California's Song-Beverly Credit Card Act (Act) of 1971 (Civil Code 1747 et seq.) is designed to promote consumer protection, including the protection of consumers' privacy rights. The Act contains a provision that prohibits businesses from requesting cardholders' "personal identification information" during credit card transactions and then recording that information. In Pineda v. Williams-Sonoma Stores, Inc. (filed Feb. 10, 2011), the California Supreme Court addressed the issue whether a credit cardholder's ZIP code is "personal identification information" within the meaning of the Act. The court concluded it is. The court held a retailer that requests a credit cardholder's ZIP code as a condition of the transaction, and records that information, is in violation of the Act.
Section 1747.08(a) of the Act provides:
"[N]o person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall...
(2) Request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the person, firm, partnership, association, or corporation accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise."
Subdivision (b) defines personal identification information as "information concerning the cardholder...including, but not limited to, the cardholder's address and telephone number." Using a dictionary definition of the word "concerning" as a broad term meaning "pertaining to; regarding; having relation to; [or] respecting...," the court reasoned that a ZIP code, "which refers to the area where a cardholder works or lives...is certainly information that pertains to or regards the cardholder."
Under section 1747.08(d) of the Act, it is not unlawful for a business to ask the cardholder to show a reasonable form of positive identification—such as a driver's license—at the time of a credit card sale, even though driver's licenses contain ZIP codes. But the business may not record the information on the driver's license as a condition of the credit card transaction. The court noted the California Legislature's concern that businesses were gathering their customers’ mailing and telephone information for their own marketing purposes, or to sell to marketing companies, rather than to complete credit card sales.
Given the ubiquitous nature of credit card sales, the Pineda decision has far-reaching implications. A number of class action lawsuits for violation of the Song-Beverly Credit Card Act were filed the day after the California Supreme Court's decision. Businesses that sell goods or services in California through credit card transactions would be well-advised to review the forms they use for such sales.