(May 4, 2011) A California Chamber of Commerce-supported bill that allows the collection of personal information including zip codes in legitimate business transactions, won unanimous approval from an Assembly committee this week.
AB 1219 (Perea; D-Fresno) stems from the case of Pineda v. Williams-Sonoma Stores, Inc., in which the California Supreme Court deemed zip codes to be personal information under the state credit card regulations, thus prohibiting collection even if used for fraud prevention.
Song Beverly Credit Card Act
The bill makes clarifying changes to a provision of the Song Beverly Credit Card Act of 1971. One section of that act defines certain information as “personal identification information” (PII) and limits when PII can be collected as part of a credit card transaction.
AB 1219 makes clear that the restrictions on collecting PII apply when the cardholder physically presents an electronically readable credit card to an employee in order to complete his or her transaction.
Pineda v. Williams-Sonoma Stores, Inc.
In Pineda, the California Supreme Court ruled that a zip code constitutes PII under the Song Beverly Credit Card Act. According to the decision, a retailer may violate the act by requesting and recording a customer’s zip code in conjunction with a credit card purchase.
Since the Pineda decision was handed down in February, more than 150 class action suits have been filed against retailers in California. Many of those retailers were collecting zip codes for legitimate reasons that should be allowable under the law.
For example, some retailers have been sued simply for collecting zip codes when the customer placed an order online and the zip code was needed for delivery. Others have been sued when they were only collecting the zip code in order to reduce the likelihood of fraud or identity theft.
The purpose of AB 1219 is to continue to limit the collection of PII while still allowing and recognizing the legitimate business need for a retailer to use PII to appropriately process and complete all components of a customer transaction. AB 1219 also will help to address the potential for identity theft in situations where the person or functioning card is not present.
Key Vote
AB 1219 passed the Assembly Banking and Finance Committee on May 2, 11-0.
Ayes: Achadjian (R-San Luis Obispo), Eng (D-Monterey Park ), Fletcher (R-San Diego), Fong (D-Cupertino), Gatto (D-Los Angeles), Harkey (R-Dana Point), Hernández (D-West Covina), Lara (D-Los Angeles), Morrell (R-Rancho Cucamonga), Perea (D-Fresno), Torres (D-Pomona).
Absent/abstaining/not voting: C. Calderon (D-Montebello).
Staff Contact: Valerie Nera