Data is hugely important in running a successful restaurant
today. Targeted email marketing campaigns can be an invaluable
marketing tool. But trying to collect too much data can land your
bistro in hot water. California has specific laws limiting what
data can and cannot be collected – restaurants need to be
aware of these limitations or it can be very costly.
For example, California enacted the Song-Beverly Credit Card Act in order to
promote consumer protection. The Act's purpose is to protect
people's personal privacy and personal identification
information during credit card transactions. California courts have
found the Act's purpose is to protect against the misuse of
personal identification information for, among other things,
"marketing purposes" – which is exactly why
businesses want this data. They want to email you their weekly
specials and happy hour deals!
The statute specifically prohibits merchants from requesting or
requiring personal identification information as a condition of
using a credit card. The key language of the Act is as follows:
... [no] corporation that accepts credit cards for the
transaction of business shall ... [r]equest, or require as a
condition to accepting the credit card ... personal identification
Courts have found that "personal identification
information" includes a customer's phone number,
addresses, and even email addresses. In other words, if a
restaurant or diner asks for a customer's email, phone number,
or ZIP code during the credit card payment process, it could open
the restaurant to liability under the Act.
And liability is potentially huge – $250 for the first
violation and $1,000 per each subsequent violation. That means if a
restaurant requests a mere 100 email addresses a day in violation
of the Act, within a couple of weeks the business could be facing
over a million dollars in potential liability – a very
expensive electronic mailing list.
The other day, I ate lunch at a fast casual restaurant chain.
Sure enough, in the middle of the credit card transaction came a
request for my email address. Businesses need to be very careful
about how they collect, store, monitor, and use customer data. The
rules are tricky, and missteps can lead to disaster.
Disclaimer:This Alert has been
prepared and published for informational purposes only and is not
offered, nor should be construed, as legal advice. For more
information, please see the firm's
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Brattle Principal Lisa Cameron, Academic Advisors Professor Greg Allenby and Professor Peter E. Rossi, and Brattle Senior Research Analyst Yikang Li recently co-authored an article for BNA about fundamental economic errors in approaches to damages in recent product mislabeling cases.
The Consumer Financial Protection Bureau recently sued three law firms in the United States District Court for the Central District of California for collecting advance fees from consumers seeking debt relief.
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