Digital Receipts, Credit Cards and California

When it comes to credit card transactions, complying with state and federal privacy laws can be a challenge. And, in California, it can be a nightmare. That’s because California’s Song-Beverly Credit Card Act restricts businesses from requiring—or simply requesting—personal information, when the customer pays with a credit card.

The question on everyone’s mind is what does “personal information” encompass?

According to the California Legislature, personal identification information includes “information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the card holder’s address and telephone number.”

Nordstrom is the first prominent retailer to have an issue with the Act. The 2013 lawsuit, Capp v. Nordstrom, Inc., alleged that the retailer asked a customer for his e-mail address in order to send a digital receipt, and then added that customer to its marketing list.

In its overview of POS data collection, PointofSale.com summarized the court’s decision: The court ruled that an email address is personal information, but noted that future factual development was necessary to determine whether sending an electronic receipt qualifies for the “special purpose” exception under the California statute.

The grey area lies in the Special Purpose Exceptions. For example, some federal courts have concluded that information collected for a loyalty or rewards program is an exception to the Song-Beverly Act.

Regardless, we know that as the first case to address a growing retail practice, Capp v. Nordstrom Inc. has the potential to set precedent in this area—as will the case against Forever 21, who finds itself facing a similar lawsuit.

For all other retailers, there is a hope: At least one law firm is offering a solution to this problem. Womble Carlyle, a North Carolina-based law firm suggests asking for the e-mail information after the transaction is processed, and the customer has the receipt in hand. This leaves no doubt that that the e-mail address is not required for the transaction itself.

We will keep monitoring the courts and bring you up-to-date news.