BILL NUMBER: AB 1509 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 18, 1999
INTRODUCED BY Assembly Member Machado
FEBRUARY 26, 1999
An act to amend Section Sections 1748.10
and 1748.12 of the Civil Code, relating to credit card issuers.
LEGISLATIVE COUNSEL'S DIGEST
AB 1509, as amended, Machado. Credit cards: marketing
information.
Existing law requires a credit card issuer to provide written
notice to all persons who are holders of the issuer's credit cards if
the issuer discloses marketing information, as defined, concerning a
consumer which discloses the consumer's identity to any person,
except specified 3rd parties. The notice is required to describe the
cardholder's right to prohibit this disclosure. Existing law
specifies the methods of satisfying this requirement.
This bill would recast this provision to, among other things,
require that a credit card issuer provide the notice before the
issuer discloses the information and, if the information is
disclosed, at least once per year. The bill would also revise the
definition of marketing information, as specified, and exempt
communications to a corporate subsidiary or affiliate of the card
issuer that are not used for marketing purposes from the disclosure
prohibition.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1748.10 of the Civil Code is amended to
read:
1748.10. This act shall be known and may be cited as the "Areias
-Robbins Credit Card Full Disclosure Act Of 1986."
SEC. 2. Section 1748.12 of the Civil Code is amended to
read:
1748.12. (a) For purposes of this section:
(1) "Cardholder" means any consumer to whom a credit card is
issued, provided that in cases when more than one credit card has
been issued for the same account, all persons holding those credit
cards may be treated as a single cardholder.
(2) "Credit card" means any card, plate, coupon book, or other
single credit device existing for the purpose of being used from time
to time upon presentation to obtain money, property, labor, or
services on credit. "Credit card" does not mean any of the
following:
(A) Any single credit device used to obtain telephone property,
labor, or services in any transaction under public utility tariffs.
(B) Any device that may be used to obtain credit pursuant to an
electronic fund transfer but only if the credit is obtained under an
agreement between a consumer and a financial institution to extend
credit when the consumer's asset account is overdrawn or to maintain
a specified minimum balance in the consumer's asset account.
(C) Any key or card key used at an automated dispensing outlet to
obtain or purchase petroleum products, as defined in subdivision (c)
of Section 13401 of the Business and Professions Code, which will be
used primarily for business rather than personal or family purposes.
(3) "Marketing information" means the categorization of
cardholders compiled by a credit card issuer, based on a cardholder's
shopping patterns, spending history, or behavioral characteristics
derived from account activity which is provided to a marketer of
goods or services or a subsidiary or affiliate organization of the
company that collects the information for consideration. "Marketing
information" does not include aggregate data which does not identify
a cardholder based on the cardholder's shopping patterns, spending
history, or behavioral characteristics derived from account activity
or any communications to any person in connection with any transfer,
processing, billing, collection, chargeback, fraud prevention, credit
card recovery, or acquisition of or for credit card accounts.
(b) At least 60 days prior to the initial disclosure of marketing
information concerning a cardholder to any person, the credit card
issuer shall provide a written notice to the cardholder that clearly
and conspicuously describes the cardholder's right to prohibit the
disclosure to marketers of goods or services of marketing information
concerning the cardholder which discloses the cardholder's identity.
The notice shall include a preprinted form in 10-point type by
which the cardholder may exercise this right and shall advise the
cardholder of a toll-free telephone number that the cardholder may
call to exercise this right.
(c) The requirements of subdivision (b) shall be satisfied by
furnishing to the cardholder a preprinted form in 10-point type for
the cardholder that clearly and conspicuously describes the
cardholder's right to prohibit the disclosure of marketing
information and a toll-free telephone number that the cardholder may
call to exercise this right. This initial notice to the cardholder
shall be provided (1) on or with the credit application and (2) on or
with the credit card when it is delivered to the cardholder. If a
credit card issuer decides to disclose marketing information after
the initial receipt of the credit card by the cardholder, but prior
to the passing of one year from the date of receipt, the issuer shall
notify the cardholder prior to the initial disclosure of marketing
information relating to the cardholder. No notice need be furnished
to a cardholder to whom prior notice has been given, as to whom no
marketing information will be disclosed, or to whom notice has been
given prior to the effective date of this act, which complies with
subdivision (b).
(d) In addition to the initial disclosure required pursuant to
subdivision (b), on or after January 1, 2000, each credit card issuer
who discloses marketing information for consideration shall clearly
and conspicuously disclose, at least once per calendar year, at
intervals of not less than six months nor more than 12 months, to
every cardholder entitled to receive an annual statement of billings
rights pursuant to 12 C.F.R. 226.99 (Regulation Z) the cardholder's
right to prohibit the future disclosure of marketing information.
The notice required by this subdivision and with the delivery of the
renewal card may be included on or with any periodic statement and
shall include a preprinted form in 10-point type by which the
cardholder may exercise this right and shall advise the cardholder of
a toll-free telephone number which the cardholder may call to
exercise this right.
(e) (1) The cardholder's election to prohibit disclosure of
marketing information shall be effective only with respect to
marketing information that is disclosed to any party after the card
issuer has received and processed the cardholder's election pursuant
to subdivision (b) or (d), not to exceed three working weeks, and
shall not apply to communications covered by subdivision (f).
(2) An election to prohibit disclosure of marketing information,
as provided in subdivision (b) or (d), shall terminate upon receipt
by the credit card issuer of notice from the cardholder that the
cardholder's election under subdivision (b) or (d) is no longer
effective.
(f) The requirements of subdivisions (b) and (d) do not apply to
any of the following communications of marketing information by a
credit card issuer:
(1) Communications to any party to, or merchant specified in, the
credit card agreement, or to any person whose name appears on the
credit card or on whose behalf the credit card is issued.
(2) Communications to consumer credit reporting agencies, as
defined in subdivision (d) of Section 1785.3.
(3) Communications to a corporate subsidiary or affiliate of the
card issuer that are not used for marketing purposes.
(4) Communications to a third party when the third party is
responsible for conveying information from the card issuer to any of
its cardholders.
(g) If the laws of the United States require disclosure to
cardholders regarding the use of personal information, compliance
with the federal requirements shall be deemed to be compliance with
this section.