Zip Code War Class Action Lawsuits In CA, MA

It might be something you’re used to – so much that you don’t even think before you do it. In stores, as part of customer surveys, and especially when using a credit card, giving out your zip code has become a common part of shopping. Is it always legal, though?

For retailers, the temptation to collect zip codes can be rewarding.

That’s the question being considered in Massachusetts at the moment after a class action was filed against Guitar Center, a musical instrument retailer, for supposedly asking credit card users for their zip codes. The lawsuit alleges that this contravenes Mass. Gen Laws ch. 93§ 105(a) – which 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. Personal identification information shall include, but shall not be limited to, a credit card holder’s address or telephone number.”

It’s not the first MA class action about zips codes, either – a case last year against Michaels focused on the use of zip codes to send marketing materials. Plaintiffs alleged that they had thought requested zip codes were required for credit card purchases, when in reality the credit card companies themselves need no such information, and the retailer was using zip codes to direct marketing materials. The case was eventually dismissed by the U.S. District Court for the District of Massachusetts on the grounds that no actual injury could be proven – but they did agree than zip codes constitute personal identification information and are protected under the law. They also agreed that identity theft is not required to argue a valid claim.

Essentially, in MA, your zip is your own and you do not have to share it.

In 2011, the California Supreme Court made a landmark ruling on Pineda v. Williams-Sonoma Stores, Inc. when they decided that retailers who ask for zip codes can be held liable for civil penalties reaching as high as $1000 per transaction. Again, the court ruled that zip codes qualify as personal information and therefore requiring customers to share them in order to complete a transaction broke the Song-Beverly Credit Card Act. For retailers, the temptation to collect zip codes can be rewarding. With a customer’s name and zip code combined, companies are able to identify your residence and then mail leaflets, sales offers and other marketing material. In CA, the high penalties aim to discourage this practice. Other states have yet to take meaningful steps.

Multiple class actions are now ongoing, including two in Massachusetts against Bed, Bath and Beyond, which again argue that unnecessary collection of zips – a requirement of the store alone, and not the credit card providers – and subsequent marketing have caused injury through misappropriation of economically valuable information and the receipt of unwanted material. Both those injuries are listed under a merchant’s violation of Mass. Gen Laws ch. 93§ 105(a). At the moment, though, retailers do continue the practice, often engineering their systems so that card purchases must have a zip before they can go through. Although you’re within your rights to refuse requests for your zip code, it may come at the expense of the transaction. It’s also important to remember than it’s not the cashier’s fault – these policies are often company-wide and can’t just be ignored.

In both the Guitar Center and the Bed, Bath and Beyond cases, plaintiffs are asking for treble damages and statutory damages of $25 per violation. It remains to be seen what the courts will say.