BILL NUMBER: AB 1509	AMENDED
	BILL TEXT

	AMENDED IN SENATE   AUGUST 31, 1999
	AMENDED IN SENATE   AUGUST 16, 1999
	AMENDED IN ASSEMBLY   MAY 18, 1999

INTRODUCED BY   Assembly Member Machado

                        FEBRUARY 26, 1999

   An act to amend  Sections 1748.10 and 1748.12 of 
 Section 1748.10 of, and to amend, repeal, and add Section
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  , operative April 1, 2000,  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, as
specified.  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  , except as
specified  .
   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
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 of marketing information concerning the cardholder which
discloses the cardholder's identity.  The notice shall be in 10-point
type and shall advise the cardholder of a toll-free telephone number
that the cardholder may call to exercise this right.  For credit
cards issued before April 1, 2000, no notice need be furnished to a
cardholder as to whom marketing information will not be disclosed or
to whom notice has been given prior to April 1, 2000, that was in
accordance with the then-existing law.
   (c) For all new credit cards issued on or after April 1, 2000, the
written notice described in subdivision (b) shall be furnished to
the cardholder on the form containing the new credit card when the
credit card is delivered to the cardholder.  For credit cards issued
prior to April 1, 2000, for which written notice is required pursuant
to subdivision (b), the written notice shall be furnished to the
cardholder on a preprinted form on or before December 31, 2000.
   (d) On or after January 1, 2001, 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 16 months, provided that
the end of the 16-month interval falls within the next calendar year
from the date the prior notice was received to every cardholder
entitled to receive an annual statement of  billings rights pursuant
to 12 C.F.R. 226.9 (Regulation Z) the cardholder's right to prohibit
the future disclosure of marketing information. The notice required
by this subdivision may be included on or with any periodic statement
or with the delivery of the renewal card 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 beginning 30
days after the card issuer has received, at the designated address on
the form containing the new credit card or on the preprinted form,
the cardholder's election pursuant to subdivisions (b) and (c) or
subdivision (d).  This does not apply to the disclosure of marketing
information prior to the cardholder's notification to the credit card
issuer of the cardholder's election.
   (2) An election to prohibit disclosure of marketing information,
as provided in subdivisions (b) and (c) or subdivision (d), shall
terminate upon receipt by the credit card issuer of notice from the
cardholder that the cardholder's election under subdivisions (b) and
(c) or subdivision (d) is no longer effective.
   (f) The requirements of this section 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.   
  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 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) If the credit card issuer discloses 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 of marketing information concerning
the cardholder which discloses the cardholder's identity.  The notice
shall include either a preprinted form by which the cardholder may
exercise this right or shall advise the cardholder of a toll-free
telephone number which the cardholder may call to exercise this
right.
   (c) The requirements of subdivision (b) may be satisfied by
furnishing the notice to the cardholder (1) on or with the credit
application, (2) with the credit card when it is delivered to the
cardholder, or (3) in any manner and at any time, provided that it is
furnished prior to the 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 the provisions of
subdivision (b).
   (d) An election to prohibit disclosure of marketing information,
as provided in subdivision (b), shall terminate upon receipt by the
credit card issuer of notice from the cardholder that the cardholder'
s election under subdivision (b) is no longer effective.
   (e) The requirements of subdivisions (b) and (c) 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.
   (4) Communications to a third party when the third party is
responsible for conveying information from the card issuer to any of
its cardholders.
   (f) 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.
   (g) This section shall become operative on July 1, 1994.  
   (h) This section shall become inoperative on April 1, 2000, and as
of January 1, 2001, is repealed under a later enacted statute, that
is enacted before January 1, 2001, deletes or extends that date.
  
  SEC. 3.  Section 1748.12 is added to the Civil Code, 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) If the credit card issuer discloses 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 of marketing information concerning the cardholder which
discloses the cardholder's identity.  The notice shall be in 10-point
type and shall advise the cardholder of their ability to respond
either by completing a preprinted form or 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 the notice to the cardholder:
   (1) At least 60 days prior to the initial disclosure of marketing
information concerning the cardholder by the credit card issuer.
   (2) For all new credit cards issued on or after April 1, 2000, on
the form containing the new credit card when the credit card is
delivered to the cardholder.
   (3) At least once per calendar year, to every cardholder entitled
to receive an annual statement of billings rights pursuant to 12
C.F.R. 226.9 (Regulation Z).  The notice required by this paragraph
may be included on or with any periodic statement or with the
delivery of the renewal card.
   (d) (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 beginning 30
days after the credit card issuer has received, at the designated
address on the form containing the new credit card or on the
preprinted form, or by telephone, the cardholder's election to
prohibit disclosure.  This does not apply to the disclosure of
marketing information prior to the cardholder's notification to the
credit card issuer of the cardholder's election.
   (2) An election to prohibit disclosure of marketing information
shall terminate upon receipt by the credit card issuer of notice from
the cardholder that the cardholder's election to prohibit disclosure
is no longer effective.
   (e) The requirements of this section 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) To the extent that the Fair Credit Reporting Act preempts the
requirements of this section as to communication by a credit card
issuer to a corporate subsidiary or affiliate, the credit card issuer
may communicate information about a cardholder to a corporate
subsidiary or affiliate to the extent and in the manner permitted
under that act.
   (4) Communications to a third party when the third party is
responsible for conveying information from the card issuer to any of
its cardholders.
   (f) 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.
   (g) This section shall become operative on April 1, 2000.