ZIP Code Ruling Leads to Billion-Dollar Lawsuits

California Supreme Court rules that retailers cannot ask customers to provide ZIP codes when making purchases with a credit card.

A unanimous California Supreme Court held Feb. 10 that retailers who ask their customers to provide ZIP codes when making purchases with a credit card are violating California law. The court ruled in Pineda v. Williams-Sonoma Stores, Inc. that ZIP codes are a type of “personal identification information” (PII) that California’s Song-Beverly Credit Card Act prohibits retailers from collecting. 

In the wake of the Pineda decision, the plaintiffs bar has filed more than 125 putative class action suits in California courts, according to Morrison & Foerster Partner David McDowell. Defendants include Wal-Mart, Best Buy, Coach, Nordstrom, Target and Macy’s, among other retailers.

Retailers may collect personal information for reasons other than marketing, and the outcome of the pending class actions could depend on how the defendants used the ZIP code information. 

“If the business collected the information to undertake fraud detection, thereby offering better pricing to consumers, and did nothing to exploit the information for financial gain, I would certainly expect that information to be important to a judge,” says McDowell.

Michael Kozubek

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