion a cascade of events, as that data is acquired, analyzed, categorized, stored and sold with other personal data over and over again. Online databases are also highly vulnerable to hacking by crooks. Numerous reports allege that iTunes and other Apple databases are a favorite for identity thieves, making the gathering of personally identifiable information alongside credit card numbers an irresponsible practice for this giant corporation to champion.

CFC sponsored SB 383 (Jackson) to restore privacy protections, permitting online businesses to collect only a customer’s zip code and other limited information necessary to combat fraud or identity theft. The information would then be destroyed when the crime prevention purpose is concluded. Apple is leading the opposition to SB 383. Several industry lobbying organizations have lined up against the bill. Senator Jackson plans to take up SB 383 for a Senate Floor vote in January 2014.

Another credit card privacy bill, AB 844 (Dickinson), would have protected personal information for online credit card purchases with limited new exceptions for fraud prevention. Assembly leadership referred AB 844 to the Assembly Appropriations Committee, where it was hijacked by retail industry lobbyists. The Committee Chair forced hostile amendments that turned AB 844 into a vehicle to eliminate privacy protections for credit card transactions at brick-and-mortar businesses. CFC and other consumer groups oppose the amended version of AB 844.

Assembly member Dickinson has held AB 844 in the Senate until 2014, and has reaffirmed his commitment to work with us to restore it as a pro-privacy bill.

CFC continues to be vigilant about privacy rights because companies like Apple will increasingly look for ways to market our personal information for profit.

Also see:

•    Apple: A rotten core under a polished brand image
•    Why are we supporting Apple’s sweatshops?
•    Apple’s disregard for consumer privacy – a consistent policy
•    How does Apple avoid paying taxes? ($44 billion in the US alone)
•    Poverty-level wages for Apple store employees
•    Apple’s ebook price fixing
•    Apple: Using secret police as personal patent enforcers
•    Apple and the NSA: Violating American citizens’ privacy
•    Apple earned the title of “least green” tech company
•    When will the golden Apple fall?