BILL ANALYSIS �
AB 1219
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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 �Section 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 �Section 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 �Section 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 �Section 1747.08(1)];
b) Cash advance transactions �Section 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 �Section 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 �Section
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
�Section 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 �Section
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 �Section 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
FN:
0002847