Attorneys at Rutan & Tucker, LLP, one of California’s oldest and largest full-service business law firms, recently scored a major victory for online retailer Buy.Com and its Rakuten.com Shopping website, in a class action complaint seeking more than $500 million in statutory damages.
Internet retailers and brick and mortar retailers that have an online presence have been closely watching the case, which involved alleged breaches of the Song-Beverly Credit Card Act. Song-Beverly prohibits the collecting of personal information such as addresses, phone numbers and zip codes in connection with credit card transactions. Song-Beverly Act violations can cost retailers up to $250 for each primary transgression and $1,000 for subsequent violations. The plaintiff sought to represent a class of millions of current and former Buy.com customers who made credit card purchases from the website during the past 12 months, and claimed entitlement to more than $500 million.
The California Supreme Court earlier this year determined that Song-Beverly does not apply to Internet transactions involving Internet downloads, but failed to determine whether Song-Beverly applies to other Internet transactions. Plaintiff’s counsel argued that providing a shipping address to prevent fraudulent transactions should have been enough information to prevent fraudulent credit card transactions, and that requiring a phone number was unnecessary. U.S. District Judge Andy Guilford ruled that the online retailer could require such information to verify its customers’ identities. Judge Guilford agreed with Buy.com’s argument that Song-Beverly does not apply to Internet transactions involving the delivery of goods, and noted that shipping addresses may easily differ from billing addresses.
“A person who buys merchandise online may direct shipments to innumerable addresses unconnected with the billing addresses for the person’s credit card,” he said. “These might include work addresses, post-office addresses or addresses of temporary residences used by college students, employees on job-related trips or others.”
Rutan senior partner Michael Hornak and associates Jeff Fohrer and Taylor Dalton represented Buy.com in the case. “Our congratulations to Mike, Jeff and Taylor for an important victory in a precedent-setting matter that benefits our client and brings greater clarity to an evolving area of law,” said Mark Frazier, head of the firm’s Trial Section.
