Litigation: Courts take a broad view of protected personal identification information

Massachusetts district court joins California Supreme Court in skepticism over retail store practices

In a decision that may herald heightened litigation risks for certain businesses that collect consumer information, the U.S. District Court for the District of Massachusetts just joined the California State Supreme Court in taking a broad view of what constitutes “personal identification information” (PII) and an arguably dim view of the common marketing practice of “reverse data mining.” See Tyler v. Michaels Stores, Inc.

Under the statutes of certain states, most notably the Song-Beverly Credit Card Act in California, businesses are generally prohibited, subject to certain exceptions, from requesting or requiring that a customer provide PII that is then recorded by the business. Last year, in a decision that spawned literally hundreds of class actions against national retailers doing business in California, the California Supreme Court in Pineda v. Williams-Sonoma held that under the Song-Beverly Act, ZIP codes constituted PII.

Michaels moved to dismiss. In granting the motion, the court employed different reasoning than the Pineda court, but reached the same conclusion that ZIP codes constitute PII. According to the Michaels court, “[b]ecause in some circumstances the credit card issuer may require the ZIP code to authorize a transfer of funds, as a debit card issuer requires a PIN number, both a ZIP code and a PIN number may be used fraudulently to assume the identity of the card holder. Just as a merchant who records a PIN number in the transaction form puts the customer at risk of identity fraud, so too does a merchant who records a ZIP code in the transaction form.” The court held that the plaintiff had alleged a per se violation of the statute.

The court nonetheless granted the motion, holding that the plaintiff had failed to claim actual damages, because she had alleged only receiving unwanted mail, not that the information collected was sold or otherwise exposed her to an increased risk of fraud.

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Donna Wilson

Donna L. Wilson is a partner in the Los Angeles office of BuckleySandler LLP where she leads the firm’s West Coast litigation practice, with a...

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