Privacy Lawyer & Attorney : Proskauer Rose Law Firm : CAN-SPAM, FCRA, FACTA

On June 26, 2008, in Absher v. Autozone, Inc. et al. (2008), the California Court of Appeal in the Second Appellate District, confirmed that California’s Song-Beverly Credit Card Act of 1971, California Civil Code § 1747.08 (hereinafter, the “Act”) does not apply to a refund for the return of merchandise purchased by credit card.

Under the Act, merchants who accept credit cards as a form of payment may not request or require as a condition to accepting payment by credit card the personal information of a cardholder, which information the merchant causes to be recorded upon a credit card transaction form or otherwise (such as a receipt, etc.). 

In the Absher case, plaintiff Dave Absher (who, when returning merchandise purchased from Autozone, was required to put his name and telephone number on a voucher in order to process the refund), claimed that Autozone’s practices violated the Act. In the trial court, Autozone moved for summary judgment arguing that the statute does not apply to return transactions. The trial court granted Autozone’s motion and the Court of Appeal affirmed the dismissal of plaintiff’s cause of action, holding that the Act’s restrictions are limited to initial purchase transactions and not return transactions. In particular, the court held that the legislative history behind the Act, as well as a policy interest in providing retailers with a reasonable means to safeguard against potential abuses in connection with the return of merchandise, weighed in favor of its interpretation that the Act does not apply where a merchant’s request for personal information is in connection with a refund for the return of merchandise purchased by credit card.

The outcome in this most recent case is not surprising given the court’s other recent decision, on May 22, 2008, which case involved The TJX Companies, Inc., T.J. Maxx of CA, LLC, Marshalls of CA, LLC, Marshalls of MA, Inc. and Marmaxx (collectively, “TJX”), and in which case the California Court of Appeal also narrowed the scope of claims available under the Act in ruling that the statute does not apply to merchandise returns.

Kathryn Conroy, a Summer Associated in Proskauer’s Los Angeles office, contributed to this post.

As discussed here last year , the Supreme Court ruled in Safeco Insurance Co. of America, et al. v. Burr, et al that reckless disregard of the requirements of FCRA can constitute willful violation.  The court left open the question of whether it was objectively reasonable for merchants to continue to print expiration dates on customer receipts after the date for compliance with FACTA had passed. 

In response to the widespread FACTA litigation, Congress amended FCRA to prevent certain putative consumer class actions. The “Credit and Debit Card Receipt Clarification Act of 2007” (“the Act”), signed by President Bush on June 3, amends FCRA to specify that printing expiration dates on receipts where the account number is otherwise properly truncated does not in and of itself constitute willful noncompliance.  Consumers will not be entitled to pursue suits claiming willful violation, and thus not be entitled to seek statutory damages, merely because an expiration date is printed on an otherwise compliant receipt.  The Act does not affect negligence suits filed by consumers who can show actual harm as a result of the printing of the expiration date, or suits against merchants who are otherwise not in compliance with FACTA’s requirements.  The Act applies to any company that printed an expiration date on any receipt provided to a consumer cardholder at a point of sale or transaction between December 4, 2004, and the date of the enactment. 

Proskauer summer associate Nicole Ross contributed to this post.