CyBIR: Cyber and Privacy Breaches – Insurance and Reinsurance Data Privacy Lawyers: Walker Wilcox & Matousek Law Firm

UPDATE: California Governor Signs Bill Exempting Gas Stations from Song-Beverly Zip Code Prohibition

Posted in Business Practices, Credit Card Transaction, Privacy Legislation, Retail

UPDATE (November 15, 2011):  On October 9, 2011, California Governor Edmund G. Brown, Jr. signed Assembly Bill 1219, exempting gas stations from the Song-Beverly/Pineda prohibition on collecting zip codes in certain instances.  The new law took effect immediately.

As we previously reported, Assembly Bill 1219 was initially intended to counteract the impact of the Pineda decision on retailers in California.  The Pineda decision prohibits retailers from requesting and recording zip codes from credit card customers.  The decision, which was retroactive, sparked a tidal wave of lawsuits against retailers under the Song-Beverly Credit Card Act of 1971.  However, the bill that was ultimately passed had been watered down significantly and now provides little relief as it only pertains to gas stations in limited settings.

* * *

UPDATE (August 29, 2011):  On August 25, 2011, the California Senate Judiciary Committee voted to pass Assembly Bill 1219, which will allow gas stations to collect zip codes from customers in certain instances.  Before doing so, however, the Committee amended the bill to include an urgency clause.  According to the amendment, the “immediate implementation of this statute will prevent potential disruption of gasoline station services throughout the state.”  If the bill is signed into law by the governor (or allowed to become law without a signature), the urgency clause will require that the bill take effect immediately.  In light of the Senate amendments, the bill will return to the Assembly for review.

* * *

The California legislature has once again watered down the bill that was proposed to counteract the Pineda decision, leaving little hope that retailers (or their insurers) will find any relief from the Pineda decision.

As we previously reported, shortly after the Pineda decision came down, California Assemblymember Henry T. Perea introduced Assembly Bill 1219, which would have allowed retailers to collect zip codes in certain instances — namely to prevent fraud and identity theft.  Before passing the bill to the Senate, the California Assembly amended the bill to limit it to transactions at motor fuel dispensers and payment islands with automated cashiers — Strike 1!

On June 22, 2011, Senator Noreen Evans, Chair of the Senate Judiciary Committee, recommended that the bill be scaled back even further.  The Pineda decision prompted the filing of more than 150 class action lawsuits.  As initially proposed, the bill was intended to clarify existing law and in doing so, would affect the pending litigation.  In her comments on the bill, Senator Evans expressed the Committee’s concern with bills that interfere with pending litigation.  According to Senator Evans, the Committee is concerned that such interference would: 1) result in a financial windfall to a private party; 2) prevent a court from deciding a case based on the laws in place at the time the cause of action accrued; or 3) allow the legislature to circumvent the judiciary.

Given these concerns, Senator Evans recommended that the bill be further amended to specifically state it it will only apply to actions filed on or after January 1, 2012 — Strike 2!

A hearing on the bill was scheduled for July 5, 2011.  The hearing, however, has been postponed by the Committee.

At this rate, it is hard to tell when (or if) this bill will ever be passed.  What is certain is that whatever version may ultimately be enacted will bear little resemblance to the bill initially proposed and will provide little, if any, assistance to retailers in California or their insurers.  Between the Pineda decision, the amendments to this bill and the Pineda-like suit recently filed in Massachusetts, 2011 is proving to be a tough year for retailers.

(Originally posted July 14, 2011)