Ninth Circuit Dismisses Redbox Class Action, Allows Zip Code Collection

On June 6, the U.S. Court of Appeals for the Ninth Circuit dismissed a proposed class action suit against Redbox, ruling that the company’s zip code collection practices fall within an exception to California’s Song-Beverly Credit Card Act of 1971. California’s Song-Beverly Credit Card Act (“Song-Beverly”) prohibits retailers from collecting personal identification information, such as telephone numbers, addresses, and ZIP codes, in connection with credit card transactions. The California legislature enacted the Act primarily to protect the privacy of consumers. There is, however, an exception to the Act that allows for such information to be collected when the credit card is being used as a deposit to secure payment in the event of “default, loss, damage, or other similar occurrence.” During the rental transaction, Redbox customers are charged an initial fee of $1 for one day’s rental. When the rental is returned, Redbox then charges the customer’s previously recorded credit or debit card for each additional day the customer kept the rental, up to a maximum fee of $25. The fee is automatically processed on the credit card on file.