Song-Beverly Credit Card Act

Last week the BNA Privacy & Security Law Report published an article discussing in detail California’s Song-Beverly Credit Card Act (the “Act”). The aim of the article is to provide those persons and businesses that regularly engage in credit card transactions in California, most notably retail merchants, with a meaningful primer on some critical current

In a previous post, we noted that the California Supreme Court in Pineda v. Williams-Sonoma Stores, Inc., granted a petition to review the issue of whether a retailer violates California’s Song-Beverly Credit Card Act if, in connection with a credit card transaction, it records a customer’s zip code for the purpose of later using

If you or your company collect zip codes in California as part of a loyalty program or otherwise, and reverse data mine for additional customer information, you should be aware that the California Supreme Court recently granted a petition to review the issue of whether a retailer violates California’s Song-Beverly Credit Card Act if, in

If you or your company have a loyalty program or collect customer information in any form, and reverse data mine for additional customer information, you face the risk of being sued in California for a violation of the California Constitutional right to privacy. Recently, in Watkins v. Autozone Parts, Inc., No. 08-cv-01509-H, 2008 WL 5132092 (S.D. Cal. Dec. 5, 2008), the United States District Court for the Southern District of California held that all a plaintiff needs to allege to state a claim for a breach of the constitutional right to privacy is that the defendant requested plaintiff’s personal information and then “covertly” reverse data mined for additional information about that plaintiff. As you may know, this decision cuts against the recent trend in California Courts of Appeal decisions aimed at narrowing the types of actions involving the collection of customer data that can be brought against retailer defendants (see e.g. Absher v. AutoZone, Inc., 164 Cal. App. 4th 332 (2008); TJX Cos., Inc. v. Sup. Ct., 163 Cal. App. 4th 80 (2008)), and creates great uncertainty for companies with respect to their ability to collect customer information.

In Watkins, plaintiff brought a putative class action alleging that Autozone violated the California Song-Beverly Credit Card Act, California Civil Code §1747.08 (the “Act” or “Section 1747.08”) by unlawfully requesting and recording personal customer information, and then “covertly” engaging in a “reverse search” to determine additional customer personal information, in violation of the California Constitution’s privacy provision.

First, the court held that plaintiff plead facts sufficient to support a claim for a violation of Section 1747.08. See 2008 WL 5132092, at *6. Second, and more significantly, in holding that plaintiff sufficiently plead a claim for invasion of privacy, the court reasoned that:

  • plaintiff adequately alleged a legally protected privacy interest in his home address;
  • the allegations that Autozone obtained and subsequently used his home address information from using his telephone number and credit card information after plaintiff’s purchase at Autozone satisfied the pleading requirements of a reasonable expectation of privacy in these circumstances; and
  • plaintiff sufficiently alleged that the invasion into his privacy was "serious," given his allegation that Autozone used his private information for profit without his consent and without informing him of the use of his information. See id.
  • Further, the court stated that the purpose of statutory provisions (including Section 1747.08) prohibiting the requesting of personal information from credit card customers “speaks to the potential seriousness of invasions that may occur.” Id. at *7 (citation omitted).

This holding creates great uncertainty for companies in determining in what circumstances collecting customer information and then reverse data mining is permissible. For instance:

  • Can a company utilize information that was obtained from a credit card customer for shipping purposes to reverse data mine for additional information about that customer?
  • Does a retail company violate a customer’s right to privacy by using a credit card customer’s zip code to obtain additional information about that customer given the recent California Court of Appeal holding that a zip code is not “personal identification information” under Section 1747.08? See Party City Corp. v. Sup. Ct. of San Diego County, No. D053530 (Cal. Ct. App. Dec. 19, 2008).


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As of January 1, 2009, and in contrast to federal law, California Civil Code Section 1747.09 requires that no more than the last five digits of a credit or debit card number be printed on both the electronically-printed card receipt retained by the business as well as the receipt provided to customers. See CAL. CIVIL