Retailers Violate Law by Recording ZIP Codes, High Court Says

by Kate Moser, The Recorder

SAN FRANCISCO ‘ Retailers can’t record customers’ ZIP codes during credit card transactions, the California Supreme Court ruled today.

ZIP codes constitute personal identification information and recording them violates a state law aimed at protecting consumers, the court concluded in the unanimous decision.

The legislative history of the Song-Beverly Credit Card Act of 1971 "demonstrates the Legislature intended to provide robust consumer protections by prohibiting retailers from soliciting and recording information about the cardholder that is unnecessary to the credit card transaction," wrote Justice Carlos Moreno.

In Pineda v. Williams-Sonoma , S178241, plaintiff Jessica Pineda filed a putative class action alleging that Williams-Sonoma improperly records ZIP codes when customers check out with credit cards, then uses the data to look up their addresses and send them catalogues or, worse, sell the information to other marketers.

With the decision, the court overturned a Fourth District panel that ruled ZIP codes aren’t personal information.

Buried in the opinion may be a small victory for retailers in that it doesn’t guarantee an automatic payday for plaintiffs, said Michael Burns, a partner in Seyfarth Shaw’s San Francisco office who wasn’t involved in the case but has handled similar ones.

Moreno made clear that the statute lays out maximum penalties, but that "the amount of the penalties awarded rests within the sound discretion of the trial court."

Retailers might think that’s good to hear, Burns said, since the plaintiffs have argued they’re entitled to $250 for the first violation of the credit card act and $1,000 for each subsequent violation.

The case drew amici curiae on both sides. Michelle Doolin, a partner in Cooley’s San Diego office, represented amici The Gap, Old Navy and Banana Republic.

The Consumer Federation of California and the Privacy Rights Clearinghouse weighed in on Pineda’s behalf and were represented by Todd Atkins at Atkins & Davidson in San Diego.

Folsom attorney Gene Stonebarger represented Pineda. Williams-Sonoma’s lawyer was P. Craig Cardon, a partner in Sheppard, Mullin, Richter & Hampton’s Los Angeles office.