California retailers can't collect zip codes.
The California Supreme Court has ruled that California merchants can no longer ask for the zip codes of customers who make purchases with credit cards.
Doing so violates the customer's right to keep his or her personal information private, the court said, citing a 1971 state law that restricts businesses from asking credit card users for personally identifying information that could be used to track them.
According to the court's judgment, a zip code together with other identifying information, such as a cardholder's name, would allow retailers to "obtain indirectly what they are clearly prohibited from obtaining directly, (therefore) 'end-running"' the intent of California state laws.
"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," the decision states. "We hold that personal identification information ... includes the cardholder's zip code."
According to CNN.com, the court's unanimous decision overturned two lower court rulings that had rejected the lawsuit. In the original suit, Jessica Pineda claimed that a Williams-Sonoma cashier had asked for her zip code while she was making a purchase and it was used later, along with her name, to figure out her home address, which was then sold to other businesses to market products. She sued the retailer in 2008, claiming that it had violated the credit card law and her privacy.
The Supreme Court said that because Williams-Sonoma recorded Pineda's zip code in an electronic cash register, which was fed into the company's central database and then used to find her address for marketing purposes, it violated California law. Supreme Court Justice Carlos Moreno stated that a zip code is part of a customer's address, which the California law categorizes as off limits.
It is not illegal in California for a retailer to see a person's zip code or address, the ruling notes: For instance, merchants can request a customer's driver's license to verify his or her identity. What makes it illegal, according to the ruling, is when a business records that information, especially when the practice is "unnecessary to the sales transaction."
Many retailers ask for zip codes, in part for fraud prevention, Bill Domrowski, president of the California Retailers Association, told CNN.com. Gene Stonbarger, Pineda's attorney, said not all retailers who request zip codes will have to stop the practice. In fact, gas stations that require zip codes during a credit transaction are exempt because the gas station doesn't record the transaction and sends the information directly to banks and credit card companies for security purposes.
As a result of the court ruling, merchants can be fined up to $250 for a first-time infraction and as much as $1,000 for additional violations.
The court decision applies only in California, though the practice of requesting zip codes has become increasingly common among retailers nationwide.