California recently passed Assembly Bill No. 1219, which amends the state's Song-Beverly Credit Card Act of 1971 to create a limited exception to the Act for retail gas stations. The Act prohibits businesses from requesting that cardholders provide "personal identification information" (PII) during credit card transactions and then recording that information. In February 2011, the California Supreme Court concluded in Pineda v. Williams-Sonoma Stores, Inc. that a retailer who requests and records a customer's ZIP code during a credit card transaction violates the Act.1
Although retailers have been defending lawsuits alleging violations of the Act based on collection of ZIP codes since before the Pineda decision, the number of these lawsuits was somewhat limited by the existence of two contrary Court of Appeal decisions that held ZIP codes are not PII. Following Pineda, more than 200 lawsuits were filed, and many hoped for a legislative "fix" to make Pineda apply prospectively only or to create an exception for fraud.
Existing law already provides certain exceptions under which a business may collect PII, including when the person or entity accepting a credit card is contractually obligated to provide PII in order to complete the transaction or if the information is requested for a special purpose incidental but related to the credit card transaction, such as shipping, delivery, servicing, or installation.2 This new exception applies to credit card sales transactions at a "retail motor fuel dispenser" or "retail motor fuel payment island automated cashier" when the ZIP code information is used "solely for prevention of fraud, theft, or identity theft."3
Despite being classified as an urgency statute necessary to "prevent potential disruption of gasoline station services throughout the state,"4 the amendment does little more than officially sanction a relatively unchallenged practice. Indeed, the post-Pineda litigation climate corroborates this observation—we are aware of only one lawsuit that was filed after Pineda against retail gas stations as compared to the over 200 lawsuits filed against brick and mortar businesses and online retailers.
Unfortunately, this relatively straightforward amendment does little to elucidate the scope of the Act following the California Supreme Court's decision in Pineda, and practically speaking, does little to change the post-Pineda landscape
Footnotes
1. Pineda v. Williams-Sonoma Stores, Inc., 246 P.3d 612, 614 (Cal. 2011). Please see here for additional background about the Song-Beverly Act and Pineda decision.
2 Cal. Civ. Code § 1747.08(c).
3 Cal. Civ. Code § 1747.08(c)(3)(B).
4 AB 1219 (Cal. 2011).
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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