On February 10, 2011, the California Supreme Court issued its opinion in Pineda v. Williams-Sonoma Stores, Inc., __ Cal.4th__ (2011), holding that a retailer’s practice of requesting and recording a consumer’s zip code during a credit card transaction violates Cal. Civ. Code, § 1747.08(a)(2). That provision states in relevant part that “no person … that accepts credit cards for the transaction of business shall …[r]equest, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the person … accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.” Pursuant to Section 1747.08, subpart (e), an action may be brought “by the person paying with a credit card” to recover civil penalties “not to exceed two hundred fifty dollars ($250) for the first violation and one thousand dollars ($1,000) for each subsequent violation….”
As held by the Court, “requesting and recording a cardholder’s ZIP code, without more, violates the Credit Card Act.” Slip Opinion, at 2. The Court rejected the argument that such an interpretation rendered the statute “unconstitutionally oppressive because it would result in penalties ‘approach[ing] confiscation of [defendant’s] entire business . . . .’” See id., at 14. As the Court reasoned, the penalty provisions of Section 1747.08 (e) were not “fixed” amounts, but rather, maximum amounts which could be imposed at the trial court’s discretion. See id.
This opinion will likely have a significant impact, as the collection of zip code information when paying by credit card is a fairly widespread practice throughout California.