Bill Targets Store Discount Clubs

To California grocers, Sen. Debra Bowen’s controversial bill to give supermarket discount club members a new right to privacy from electronic intrusion is a fix in search of a problem.

But as the Marina del Rey Democrat sees it, personal privacy is an endangered commodity, and card holders should be able to choose whether to give up some privacy to buy groceries at cheaper prices.

Bowen’s bill would require grocery stores to tell millions of current discount club members and applicants that they can block the sharing of information about their personal shopping habits with outside marketers.

Bowen, a legislative expert on computer technology, said she is concerned about “what happens to this data and how it gets used if it is transferred without restriction.”

Based on grocery purchasing data, Bowen said, employers might decide whom to hire or landlords might decide who should be their tenants. Such decisions might involve “how many cigarettes or six-packs of beer or how many rolls of Tums” the shopper had purchased, she said.

In an interview, Bowen conceded that she knew of no such abuses. But she said her bill is a proactive plan intended to prevent situations such as the recently disclosed practice of some banks sharing customer information with other enterprises, including checking account numbers.

“Once your personal buying habits are put up for sale and the information gets out into the public, it becomes very difficult to put that genie back in the bottle,” Bowen told the Assembly Consumer Protection Committee last week.

Her bill, SB 417, narrowly passed the Senate in April and is fighting for survival in the Assembly committee, where it is opposed by the politically influential California Grocers Assn. and the California Retailers Assn.

Representatives of the two organizations say they support safeguarding the privacy of customers, but they contend that a new law isn’t needed because consumers can now “opt out” if they wish.

“This [bill] is almost a cure for which there is no known disease,” Bruce Young, a former legislator who represents retailers, told committee members.

He denied that grocers sell individual information to outside marketers. “All they do is aggregate it so they can say to General Mills, ‘We have 300,000 people a week who buy Cheerios and this is worth doing a special on,’ ” Young said.

But Bowen noted that supermarkets typically do not advise consumers that they can block the collecting and sharing of personal information for outside purposes. She said supermarkets technically do not own their customers’ data, but they do provide the information under contract to outside marketers.

In contrast, credit card and video rental companies are prohibited from sharing customer data without a consumer’s consent.

With the swipe of the club card, grocery purchases are electronically matched to the member’s name, address, telephone number and, in some cases, driver’s license and Social Security numbers.

The information is used for legitimate grocery business purposes, Bowen said, and is sold to outside marketing companies where it is customized for reuse in huge databanks unrelated to groceries.

Bowen testified that major California grocery chains have contracted with a Florida-based company, Catalina Marketing Corp., which, she said, is in the business of manipulating, integrating and “selling data on individual shoppers.”

“We want [consumers] to have notice, but we want to find a practical way to provide them notice,” Stanley Van Vleck of the Grocers Assn. told the committee.

The bill would require that next January and February, grocery sellers contact club members directly by first-class letter, a brochure handed out at the check stand, or a printed message on the cash register receipt. The notice would advise shoppers that they can stop stores from sharing personal information.

Grocers and retailers complained that the mailing costs would be prohibitive, a point Bowen conceded. They also said more than 100 million brochures would have to be printed because the documents would be handed to repeat customers as they shopped during the two-month period.

There is not enough space on cash register receipts to print a message adequately explaining the proposed new privacy rights, they said.

Instead, the retailers proposed that the consumer rights be spelled out on Internet Web sites, printed on signs at the supermarket or advertised in newspapers. Bowen rejected them all, saying they would fall short of reaching customers directly.

Cash register receipts typically would have only enough space for a message of a few words, said Van Vleck of the grocers association. He warned against creating a sales receipt that would measure about “two feet long” and whose length would discourage customers from reading it.

Instead, the grocers and retailers suggested a receipt message that would tell shoppers: “You have new rights. If you want to exercise these rights, please speak with (the manager, the desk, the retailer, the clerk).”

“Just telling people that they have new rights is not likely to get many people to understand what rights they have,” Bowen responded.

After nearly an hour of arguments, members of the committee grew restless with the failure of the two sides to compromise on how to notify customers.

Chairwoman Susan Davis (D-San Diego) ordered Bowen and her opponents to try again to reach an agreement, and set a second hearing for June 29, when a vote may be taken.