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Your Legal Corner - Client Alert Blog

Credit Card Purchase + Retailer's Request For Your Zip Code Equals A Lot Of Liability

Written By: Melissa C. Marsh, Esq., California Attorney, February 2011 Add to Favorites
Has a retailer recently asked you to give them your zip code? If so, they may have broken the law.

The Song-Beverly Credit Card Act of 1971, set forth in California Civil Code 1747 et seq., was designed to protect consumers. As part of that protection, California Civil Code 1747.08(a) prohibits businesses from requesting and recording a customer's "personal identification information" during a credit card transaction. California Civil Code 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 card holder's address and telephone number." In Pineda v. Williams-Sonoma Stores, Inc. (Cal. Sup. Ct. Feb. 11, 2011), the California Supreme Court was asked to decide whether California Civil Code 1747.08 is violated when a business requests and records a customer's ZIP Code during a credit card transaction. The California Supreme Court held that it was violated.

In Pineda, the California Supreme Court held that Williams-Sonoma's practice of collecting ZIP Code information during a credit card purchase transaction constituted the acquisition of "personal identification information" and therefore violated California Civil Code 1747.08 (the Song-Beverly Credit Card Act of 1971). According to the Supreme Court, the purchaser's ZIP Code was unnecessary for the transaction and could be used to violate a person's privacy, namely by matching the customer's name and the Zip Code in a database to obtain the customer's previously undisclosed full mailing address. The retailer could then either sell the information obtained, or use the information for direct marketing.

In sum, California retailers are, in most circumstances, precluded from recording any of the customer's personal information, unless necessary for security or shipping purposes. Despite the Supreme Court's ruling in Pineda, Retailers should be aware that they are still allowed to ask a customer to show their driver's license for proof of identification (they just can't record, or swipe, the information!). Retailers should also note that the Song-Beverly Credit Card Act of 1971 does not apply to Internet, telephone and mail order transactions.

The Supreme Court has sent the Pineda case back to the trial court basically to determine the damages. The Song-Beverly Credit Card Act of 1971 provides for a civil penalty of $250 for the first violation, and a $1,000 civil pensalty for each subsequent violation, plus attorney's fees and costs. Class action attorneys have recently filed law suits against 20 retailers, including Tiffany & Co., Target, Walmart, Victoria's Secret, Bed Bath & Beyond Inc., and Crate & Barrel over their zip code policy, and more are expected.

Posted In: Business Law Bulletin  Corporate Client Bulletin 

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.