San Joaquin County Superior Court Judge Lauren Thomasson has ordered class action certification in a consumer protection lawsuit filed against Save Mart Supermarkets (S-Mart) in which as many as 300,000 of its customers were needlessly put at substantial risk for credit card fraud and identity theft.

The suit, filed by James Lindsay and Gene Stonebarger of the Sacramento law firm Lindsay & Stonebarger, notes that Save Mart presented its credit card customers with pre-printed forms that requested their telephone numbers. That is a violation of state consumer protection law (California Civil Code section 1747.08). Worse, the pre-printed forms also contained the full 16-digit account number of the credit card, the account type and the expiration date. During discovery, it was determined that Save Mart violated the law on more than 6 million transactions – just in the one year preceding the lawsuit.

But what makes the Save Mart case especially troubling is that the pre-printed forms, which contained this sensitive personal and private financial information, were simply stored in a warehouse in Merced, where numerous employees had access to the information. When representatives of Lindsay & Stonebarger visited the warehouse to inspect the documents, the lock on the warehouse door was broken.

“This is the most egregious scenario we have come across,’’ said attorney James Lindsay of Lindsay & Stonebarger. “Thousands of Save Mart employees have had access to enough information to cause significant financial damage to customers. It is clear that Save Mart knew it was improper to collect this information but continued to do so anyway. The full extent of the damage to customers as a result of this practice is unclear.’’

Lindsay & Stonebarger, on behalf of plaintiffs, filed suit against Save Mart on July 21, 2004. Since then, the law firm has filed similar lawsuits against numerous other businesses, including Best Buy, The Children’s Place, The Container Store, Ben Bridge Jeweler, Carter’s and Dillard’s. All of those defendants have since settled, resulting in various gift cards and discounts to customers.

“We feel these are important victories for California consumers,’’ Lindsay said. “When we first began investigating this problem, we were shocked at how pervasive it was.’’

While others have settled, Save Mart has refused at all opportunities to take any responsibility for its illegal actions. They went so far as to recently request the court to rule that this lawsuit could not force Save Mart to refrain from breaking the law. The court, of course, disagreed.

In her order, Judge Thomasson has certified both a class and subclass. The class consists of customers who were presented with the illegal form but did not respond. The subclass consists of customers who actually provided the information.

The next step in the process is to provide formal notice to the class and subclass, which likely will come in the form of multiple in-store postings. A trial date has not yet been scheduled.

Consumers, including plaintiffs in these particular cases, are concerned for a variety of reasons with being asked to provide personal information.  Many feel it is a privacy issue that ultimately leads to unsolicited telemarketing calls and direct mail.  But the real concern is that collecting such information only increases the likelihood that it may fall into the wrong hands.  Those fears are well founded.

The Federal Trade Commission notes that identity theft is far and away the largest concern of consumers who file complaints with the agency, representing 37% of all complaints -- more than three times as many complaints as internet auctions, which ranked second.  A study by the Identity Theft Resource Center, which in 2004 received a Department of Justice National Crime Victims Service Award, showed that identity theft costs victims on average $1,400 in out of pocket costs -- a number that is rising -- as well as 600 hours to correct the problem.  The same study established that employees of businesses that had obtained the person’s information were the most frequent cause of the identity theft where the cause could be identified.  Studies done in July 2003 by Gartner Research and Harris Interactive estimate that 7 million people had fallen prey to identity theft in the prior 12 months.

Hannah-Beth Jackson, former Assemblymember and President of California’s premier on-line progressive website, Speak Out California, referred to Lindsay & Stonebarger’s successful prosecution of these cases as, “an important victory for California’s consumers and a clear vindication of the people’s right to have their personal and financial information remain private.  No business should be able to use this information without a consumer’s knowledge and clear and affirmative permission.  It’s time that the rights of consumers are respected and that laws protecting personal information are complied with by anyone doing business in this state.’’