Protection From Disclosure Of Personal Identification Information With Use Of Credit Card Extends To Cardholders Who Use Personal Credit Cards For Business Purposes

In Archer v. United Rentals, Inc., (— Cal.Rptr.3d —-, Cal.App. 2 Dist., June 13, 2011), a court of appeal considered whether the protection from disclosure of personal identification information provided by the Song-Beverly Credit Card Act of 1971 extends to the use of a business credit card or the use of a personal credit card for business purposes. The court of appeal held the protection of personal identification information does not extend to the use of a business credit card but does extend to the use of a personal credit card for business purposes.

Facts

Two individuals brought a lawsuit against United Rentals, Inc., and United Rentals Northwest, Inc. (collectively, “United Rentals”) alleging that United Rentals collected their personal identification information as a condition to accepting their credit card payments in violation of the Song-Beverly Credit Card Act of 1971 (“SBCCA”). On May 14, 2003, Vincent Archer (“Archer”) purchased a five-gallon propane tank for his backyard barbecue at a Canoga Park store owned by United Rentals. As a condition to accepting Archer’s credit card payment, United Rentals “requested personal identification information, including his residential address, city, and ZIP code, and recorded the information on the sales invoice and in defendants’ computer database.” On May 18, 2003, Alistair Cochran (“Cochran”) purchased a five-gallon propane tank for his backyard barbecue at United Rentals’ West Los Angeles store. As a condition to accepting Archer’s credit card as payment, United Rentals “requested his driver’s license, which contained personal identification information, including his name and residence address” and “recorded the information on the invoice and in [United Rentals’] computer database.”

Archer and Cochran brought a lawsuit against United Rentals on behalf of themselves and a class of persons similarly situated seeking monetary recovery under the SBCCA and the Consumer Legal Remedies Act (“CLRA”) and on behalf of the class, they sought injunctive relief under the Unfair Competition Law (“UCL”). The trial court granted the motion for class certification as to the UCL claims, but denied the motion as to the SBCCA and CLRA claims.

The court found the SBCCA provides no protection for consumers who use business credit cards, even if they are issued in the consumer’s name. The court also found “the SBCCA provides privacy protection for a consumer who uses a credit card ‘occasionally’ for a business purpose but no protection where the consumer card is used ‘primarily’ for business purposes.” Because not all transactions are protected, the court reasoned class certification was not proper as to the SBCCA and CLRA claims. The trial court, however, did award Archer and Cochran $250 each for their individual claims pursuant to the SBCCA and the CLRA.

Decision

The court of appeal first held that Archer and Cochran have no standing to prosecute UCL class claims. In order to establish standing to prosecute their UCL class claims for injunctive relief, Archer and Cochran were required to show “they have ‘suffered injury in fact and [have] lost money or property.’” The court found Archer and Cochran failed to make the required showing of loss of money or property. Archer and Cochran claim the unfair business practice in which United Rentals engaged was “the unlawful collection and recordation of their personal identification information.” They claim this unlawful collection and recordation of information was “an invasion of their right of privacy, which, they maintain, constitutes an ‘injury in fact.’” The court found Archer and Cochran failed to show how this violation of privacy “translates into a loss of money or property.’” The court held “the absence of ‘lost money or property’ is fatal to [their] UCL class claim for injunctive relief.”

Archer and Cochran pleaded the CLRA claim simply as “an alternative legal theory based on the same alleged SBCAA violations.” Therefore, the court of appeal only addressed the propriety of the lower court’s ruling on the CLRA class claim in the context of its discussion of the class claim for the SBCCA violations.

Civil Code section 1747.08, which is part of the SBCCA, provides, in part, “no person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business” may “[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, firm, partnership, association, or corporation accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.” Section 1747.08 provides that any person who violates this provision shall be subject to a civil penalty not to exceed $250 for the first violation and $1,000 for each subsequent violation. The SBCCA defines “personal identification information” as “information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to the cardholder’s address and telephone number.”

The term “cardholder” is defined as “‘a natural person to whom a credit card is issued for consumer credit purposes, or a natural person who has agreed with the card issuer to pay consumer credit obligations arising from the issuance of a credit card to another natural person.’” Civil Code section 1747.02, subdivision (d) provides, “‘For purposes of Sections 1747.05, 1747.10, and 1747.20, the term includes any person to whom a credit card is issued for any purpose, including business, commercial, or agricultural use, or a person who has agreed with the card issuer to pay obligations arising from the issuance of that credit card to another person.’” The court determined a plain reading of subdivision (d) leads it to “conclude that a credit card issued for business purposes, namely, a business credit card, is distinct from a credit card issued for consumer purposes, namely, a personal credit card.” The court found the SBCCA’s definition of the term cardholder “is restricted to ‘a natural person to whom a credit card is issued for consumer credit purposes’ in all instances except for three provisions—sections 1747.05, 1747.10, and 1747.20—in which case the definition is expanded to include ‘any person,’ not just ‘a natural person,’ and where the ‘credit card is issued for any purpose, including business.’”

Section 1747.08 is not listed in section 1747.02, subdivision (d), as one of the exceptions to which the expanded definition of cardholder applies. Therefore, the court held “that section 1747.08 does not apply to credit cards issued for business purposes.” However, the court held “that the privacy protection of section 1747.08 applies to – a natural person to whom a credit card is issued for consumer credit purposes . . . without regard to the actual purpose for which the card is used, namely, business or otherwise.”

The court of appeal reversed the decision of the trial court denying class certification of the SBCCA and CLRA causes of action. The court of appeal remanded the case “for the trial court to conduct further proceedings to determine whether a class of personal credit card holders could be ascertained without regard to the purpose for which the personal credit card was used in a particular transaction.”

Questions

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