Calif. Court: Merchants Can't Ask Patrons for ZIPs

by Mercator Advisory Group 0

The California Supreme Court, in a unanimous decision, struck down merchants’ ability to collect consumer ZIP codes at POS. This decision came in response to a lawsuit filed against Williams-Sonoma by Jessica Pineda after a sales associate asked for her ZIP code. Pineda said the practice violated credit card law and her privacy.

The Supreme Court said that Williams-Sonoma recorded Pineda’s ZIP code in an electronic cash register, which was fed into the company’s central database. From there, it used software to match the customer’s name and ZIP code with her undisclosed address, information it can use to market its own products and sell to other businesses. That’s why the Supreme Court ruled that acquiring a customer’s ZIP code violated the California law.

“This really bolsters and further protects the privacy rights of California consumers,” said Gene Stonebarger, Pineda’s attorney. Stonebarger said not all retailers who request ZIP codes will have to stop the practice.

He 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.

This decision may affect data handling/routing requirements, and reduce merchants’ ability to leverage consumer data for marketing purposes. So far, it looks like security uses are allowed, if data is routed to the issuer directly.

Read more here: http://hosted.ap.org/dynamic/stories/U/US_CREDIT_CARDS_ZIP_CODES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT