The Ninth Circuit Court of Appeal has asked the California Supreme Court to determine whether state law permits retailers to ask customers for personal identification information, including their telephone number, address, zip code, and e-mail address, so long as customers would not reasonably believe the information is required to complete an in-store credit card purchase. If the Supreme Court accepts the question, its eventual ruling could have important ramifications for the collection of information at the point of sale any time a credit card is used.

In California, the legal limitation on collecting a customer’s personally identifiable information including name, address, zip code and email (often referred to as PII) at the cash register falls under the Song-Beverly Credit Card Act1. California has seen an enormous number of class actions filed against retailers for the wrongful collection of a customer’s PII and violations of Song-Beverly. Although decisions in individual cases have varied pretty substantially, an operating principle that emerged from these decisions is that a retailer may not request PII before or during the sale transaction because the sale transaction might be completed using a credit card and the request for information might be objectively interpreted by the customer as suggesting that such personal information was required as a condition to being able to use their credit card. As a result of these decisions, many retailers in California adopted specific procedures to prevent their sales associates from requesting PII until after the sale transaction has been completed, the credit card has been returned to the customer and the customer has received their purchased items and receipt. In that scenario, it would seem there could be no ambiguity about the reason for the request for PII – it would not be objectively reasonable to view the request as a condition to completing a credit card transaction because the sale transaction would be entirely complete. This approach has been called the “objective consumer perception test.”

And yet the class action lawsuits continued. In Davis v Devanlay Retail Group, Tammie Davis visited a store owned by Devanlay Retail Group, Inc., brought an item to the cash register for purchase and provided her credit card to the cashier. When Ms Davis was placing her credit card back in her purse after having paid, she was asked for her zip code. The Devanlay Retail Group had implemented the procedure described above: it had instructed its sales associates to delay requesting any PII until after the credit card transaction was complete so that it would not be objectively reasonable for Ms Davis and other customers to believe the request for information was a condition to paying by credit card. The Ninth Circuit Court of Appeals has concluded that neither the case law nor the statute (or its legislative history) provides adequate guidance to retailers. Indeed, because the Ninth Circuit found no controlling precedent, and found the meaning of the statute to be ambiguous, it certified the following question of law to the California Supreme Court: “Does section 1747.08 of the California Civil Code prohibit a retailer from requesting a customer’s personal identification information at the point of sale, after a customer has paid with a credit card and after the cashier has returned the credit card to the customer, if it would not be objectively reasonable for the customer to interpret the request to mean that providing such information is a condition to payment by credit card?”

If the California Supreme Court rules “yes”, the ruling could have an immediate impact in California on requests for information such as telephone numbers, addresses, zip codes and e-mail addresses in conjunction with in-store credit card purchases.2

The Court has discretion whether to accept the certified question. If it does, it will likely render a decision in the next eight to twelve months.