California Retailers Who Collect Zip Codes In Credit Card Transactions May Now Face Class Action Lawsuits

On February 10, 2011, the California Supreme Court issued a decision in Pineda v. Williams-Sonoma (.pdf), finding that a ZIP code constitutes “personal identification information” under California’s Song-Beverly Credit Card Act of 1971 (the “Song-Beverly Act”).  The Song-Beverly Act prohibits retailers from requesting and recording "personal identification information" as a condition of a credit card transaction.  Accordingly, unless a statutory exception applies, a retailer that requests or requires that a customer provide a zip code as a condition of accepting a credit card transaction violates the Song-Beverly Act.  A retailer is subject to a civil penalty of up to $250 for the first violation and up to $1,000 for each subsequent violation.

The plaintiffs bar reacted quickly to the Supreme Court’s decision—at least 20 class-action complaints have been filed in the week following the decision. 

The Pineda decision likely caught many by surprise because, as recently as September 30, 2010, a California appellate court had ruled that a ZIP code did not fall under the statutory definition of “personal identification information.”