More Retailers Facing Zip Code Lawsuits

We’ve reported before on the ‘Zip Code Wars’ heating up between retailers and consumers, and the increasing number of companies facing legal challenges over the practice of asking for customer’s postal codes. In short, certain retailers require customers to share their zip code when making purchases using a credit card, though credit card companies themselves do not require this.

No person, corporation or other business entity shall require that a credit card holder write personal identification information.

Instead, the zip codes are requested for their marketing potential. With your zip code and your name a retailer may be able to target your address with appropriate marketing materials.

Whether it’s illegal or not for companies to require personal information when an individual uses a credit card depends on the state. Massachusetts and California consumers have previously launched class action lawsuits against retailers who required customers to share their zip codes, arguing that zip codes should be considered personal information, and therefore illegal for retailers to request.

One of the problems customers face is that while you’re free to refuse the request for your zip code, stores’ systems may be set up in such a way that credit card transactions cannot be processed without the information. Faced with a choice between not being able to make their purchases and sharing their zip code, many consumers simply bite the bullet and hand over their details.

Some, however, are fighting back.

Three different retailers have been hit with separate class action lawsuits this month over allegations that they require customers who use credit cards to share their zip codes. Lowe’s, Payless, and PetSmart are all accused of violating Massachusetts law, with plaintiffs claiming that they were required to give zip codes when using credit cards – information that, crucially, the state’s Supreme Court ruled last March counts as personal information.

Plaintiffs in the Payless lawsuit, Erin Alberts, Timothy Alberts and Michael Pietrantonio, allege that they were unable to complete their credit card transactions at Massachusetts branches of the shoe store without supplying their zip codes. They also allege that the information was retained and sold to third parties, resulting in unsolicited marketing materials being delivered to their addresses. The lawsuit alleges violations under the Massachusetts Unfair Trade Practices Act. The Act states that “no person, firm, partnership, corporation or other business entity that accepts a credit card for a business transaction shall write, cause to be written or require that a credit card holder write personal identification information, not required by the credit card issuer, on the credit card transaction form.’

Plaintiffs in the Payless case are reportedly seeking compensation for a class membership made up of all Massachusetts residents who were required to share their zip code when paying by credit card. They also want the companies to stop using zip codes to send targeted advertising materials.

Where does the line fall between annoying request and illegal activity? The courts will now have to decide, and the case continues.