case law update

The Eighth Circuit: No Privacy Interest in the Magnetic Strip on Credit, Debit, and Gift Cards

The Eighth Circuit recently held that a defendant lacks a privacy interest in the information contained in the magnetic strip on credit, debit, or gift cards.

On June 20, 2014, Sergeant Michael Vance pulled over Mr. Eric-Arnaud Benjamin Briere DE L’Isle’s vehicle because DE L’Isle followed a tractor trailer too closely. When Sergeant Vance approached DE L’Isle’s vehicle, he smelled burnt marijuana.

Sergeant Vance deployed his canine, which signaled the presence of controlled substances inside DE L’Isle’s vehicle. DE L’Isle told Sergeant Vance that he cannot search the vehicle and a struggle pursued between DE L’Isle and Sergeant Vance. Sergeant Vance subsequently placed DE L’Isle in handcuffs and forced him into the police vehicle.

While no narcotics were found in DE L’Isle’s vehicle, Sergeant Vance and two other officers discovered a duffle bag in the trunk. The bag was filled with credit, debit, and gift cards. The officers seized the duffle bag and arrested DE L’Isle for assault and resisting arrest.

U.S. Secret Service agents obtained and scanned the seized cards. The agents discovered that the magnetic strips on the back of the cards either contained no account information or contained stolen American Express credit card information. Ten cards were American Express credit cards with DE L’Isle’s name on the front and no information in the magnetic strips. Other credit, debit and gift cards contained credit card information linked to the accounts of American Express customers in the magnetic strips of the cards.

DE L’Isle was charged with possession of fifteen or more counterfeit and unauthorized access devices to which he pled not guilty. He filed a motion to suppress any evidence discovered when the agents scanned the magnetic strips on the seized cards. DE L’Isle contended that the agents conducted the search of the information in the magnetic strips without a warrant, violating his Fourth Amendment right to be free from unreasonable search or seizure. The district court denied the motion to suppress and held that “reading the magnetic strip on the back of a credit, debit or gift card is not a ‘search’ for Fourth Amendment purposes.”

The jury returned a guilty verdict. DE L’Isle appealed the district court’s denial of his motion to suppress to the U.S. Court of Appeals for the Eighth Circuit. While DE L’Isle did not challenge the traffic stop or the seizure of the cards, he disputed the district court’s holding that he had no Fourth Amendment privacy interest in the information contained in the magnetic strips of the cards.

The court of appeals first determined that scanning the magnetic strips on the cards was not a physical intrusion into a protected area. According to the court, the magnetic strip on the back of a debit, credit, or gift card is an “external electronic storage device” that reflects the information listed on the front of the card. The information contained in the magnetic strip only differs from the information listed on the front of the card when the card is tampered with.

Next, the court of appeals concluded that DE L’Isle failed to show that he had a reasonable expectation of privacy under Katz v. United States, 389 U.S. 347361 (1967). Here, DE L’Isle certainly did not have a subjective expectation of privacy in the ten American Express credit cards because his name was listed on the front of them. He also did not have a subjective expectation of privacy in any of the other cards because the very purpose of credit, debit, and gift cards is to enable the holder of the card to transfer information to the seller. When the holder of a card uses it, he knowingly discloses the information to a third party. Therefore, as the holder of the cards, DE L’Isle could not claim a reasonable expectation of privacy in them.

The court also found that there was no objective expectation of privacy. Typically, any information found in the magnetic strips is identical to the information on the front of the card and in plain view. As such, society cannot accept that the holder of a card has an expectation of privacy in the magnetic strip reflecting this information. The fact that the ten American Express credit cards did not have information in the magnetic strips further supported the court of appeals’ conclusion. The court stated: “If society does not recognize a privacy interest in readily visible information, DE L’Isle certainly cannot assert a privacy interest in information that is nonexistent.” Regarding the other cards with different information in the magnetic strips than on the front of the cards, the court found that society is even less likely to recognize DE L’Isle’s expectation of privacy in magnetic strips that were re-encoded only to commit a crime.

The court of appeals left open the possibility, where there are facts different from DE L’Isle’s, that a court could reasonably find a legitimate privacy interest in the information contained in the magnetic strip of a credit, debit, or gift card. Here, there was no privacy interest warranting Fourth Amendment protections because all of the information in the magnetic strips should have been identical to the information in plain view on the front of the cards, but the cards were counterfeit.

Read the full case: United States v. DE L’Isle

 


This case law update was written by Michael J. Sgarlat, associate attorney, Shaw Bransford & Roth, PC.

For thirty years, Shaw Bransford & Roth P.C. has provided superior representation on a wide range of federal employment law issues, from representing federal employees nationwide in administrative investigations, disciplinary and performance actions, and Bivens lawsuits, to handling security clearance adjudications and employment discrimination cases.

Posted in Case Law Update

Tags: case law update, michael j sgarlat

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