California Senate Passes Privacy Bill Restricting E-tailers' Collection Of Customer Data

In the wake of recent highly publicized consumer data breaches, the California Senate has passed S.B. 383 (the "Bill"), a bill that restricts the personal identification information that retailers can collect from consumers making online credit card purchases of downloadable content. The Bill provides for penalties of $250 for an initial violation and $1,000 for subsequent violations, which can become significant if aggregated in a class action.

Decades ago, the California Legislature enacted the Song-Beverly Credit Card Act of 1971 ("Song-Beverly" or the "Act") to govern the issuance and use of credit cards. In 1990, the Act was amended to specifically address the misuse of personal identification information by retailers for marketing purposes. The amended Song-Beverly forbid retailers from requesting and recording a customer's personal identification information during a credit card transaction.