The collection of ZIP codes by retailers may now be prohibited following the recent California Supreme Court decision in Pineda vs. William Sonoma, __ Cal. 4th__ (February 10, 2011). Writing for a unanimous court, Justice Morena found that ZIP codes are “personal identification information” for the purposes of the Song-Beverly Credit Card Act (“Credit Card Act “). Under the Credit Card Act, personal identification information may not be recorded nor required of a customer in order to make an in-store purchase using a credit card.
Initially passed in 1990, the Credit Card Act was enacted “to address the misuse of personal identification information for, inter alia, marketing purposes.” It prohibits retailers from asking customers for their personal identification information and recording it during credit card transactions. Specifically, section 1747.08(a) provides that no firm shall “[r]equest, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information, which the . . . firm . . . accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.” Since its initial passage, there have been multiple class action lawsuits against retailers violating this statute. As recently as 2008, California 4th District Court of Appeals addressed this specific issue in Party City Corp. v. Superior Court, 169 Cal.App.4th 497 (2008) where it held that ZIP codes were too general to be covered by the Credit Card Act because they pertain to a group of individuals, not a specific individual.
Not to be deterred, Jessica Pineda brought a class action against Williams-Sonoma for violations of the Credit Card Act “and Business and Professions Code section 17200 et seq. Her lawsuit was based on a 2008 visit to a Williams-Sonoma Store in California. While making her purchase, the cashier asked for her zip code, but did not tell her what the information would be used for. Thinking the information was necessary to complete the transaction, Pineda provided the information. Later, using specialized computer software, Williams-Sonoma conducted a “reverse lookup” and was able to determine Pineda’s previously unknown mailing address by matching her name and zip code in a third-party database. This information was then stored in Williams-Sonoma’s own database for use in direct-mail marketing campaigns. Aware of the court’s prior holding in Party City, Pineda pursued her class action on the grounds that an essential element was missing from the prior cases. Namely, allegations that Williams=Sonoma actually use of the acquired ZIP code. Rather than rule that harm was a required element, the court instead overruled Party City altogether.