SACRAMENTO, Calif. -- The nation's first legislation regulating how supermarkets can use information collected from frequent shopper cards is expected to be signed into law by California Gov. Gray Davis within the next few days.
A similar law has been proposed in the Wisconsin Legislature.
The Supermarket Club Card Disclosure Act of 1999 has already passed both houses of the California Legislature and, once it's signed into law, would take effect July 1, 2000.
The bill prohibits club card issuers from requiring an applicant to provide a driver's license number or Social Security number as a condition for obtaining the card and also prohibits issuers from selling or sharing cardholders' names, addresses, phone numbers or personal information concerning shopping patterns, spending history or behavioral characteristics.
The bill excludes membership clubs that charge an annual fee for cards or require cards to make purchases in the store.
Any violation of the prospective law will be punishable by a $2,500 fine for each customer whose privacy is breached.
Peter Larkin, president of the California Grocers Association, said his group supported the bill. "Our member companies do not sell or share this information, and this bill will assure the public that such a practice will never occur," he said.
Carlene Thissen, president of Retail Systems Consulting, Naples, Fla., which tracks frequent shopper programs, told SN said she's not aware of any supermarkets that share frequent shopper information. "Everyone is very conscious and aware of the potential problems of doing so," she said last week.
"The only thing retailers can do is send offers to consumers of behalf of specific manufacturers, but without ever giving the manufacturers any names or addresses."
According to Thissen, the Wisconsin proposal was motivated by actions of the State Department of Transportation and banks, which sold names and addresses to direct marketers.
The proposed legislation in Wisconsin would prohibit a business that requests personally identifiable information from a customer from releasing the information unless the application contains a disclosure about whom the information may be released to, the type of information that may be released and the purposes for which it may be released.
Violators would be fined up to $100 per violation under the Wisconsin proposal.
According to a newsletter from Thissen's company, a spokesman for the Wisconsin Grocers Association said no grocery stores in the state sell lists of customers during testimony before a Wisconsin legislative committee on privacy, electronic commerce and financial institutions earlier this month.
The newsletter also quoted him as saying most grocers allow customers to check a box on the application to opt out of receiving special offers and said the association would like to see the proposed bill amended to exempt businesses that provide such an opportunity to consumers.
If that bill is passed, Wisconsin retailers would have to alter their application forms and notify existing cardholders, which could cost grocers more than $1.5 million, the association spokesman was quoted as saying.
A California bill proposed earlier this year would also have required an opt-out provision for consumers, industry sources told SN. However, with more than 30 million cardholders in the state, legislators recognized the cost burden of notifying all of them and allowed the bill to die in committee, the sources said.