BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1219|
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THIRD READING
Bill No: AB 1219
Author: Perea (D)
Amended: 9/1/11 in Senate
Vote: 27 - Urgency
SENATE JUDICIARY COMMITTEE : 5-0, 8/25/11
AYES: Evans, Harman, Blakeslee, Corbett, Leno
ASSEMBLY FLOOR : 75-1, 6/3/11 - See last page for vote
SUBJECT : Credit cards: personal information
SOURCE : Western States Petroleum Association
DIGEST : This bill creates a new exception to existing
law's prohibition against the collection of zip codes
during credit card sales transactions. This bill permits
the collection of zip code information when a person or
entity accepting a credit card in a sales transaction at a
retail motor fuel dispenser or retail motor fuel payment
island automated cashier uses the zip code information
solely for prevention of fraud, theft, or identity theft.
ANALYSIS : Existing law, the Song-Beverly Credit Card
Act, places restrictions on credit card transactions.
(Civil Code �CIV] Section 1747 et seq.)
Existing law provides that no person or entity that accepts
credit cards for the transaction of business shall do any
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of the following:
1. Request, or require as a condition to accepting the
credit card as payment for goods or services, the
cardholder to write any personal identification
information on the credit card transaction form; or
2. Request, or require as a condition of accepting the
credit card as payment for goods or services, the
cardholder to provide personal identification
information, which the person or entity accepting the
credit card writes, causes to be written, or otherwise
records upon the credit card transaction form;
3. Utilize a credit card form which contains preprinted
spaces specifically designated for filling in the
cardholder's personal identification information. (CIV
Sec. 1747.08(a))
Existing law provides the following exemptions from the
above restrictions:
1. If the credit card is being used as deposit to secure
payment in the event of default, loss, damages, or
similar occurrence;
2. Cash advance transactions; or
3. If the person or entity accepting the credit card is
contractually obligated to provide personal
identification information in order to complete the
credit card transaction or is obligated to collect and
record the personal identification information by
federal law or regulation;
4. If the personal identification information 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. (CIV Sec. 1747.08(c))
Existing law defines "personal identification information"
as information concerning the cardholder, other than
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information set forth on the credit card, and including,
but not limited to, the cardholder's address and telephone
number. (CIV Sec. 1747.08(b).) Existing case law has
interpreted this definition to include the cardholder's zip
code. ( Pineda v. Williams-Sonoma Stores, Inc. (2011) 51
Cal.4th 524.)
This bill creates a new exception to the above, thus
permitting the collection of zip code information when a
person or entity accepting a credit card in a sales
transaction at a retail motor fuel dispenser or retail
motor fuel payment island automated cashier uses the zip
code information solely for prevention of fraud, theft, or
identity theft.
This bill states that this act is an urgency statute
necessary for the immediate preservation of the public
peace, health, or safety within the meaning of Article IV
of the Constitution and shall go into immediate effect.
The facts constituting the necessity are:
In order to prevent potential disruption of gasoline
station services throughout the state, it is necessary to
create a new exception to the prohibition on the collection
of zip code information when credit cards are used that
will apply in the purchase of gasoline and that will be
implemented immediately.
Background
The Song-Beverly Credit Card Act (Song-Beverly) is
"designed to promote consumer protection" and it "imposes
fair business practices for the protection of the
consumers. 'Such a law is remedial in nature and in the
public interest �and] is to be liberally construed to the
end of fostering its objectives.'" ( Florez v. Linens N
Things, Inc. (2003) 108 Cal.App.4th 447, 450; rev. denied
2003 Cal. LEXIS 5453.) (citations omitted)
Recognizing the protective purpose of Song-Beverly, in
February 2011, the California Supreme Court held in Pineda
v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524 that
personal identification information-as used in the
act-includes a cardholder's zip code information. As a
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result, a business is in violation of Song-Beverly if it
requests a customer's zip code as a part of a credit card
transaction.
According to the sponsor, a number of lawsuits were filed
after the Pineda decision came down. Prior versions of
this bill were broader and applied to all retailers,
allowing them to collect zip code data in specified
instances. Because of concerns that this bill was overly
broad and would inadvertently undermine the strong consumer
protections contained in Song-Beverly, this bill was
amended several times in the Assembly and scaled back to
its current form. This bill now creates a new exception to
existing law's prohibition against the collection of zip
codes during credit card sales transactions by permitting
the collection of zip code information when a person or
entity accepting a credit card in a sales transaction at a
retail motor fuel dispenser or retail motor fuel payment
island uses the zip code information solely for prevention
of fraud, theft, or identity theft. In order to avoid
affecting pending litigation, this bill takes effect on a
prospective basis.
The California Supreme Court's decision in Pineda v.
Williams-Sonoma Stores, Inc.
As described above, in February 2011, the California
Supreme Court held in Pineda v. Williams-Sonoma Stores,
Inc. (2011) 51 Cal.4th 524 that personal identification
information-as used in Song-Beverly-includes a cardholder's
zip code information. As a result, a business is in
violation of Song-Beverly if it requests a customer's zip
code as a part of a credit card transaction.
In Pineda , the plaintiff made a purchase at Williams-Sonoma
and, when the cashier asked for her zip code, the plaintiff
provided it because she believed that it was necessary to
complete the transaction. The cashier entered the
plaintiff's zip code into the electronic cash register and,
as a result, at the end of the transaction, Williams-Sonoma
had the plaintiff's name, credit card number, and zip code
in its database. Using computer software, Williams-Sonoma
then performed reverse searches from databases containing
millions of names, addresses, email addresses, and
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telephone numbers. That software then matched the
plaintiff's name and zip code with her address, which had
not been disclosed by the plaintiff. The plaintiff's
complete information was then stored in Williams-Sonoma's
database and the company used it to "market products to
customers and may also sell the information it has compiled
to other businesses." ( Pineda v. Williams-Sonoma Stores,
Inc. 51 Cal.4th at 528.)
In holding that a zip code, without more, constitutes
"personal identification information" under Song-Beverly,
the California Supreme Court noted that the definition
includes the cardholder's address. The question then,
according to the Court, is whether the Legislature intended
that components of an address be included. On that point,
the Court stated, "�t]he answer must be yes. Otherwise, a
business could ask not just for a cardholder's ZIP code,
but also for the cardholder's street and city in addition
to the ZIP code, so long as it did not also ask for the
house number. Such a construction would render the
statute's protections hollow. Thus, the word "address" in
the statute should be construed as encompassing not only a
complete address, but also its components." (Id. at 531.)
In addition, the Court noted that the lower court ruling
siding with Williams-Sonoma would "permit retailers to
obtain indirectly what they are clearly prohibited from
obtaining directly, 'end-running' the statute's clear
purpose. This is so because information that can be
permissibly obtained under the Court of Appeal's
construction could easily be used to locate the
cardholder's complete address or telephone number. Such an
interpretation would vitiate the statute's effectiveness."
(Id. at 533.)
The rationale for protecting consumers' personal
identification information in these instances has not
changed over the years. The Court cited the Senate
Judiciary Committee's analysis of AB 2920 (Areias), Chapter
999, Statutes 1990, which added the original restriction on
collection of personal identification information and noted
"'The Problem �] ? �] Retailers acquire this additional
personal information for their own business purposes-for
example, to build mailing and telephone lists which they
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can subsequently use for their own in-house marketing
efforts, or sell to direct-mail or tele-marketing
specialists, or to others.' (Senate Judiciary Committee's
analysis of AB 2920, �], 1989-90 Session, as amended June
27, 1990, pp. 3-4.)" (Id. at 534.)
After reviewing the legislative history of Song-Beverly,
the Court found that the history "demonstrates the
Legislature intended to provide robust consumer protections
by prohibiting retailers from soliciting and recording
information about the cardholder that is unnecessary to the
credit card transaction."
After determining that zip code information is personal
identification information for purposes of Song-Beverly,
the Court expressly rejected the defendant's argument that
the decision should apply only on a prospective basis
because retailers had previously assumed that a zip code
was not personal identification information. Noting that
it was "not persuaded," the court stated that the statute
provided constitutionally adequate notice of the proscribed
conduct. (Id. at 536.)
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 9/1/11)
Western States Petroleum Association (source)
California Manufacturers and Technology Association
ARGUMENTS IN SUPPORT : The author writes:
"Song-Beverly Credit Card Act limits when a retailer or
other entity that accepts credit cards can collect
additional personal identification information (PII) from
a customer. In the recent California Supreme Court
decision of Pineda v. Williams-Sonoma Stores, Inc. . . .
zip code data was found to be PII based on the facts of
the case. . . . Since February, the Pineda decision has
had serious unintended consequences and resulted in over
150 class action suits filed against retailers in
California. Unfortunately, a significant portion of
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these suits were brought upon companies, including fuel
retailers, who had been collecting zip codes in an effort
to protect consumers."
The sponsor of this bill, the Western States Petroleum
Association (WSPA) writes that this bill:
". . . assures the continued ability of California
drivers to use credit cards for fuel purchases at the
pump. . . . Class action lawsuits have been filed
against WSPA member companies for their collection of zip
code information at service stations. Many other fuel
retailers, especially small-business operators, are
concerned that they too will be targeted. The zip code
data is requested during credit card transactions at the
pump for the sole purpose of fraud prevention. This
information is never used for marketing purposes."
ASSEMBLY FLOOR : 75-1, 6/3/11
AYES: Achadjian, Alejo, Allen, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nielsen, Norby, Olsen, Pan, Perea, V.
Manuel P�rez, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Ammiano
NO VOTE RECORDED: Carter, Gorell, Roger Hern�ndez, Nestande
RJG:kc 9/1/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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