Massachusetts Zip Code Collection Class Actions on the Rise
Posted on Jun 5, 2014 11:55am PDT
In the year since the Massachusetts Supreme Judicial Court ruled that retailers
cannot collect ZIP codes from consumers using credit cards, the number
of class actions alleging that retailers have violated the law have soared.
A little more than 12 months ago, the high court in Massachusetts ruled
that retailers requesting and recording ZIP codes from consumers during
credit card transactions violate Massachusetts General Laws, c. 93, §
105, a consumer protection statute prohibiting the collection of personal
identification information from consumers using credit cards. The law
is designed to address retailers' practice of leading consumers to
mistakenly believe that providing personal information is necessary to
complete a credit card transaction when, in fact, it is not. The overriding
purpose of the statute is to protect the personal privacy of consumers
who pay for transactions with credit cards so that they do not unwillingly
become a target of retailers' marketing efforts.
In the case, the class plaintiff alleged that Michaels Stores, Inc. violated
§ 105 when its employees requested and recorded only a portion of
customers' addresses — namely, ZIP codes — while processing
credit card transactions. The high court agreed.
Since the Michaels ruling a little over a year ago, more than 17 class
actions have been filed against retailers based on their alleged collection
of ZIP codes from their customers. Nine cases have been filed in 2014.
Defendant retailers include Donna Karan, Jos. A. Bank, Apple, Williams–Sonoma,
Patagonia, PetSmart, Lowe's, J. Crew, J.C. Penney, Kohl's, and
Bed Bath & Beyond. The cases are in varying stages — some settled
at the outset of the litigation, but others are in the throes of discovery.
The cases have been brought by about 10 different plaintiffs, many of
whom use the same plaintiffs' counsel. Given this marked increase
in cases alleging that retailers have improperly collected ZIP codes,
retailers and defense counsel should expect more cases to be filed soon.