Privacy Debate Over Redbox Zip Code Collection

There doesn’t seem to be much chance of an appellate rescue for the privacy class action against Redbox, the DVD-rental self-service kiosk operation, based on Wednesday’s oral arguments before the 9th U.S. Circuit Court of Appeals.

Chief Judge Alex Kozinski did express some interest in shipping the question of whether Redbox violated California state law to the Supreme Court in San Francisco.

“Are you looking for a trip to San Francisco?” Kozinski asked Redbox lawyer Eric Miller during arguments in Pasadena that were live-streamed over the internet.

Redbox operates self-service DVD kiosks throughout the U.S., which allows customers to rent or buy a movie using a touch-screen selection process and paying by credit card.  Customers must enter their ZIP code and email associated with the credit card to prevent fraud.

Former Los Angeles federal judge Jacqueline Nguyen, now a member of the 9th Circuit, dismissed the class action in 2012, rejecting the allegation that Redbox violated the Song-Beverly Credit Card Act by requesting ZIP codes and emails with credit card transactions.  The law was intended to limit access to individuals’ personal address and phone number information by store clerks and businesses.

“The court found the Act does not apply to online credit card transactions, it also does not apply to credit card transactions at unmanned, automated Redbox kiosks,” state the minutes of Nguyen’s decision.

The class action was filed following the state Supreme Court’s decision, which broadened the scope of the law to include ZIP codes as personal identification information that could not be collection in conjunction with a consumer credit card transaction.

Many brick-and-mortar retailers have been sued under the law, but whether it applies to Redbox, a purely automated, self-service system, has never been decided prior to Nguyen’s decision.

Robin Workman, representing consumers, argued that Redbox is using the information for marketing purposes.  But she was hit with a barrage of questions from skeptical judges.

“This is about where to put the Redboxes so consumers can use them; I fail to see how that infringes your clients’ privacy,” said Judge Richard Clifton.

And Judge Stephen Reinhardt jumped in, “It would hardly offend me as a consumer if they knew my ZIP code.  What’s the purpose [of the Legislature] to cover this particular type of action?”

Then Kozinski asked, “Why not send this to the California Supreme Court and let them sort it out?”

They spent some time discussing whether the court could determine the plain reading of the statutory language and understand from the legislative history whether the lawmakers intended the limits on retaining personal information to cover self-service kiosks.

Kozinski pointed out that while gas station pumps asking for ZIP codes has been around a long time, vending machines are a fairly new, but growing phenomenon.

In the district court decision, Nguyen found there are unique fraud concerns presented by online and unattended kiosk transactions and thus collection of personal identification data may be the only way to prevent credit card fraud.

The panel took the case under submission and will issue a ruling in the coming weeks.

Case: Sinibaldi v. Redbox Automated Retail, No. 12-55234


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