BILL ANALYSIS                                                                                                                                                                                                    Ó



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           REPLACE  :  09/08/11  Changes per consultant.

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1219 (Perea)
          As Amended  September 1, 2011
          2/3 vote.  Urgency
           
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          |ASSEMBLY:  |75-1 |(June 3, 2011)  |SENATE: |35-0 |(September 7,  |
          |           |     |                |        |     |2011)          |
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           Original Committee Reference:    B. & F.

          SUMMARY  :  Provides clarification for those instances when an 
          entity that accepts credit cards may not request certain types 
          of personal identification information (PII) to complete the 
          transaction.   Specifically,  this bill  creates an express 
          exemption from the prohibition against the collection and 
          retention of zip code information when the zip code is used 
          solely for prevention of fraud, theft, or identify theft in a 
          sales transaction at a retail motor fuel dispenser or retail 
          motor fuel payment island automated cashier.

           The Senate amendments  provide for a definition of "retail motor 
          fuel dispenser" and "retail motor fuel payment island automated 
          cashier" to provide clarification of instances when zip code 
          information may be requested to complete a credit card 
          transaction.  The amendments also add an urgency clause.
           
          EXISTING LAW  : 

          1)Provides that under the Song-Beverly Credit Card Act of 1971 
            (Credit Card Act) (Civil Code Section 1747 et seq.), no 
            person, firm, partnership, association or corporation that 
            accepts credit cards shall do any of the following:

             a)   Require, or request, as condition of accepting the 
               credit card, the cardholder to write any PII identification 
               information upon the credit card transaction form or other 
               document ÝSection 1747.08a(1)]; 

             b)   Require, or request, as a condition of  accepting the 
               credit card, the cardholder to provide PII identification 
               information which the entity accepting the card would then 








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               write or record upon the credit transaction form or 
               otherwise ÝSection 1747.08a(2)]; or,

             c)   Utilize in any credit card transaction, a credit card 
               form that contains preprinted spaces for PII identification 
               information of the cardholder ÝSection 1747.08a(3)].

          2)Specifies that the prohibitions in a), b), and c) above do not 
            apply under the following circumstances:

             a)   If the credit card is being used as a deposit to secure 
               payment in the event of default, loss, damage, or other 
               similar occurrence ÝSection 1747.08(1)];

             b)   Cash advance transactions ÝSection 1747.08(2)];

             c)   If the entity requesting the information is 
               contractually obligated to provide the PII information in 
               order to complete the transaction, or is obligated to 
               collect and record the PII identification information by 
               federal law or regulation ÝSection 1747.08(3)]; or,

             d)   If PII is required for a special purpose, incidental but 
               related to the individual credit card transaction, 
               including but not limited to, information relating to 
               shipping, delivery, servicing, or installation of the 
               purchased merchandise, or for special orders ÝSection 
               1747.08(4)].

          3)Clarifies that the prohibitions on collecting PII 
            identification information relating to the credit card 
            transaction does not prohibit a requirement that the 
            cardholder provide reasonable forms of positive 
            identification, including a driver's license or California 
            State identification card, or another form of identification 
            ÝSection 1747.08(4)d].

          4)Specifies that if the cardholder pays for the transaction with 
            a credit card number and does not make the credit card 
            available upon request to verify the number, the cardholder's 
            driver's license number or identification card number may be 
            recorded on the credit card transaction form ÝSection 
            1747.08(4)d].

          5)Defines "PII" as information concerning the cardholder, other 








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            than information set forth on the credit card, and including 
            but not limited to, the cardholder's address and telephone 
            number ÝSection 1747.08(3)b].

           AS PASSED BY THE ASSEMBLY  , the bill was substantially similar to 
          the bill currently under consideration.

           FISCAL EFFECT  :  None

           COMMENTS  :  The need for this bill arises from Pineda v. 
          Williams-Sonoma Stores, Inc., (2011) 51 Cal.4th 524, in which 
          the California Supreme Court ruled that a consumer's ZIP code is 
          PII under the Credit Card Act, and as such, falls under the 
          restricted uses contained within the statute.  Prior to 
          addressing how this bill would address this issue, it is 
          important to provide background on the case.

           Pineda v. Williams-Sonoma Stores, Inc  .  
           
          The plaintiff sued retailer Williams-Sonoma Stores, Inc., 
          claiming the retailer violated the Credit Card Act during a 
          transaction in which a cashier at the retailer asked the 
          plaintiff for her ZIP code.  The plaintiff complied with the 
          request, believing her ZIP code was necessary for completing the 
          transaction.  Subsequently, the defendant used computer software 
          to conduct reverse searches and cross checks against databases 
          that contain millions of names, email address, telephone 
          numbers, and street addresses.  Using the software, the 
          defendant was able to match the name and ZIP code of the 
          plaintiff to match with her address which was then retained in 
          the defendant's own database used for marketing purpose.  
          Additionally, such information was also sold by the defendant to 
          other businesses.  The plaintiff filed a class action alleging 
          that the retailer had violated the Credit Card Act.

          The trial court and court of appeal agreed with the defendant 
          that the ZIP code does not constitute PII.  The California 
          Supreme Court agreed to take up the issue.   The Court concluded 
          that under the Credit Card Act, PII does include the ZIP code.  
          The Court concluded that because address is a sum of its parts 
          (i.e., name, street, city, ZIP code) in that the ZIP code "is 
          readily understood to be part of an address; when one addresses 
          a letter to another person, a ZIP code is always included.  The 
          question then is whether the Legislature?intended to include 
          components of the address.  The answer must be yes."  








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          Additionally, the Court also found that the broad language used 
          in the statute demonstrated that the Legislature intended the 
          statute to be interpreted broadly.
           
          Discussion  .

          In the Pineda case, the retailer was collecting ZIP codes for 
          marketing purposes and potentially for sale to other businesses. 
           However, the Supreme Court did not address uses of ZIP codes 
          for what could be described as more legitimate purposes.  
          Specifically, ZIP codes are also used for fraud prevention 
          purposes, or at a basic level, as part of the shipping address 
          for an online internet transaction.  This bill simply creates an 
          express exemption in current law from the prohibition on 
          collecting zip code information in a retail credit card 
          transaction at a motor fuel dispenser so long as the zip code 
          information is used to prevent fraud, theft or identity theft.

          While the courts may determine in current litigation, in 
          response to the Pineda case, that such an exemption always 
          existed, this bill creates an express exemption.


           Analysis Prepared by  :    Mark Farouk / B. & F. / (916) 319-3081


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          0002847