Colorado Not Allowed To Demand All Purchase Info From Companies

from the consumer-privacy dept

Remember how North Carolina was demanding that Amazon hand over pretty much all purchase info on every citizen who had ordered anything from the site? Thankfully, Amazon won that lawsuit, and was allowed to protect purchaser privacy. However, other states apparently didn't get the message. Michael Scott points us to the news that the state of Colorado, which had put in place a similar law, just got a preliminary injunction barring it from enforcing the law. While it's not a final ruling, it does mean that the companies protesting this law have established a "substantial likelihood" of prevailing. The ruling focuses on how the law violates the Commerce Clause in regulating interstate commerce (which state governments are not allowed to do). It doesn't directly discuss the privacy issues, other than indirectly to note that weighing the balance of potential "harms" it makes sense to block this law. If the law is later found to be legal, then the state can still get that info and collect taxes, but if the law is allowed to be enforced, it could violate people's privacy and other rights.


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  1.  
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    bob, Feb 1st, 2011 @ 1:59am

    Funny

    How the feds protect their Commerce Clause rights against the states, but get all bent out of shape when the same Commerce Clause prevents them from doing what they want to do.

    All because some farmer wanted to grow wheat to use privately, and the government wanted to stop him from doing that.

    Google farmer, wheat, commerce clause.

     

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  2.  
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    Bt Garner (profile), Feb 1st, 2011 @ 2:43am

    The states are trying to rob Peter to pay Paul

    I live in NC, and we have a large Dell facility in the state, so that means, when I buy a Dell, I pay NC tax, just like the folks in Washington pay their sales tax when they buy from Amazon.

    As a consumer, I don't care (in general) where the money goes, my concern is the bottom line for what I am buying. If my laptop with tax is $900 through Dell, and $850 through Amazon, I am going to save $50 and go with the latter. It is irrelevant that the Dell price was $840 plus $60 that was is paid to the state.

     

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  3.  
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    Anonymous Coward, Feb 1st, 2011 @ 6:35am

    Re: The states are trying to rob Peter to pay Paul

    It's why it is likely in the long run that you may end up with a federal sales tax for online sales, which would be distributed back to the states based on population or some other semi-crooked formula.

    Attempting to apply various state taxes on a product is anti-competitive and against the interests of the states, as they make it more expensive for the residence of the state to buy from in state companies, and cheaper to buy from out of state.

    I suspect you will end up with a system of "state tax in the state of origin (shipping) only, or federal tax for everyone else" which would likely come very close to leveling the playing field (and might even encourage some states to use a lower sales tax to be more attractive than the federal rate).

     

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  4.  
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    average_joe (profile), Feb 1st, 2011 @ 7:03am

    Re: Funny

    All because some farmer wanted to grow wheat to use privately, and the government wanted to stop him from doing that.

    Google farmer, wheat, commerce clause.


    I don't have to google it... you're talking about Wickard v. Filburn. Wickard doesn't apply here though, since that was a regular commerce clause case, and this one's a dormant commerce clause case. The feds aren't a party to this case.

     

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  5.  
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    average_joe (profile), Feb 1st, 2011 @ 7:25am

    The ruling focuses on how the law violates the Commerce Clause in regulating interstate commerce (which state governments are not allowed to do). It doesn't directly discuss the privacy issues . . . .

    That's not exactly true--states can regulate interstate commerce, but only under certain conditions. Article I, section 8, clause 3, the Commerce Clause, grants Congress the power to regulate commerce between the states. The Constitution is silent as to what states may or may not do in the absence of congressional legislation. The doctrine that has evolved over the years is that the Commerce Clause implies a restriction that prohibits a state from passing legislation that improperly burdens or discriminates against interstate commerce. This is known as the Dormant Commerce Clause.

    This judge in this case is saying that the Act is likely to be a facially discriminatory state law. The judge didn't use the word, but this is "protectionism" where a state erects a barrier to trade in order to protect in-state interests at the expense of out-of-state interests. Such laws are invalid unless the state can prove the discrimination is necessary to promote a legitimate state interest. While collection of tax is a legitimate state interest, the state failed to show that this interest could not be met by some other reasonable alternative.

    The privacy issue is an interesting one, but since the judge found a likelihood of the law being impermissibly discriminatory on its face, it wasn't necessary to discuss that issue.

     

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