Credit Card Use — Beware!

On February 10, 2010, the California Supreme Court handed down its decision in Pineda v. Williams-Sonoma Stores, Inc., — Cal. Rptr. 3d —, 2011 WL 446921 (Cal. Feb. 10, 2011). This decision should be studied by everyone who accepts credit cards in payment for goods and services.  Yes, this applies to gas station pumps that ask for your zip code as well as to attorneys and others. 

The Pineda decision held that merchants who request a consumer’s zip code to complete a retail credit card transaction have violated California’s Song-Beverly Credit Card Act (“SBCCA”). The SBCCA contains a provision that prohibits merchants from requesting and recording “personal identification information” about the cardholder. Penalties for violating the SBCCA range from a maximum of $250 for the first violation to $1,000 for each subsequent violation. Needless to say, the potential damages for a retailer who routinely processes hundreds or thousands of credit card transactions per day could be astronomical.

What’s the big deal? Well, the zip code, plus the name of the person, can be reverse "mined" in order to get the address of the person along with other important personal information, the precise thing the law was designed to prevent.

Of course, if you have this information as part of your file, I would guess the law doesn’t apply because you’re not asking for the zip code specifically in relation to accepting the credit card for payment.  But, be careful.


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