Stores Can't Ask For Customer ZIP Codes: CA Supreme Court

The class-action case was brought by Jessica Pineda against Williams-Sonoma.

By Scott Weber
|  Friday, Feb 11, 2011  |  Updated 8:23 AM PDT
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Customers who use their credit cards at stores can no longer be asked for their ZIP code, the California Supreme Court ruled Thursday.

In a unanimous decision, the state's high court concluded that person's personal information includes his or her ZIP code and that California's Credit Card  Act prohibits a merchant from asking for it.

The class-action case was brought by Jessica Pineda against Williams-Sonoma.

Pineda alleged that while she was paying for a purchase with her credit card, the cashier asked for her zip code. Pineda thought it was needed to complete the purchase but later learned that Williams-Sonoma used special software to match her name and ZIP code to locate her home address for marketing purposes, according to the ruling.  

Pineda sued the retailer saying they were violating the state's Credit Card Act.

In the opinion, Justice Carlos R. Moreno wrote that the legislative history of the Credit Card Act demonstrated the Legislature "intended to provide robust consumer protections by prohibiting retailers from soliciting and recording information about the cardholder that is unnecessary to the credit card transaction."  

ZIP codes can still be collected under certain circumstances -- at gas station pumps and for transactions that involve shipping. Gas stations use the ZIP codes for security reasons at swipe-and-pay pumps.

Gene Stonebarger, Pineda's attorney, said gas stations that require ZIP codes be entered at the pump are exempt because the gas station "doesn't record the transaction.'' Stonebarger said that information is sent directly to the banks and credit card companies as a security measure and those transactions won't be affected.

The information also can be requested when a card is used as a deposit or for a cash advance.

An attorney for one national chain said the ruling would likely lead to additional lawsuits.

"It's a terrible decision," said Bill Dombrowski, president of the California Retailers Association, which filed a friend-of-the-court brief on William-Sonoma's side.

Dombrowski said it's too soon to know how disruptive the ruling will be to businesses that routinely require patrons to supply their ZIP codes to authorize a transaction.

"It's fraud prevention." said Dombrowski, who added that not all California merchants make the request.

William-Sonoma and many other merchants said they ask for ZIP codes, in part, as a security precaution.

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