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Online Retailers Face Objections Regarding Collection of Consumer Data
November 7, 2012
The California Supreme Court today is scheduled to hear arguments on a case in which the outcome could significantly reduce the state's online retailers' ability to identify fraudulent transactions.
The case focuses on the interpretation of the Song-Beverly Credit Card Act. Last revised in 1991, the Act is intended to restrict the amount of personal information consumers must provide to make a credit card purchase. Online retailers insist that the law only applies to in-store purchases because it was written before the internet was a significant channel for commerce.
While consumer advocates concede online merchants may need some personal information, such as a ZIP code, they say demanding addresses and phone numbers goes well beyond what any business needs to validate a credit card.
It is hard to overestimate the sophistication of modern fraud attacks, and online retailers are exposed to significantly more risk than their brick and mortar counterparts. Merchants can use almost any piece of consumer information to validate an online order, so it will certainly be interesting to see what amount of information the court believes a merchant truly needs.
to read more from BusinessWeek.
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