COLLECTION OF ZIP CODES VIOLATES CALIFORNIA CREDIT CARD LAW
The Supreme Court of California recently held that a cardholder’s ZIP code, without more, constitutes “personal identification information” within the meaning of Section 1747.08 of California’s Song-Beverly Credit Card Act of 1971 (Credit Card Act). Pineda v. Williams-Sonoma Stores, Inc., 246 P.3d 612 (Cal. Feb. 10, 2011).
In Pineda, the plaintiff was asked to provide her ZIP code while making a credit card purchase at one of defendant Williams-Sonoma’s stores. The ZIP code was entered into the electronic cash register by the sales clerk and was later used by the defendant to determine the plaintiff’s previously undisclosed address, which defendant maintained in its database. This database is used by defendant to market products to customers and sold by defendant to other businesses. The plaintiff brought a class action lawsuit alleging, among other things, that defendant’s collection of her ZIP code violated Section 1747.08 of the Credit Card Act.
Section 1747.08(a)(2) of the Credit Card Act generally prohibits requiring a cardholder to provide and recording personal identification information on a credit card transaction form or otherwise. Section 1747.08(b) defines “personal identification information” as information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder’s address and telephone number. The trial court ruled that plaintiff’s ZIP code did not constitute “personal identification information” and the intermediate appellate court affirmed. On appeal, the Supreme Court of California reversed.
The Court focused on the plain language of the statute. The Court determined that the broad term “concerning” as used in Section 1747.08(b) means pertaining to, regarding, having relation to, or respecting and certainly included a cardholder’s ZIP code, even though, unlike an address and telephone number, a ZIP code above is not specific in nature to an individual. The Court also noted that a ZIP code constitutes information unnecessary to a sales transaction, which information defendant clearly used for other business purposes (e.g., sales of data to third parties).
The Court concluded that a broader interpretation of Section 1747.08 is more consistent with the rule favoring liberal construction of remedial statutes and is more consistent with Section 1747.08(d), which permits businesses to require a cardholder to provide reasonable forms of positive identification as a condition to accepting a credit card but prohibits the recording of any information. The legislative history of Section 1747.08(b) also supports prohibiting retailers from soliciting and recording information about a cardholder that is unnecessary to a credit card transaction, according to the Court.
California retailers should review their policies and procedures with respect to requesting ZIP codes in connection with credit card transactions. Additionally, retailers outside of California also may wish to examine state laws that may be interpreted similarly.
- Michael Tomkies and Margaret Stolar