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Consumer

California Retailers Sued Following Zip Code Privacy Ruling

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Credit card transaction, economy, commerce, retail,

(AP)

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SAN FRANCISCO (AP) — Consumers have filed lawsuits against more than a dozen national retail chains operating in California since the state Supreme Court ruled it’s illegal for clerks to ask customers for their ZIP codes.

The high court unanimously ruled last week that a ZIP code is part of a customers’ address, and a state consumer privacy law forbids stores from requiring addresses during credit card transactions.

The decision against San Francisco-based Williams-Sonoma Inc. set off a flurry of litigation, with most of the lawsuits being filed in San Francisco or Los Angeles courts.

Among the retailers facing lawsuits that seek class-action status are Wal-Mart Stores Inc., Target Corp., Macy’s Inc. and Cost Plus Inc. The lawsuits say the companies requested ZIP code information from their customers during the past year.

Attorney Mike Burns, who represents Michaels Stores Inc. in a ZIP code case, said it’s difficult to assess how much each lawsuit could cost each company. State law calls for maximum fines of $250 for the first violation and $1,000 for each additional one, exposing each company to millions of dollars of liability.

But state Supreme Court Justice Carlos Moreno made clear in the ruling he wrote for the court last week that judges are free to award token fines for any violations.

Burns said he expects the retailers to defend themselves by arguing that clerks’ requests are voluntary and consumers are free to refuse to divulge that and other personal information while paying by credit card. Burns said that legal argument hasn’t been taken up by the appellate courts, so it’s unclear whether that will absolve the retailers of liability.

The state’s consumer privacy law, adopted in 1997, exempts some businesses such as gas stations that require ZIP codes for security purposes. Unlike the retailers, the gas stations don’t collect the information and store it in databases that allow the consumer to be identified and targeted for marketing through personal information gathered at the cash register.

(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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