California Takes the Zip Out of Credit Card Transactions


On February 10, 2011, the California Supreme Court held that retailers may not collect and record customers' zip codes in the course of a credit card transaction. Because a zip code is personal identification information, asking customers to provide it is a violation of the Song-Beverly Credit Card Act of 1971, according to the decision. The ruling is expected to impact all retail businesses in California.

The law, commonly known as the Credit Card Act, prohibits a store that accepts credit cards from "request[ing], or requir[ing] as a condition to accepting the credit card as payment...the cardholder to provide personal identification information, which the [store] records upon the credit card transaction form or otherwise."

The statutes define personal identification information as "information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder's address and telephone number."

The plaintiff in the case originally sued Williams-Sonoma Stores, Inc., a franchise that sells home furnishing and gourmet cookware, in state court in California, claiming that the company asked for and recorded her zip code during a credit-card transaction and then used it to perform a computerized search for her mailing address. The company allegedly maintained customers' personal information in a data base, used the information to market products to customers and sold the information to other businesses. The case was brought as a class action.

The trial court dismissed the putative class action, holding that a zip code did not fall under the definition of "personal identification information." The California Court of Appeal affirmed the trial court's decision, whereupon the plaintiff appealed. The case has now been remanded to the state court.

In reversing the decision of the appeals court, the California Supreme Court interpreted the statutory language, comparing zip codes to terms specifically mentioned in the statute, such as a cardholder's address and telephone number. The court held that a cardholder's zip code is similar to his or her address or phone number, in that a zip code is unnecessary to the transaction. The court also noted that a zip code can be used, together with the cardholder's name, to locate the cardholder's full address. Hence, the court held that personal identification information, as that term is used in the Credit Card Act Section 1747.08, includes a cardholder's zip code. 

The case is Pineda v. Williams-Sonoma Stores, Inc., S.178241, Cal. Supreme Court, Feb. 10, 2011.