By Reed Fujii

Record Staff Writer

July 20, 2006 6:00 AM

STOCKTON - Dillard's department store customers who used a non-Dillard's credit card at the Stockton store and were asked for their telephone number may soon be eligible for a $20 gift card under a proposed class-action lawsuit settlement.

It is one of a series of cases that a Sacramento plaintiff's attorney said involved merchants who illegally collected such phone numbers and put their customers at risk for identity theft.

California law prohibits merchants from requesting and recording personal identification information from customers, or using forms with blank spaces for that information, in credit card transactions, said attorney James M. Lindsay of the firm Lindsay & Stonebarger.

"When we first began investigating this problem, we were shocked at how pervasive it was," he said.

San Joaquin County Superior Court Judge Bob McNatt gave preliminary approval June 29 to the class-action settlement with Dillard's.

Stanislaus County Superior Court gave final approval July 7 to a similar settlement involving The Children's Place, a children's clothing chain. Lindsay & Stonebarger previously received settlements with Best Buy, The Container Store and American Golf Corp.

"What all cases had in common was this: The business had no legal authority to ask for such information and, by compiling that information - and in some cases storing it on forms containing full 16-digit credit card numbers, card type and expiration date, along with the customer's name - they put their customers at risk," Lindsay said.

An attorney with the Los Angeles office of Bryan Cave LLP, which represents Dillard's, declined to comment Wednesday on the lawsuit. A reporter's calls to Dillard's corporate headquarters in Little Rock, Ark., were not returned Wednesday afternoon.

The Dillard's case arose July 5, 2005, when Stockton resident April Castaneda swiped her credit card through the store's card reader and was prompted to punch in her telephone number.

"Dillard's was utilizing that information, the telephone number, to find your home address ... so that they could then market you products or do whatever they wanted to do with that information," Lindsay said. "In California, that's not legal."

He believes up to 250,000 Dillard's customers, who shopped at stores in Palmdale and El Centro as well as Stockton, may be covered by the class-action suit.

Notices of the proposed settlement have been mailed to nearly 120,000 people who could be identified.

They include customers who used a non-Dillard's credit card at one of those stores between July 4, 2004, and July 8, 2005. Such customers may get more information, request a copy of the settlement notice or seek to be excluded from the settlement by contacting Dillard's at (800) 345-5273 or by sending an e-mail containing their mailing address to claimform@dillards.com

Claims for a $20 gift card may not be filed until after the settlement is made final, perhaps next month, Lindsay said.