The California Supreme Court handed consumers a victory by ruling that it is illegal for businesses to collect ZIP codes from customers who pay with credit cards.
The court said unanimously that collecting ZIP codes from cardholders violates California’s Credit Card Act, which prohibits businesses from requesting and then recording “personal identification information” during credit card transactions.
“The Legislature intended to provide robust consumer protection by prohibiting retailers from soliciting and recording information about the cardholder that is unnecessary to the credit card transaction,” Justice Carlos Moreno wrote for the court.
Moreno said ZIP codes qualify as personal identification information because they can easily be used together with a customer’s name to locate the person’s complete address, thus “end-running the statute’s clear purpose.”
The court ruled in San Francisco in a 2008 lawsuit filed against Williams-Sonoma Stores Inc. by Jessica Pineda of San Mateo County.
Pineda said in the lawsuit that she was asked for her ZIP code when she used her credit card to buy an item at a Williams-Sonoma store, and thought she was required to comply.
She alleged that the store kept the ZIP code together with her name and then, by using computer software to search databases, found her address and marketed products to her.
Williams-Sonoma, a home furnishings and cookware chain founded in Sonoma and now based in San Francisco, unsuccessfully argued that ZIP codes are not covered by the law because the codes do not reveal a specific address.
Craig Cardon, a lawyer for the company, said he had no immediate comment on the decision. A company spokesman could not be reached for comment.
Pineda’s lawyer, Gene Stonebarger, said the ruling “furthers the privacy rights of California consumers.”
“It is really important in today’s day and age in light of advances in technology when so much information is available,” he said. “Any additional piece of information, such as a ZIP code, can be enough to reveal personal information.”
The attorney said the ruling does not apply to gas stations’ collection of ZIP codes because those outlets do not record the codes and instead send them directly to banks for purposes of credit card authorization.
The law also allows merchants to ask to see a customer’s identification, such as a driver’s license, for the purpose of verifying a credit card owner’s identity, so long as the merchants do not keep the information.
Stonebarger said the law applies only to credit card transactions, and there is no law prohibiting stores from asking for the ZIP codes of customers who pay in cash. But in those cases, the stores would not have the customers’ names, he noted.
The California Supreme Court overturned rulings by a trial judge and a state appeals court that had dismissed the lawsuit.
The suit was originally filed in San Diego County Superior Court, but Stonebarger said it will now be moved to San Francisco Superior Court to be handled together with similar cases pending in that court.
He said the next steps in the case will be to gather evidence on the number of customers from whom Williams-Sonoma gathered the information and how it used the customers’ addresses, including whether it sold the information to other companies.
Stonebarger said Pineda will seek to have the lawsuit certified as a class action on behalf of all California customers of Williams-Sonoma and estimated that the number could be hundreds of thousands.
The credit card law allows courts to levy civil penalties of up to $250 for a first violation and up to $1,000 for each subsequent violation, but judges have the discretion to award less than that amount, Stonebarger said.
Julia Cheever, Bay City News
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