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California merchants may not ask customers using credit cards for their ZIP codes, state Supreme Court rules

California merchants may not ask customers who pay with credit cards for their ZIP codes, the California Supreme Court decided unanimously Thursday.

In a case closely watched by retailers, the state high court said ZIP codes were "personal identification information," which a state law bars businesses from demanding of customers.

The class-action lawsuit against Williams-Sonoma Stores Inc. was brought by a woman who contended that Williams-Sonoma asked her for her ZIP code when she purchased an item with her credit card. She said the store used her name and ZIP code to identify her address and then stored the information in a database for marketing. She also contended the store had the ability to sell her information to other businesses.

Two lower courts rejected the suit, but the California Supreme Court said a ZIP code was part of a person's address and therefore covered by the state's Credit Card Act.

"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," Justice Carlos R. Moreno wrote for the court.

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Comments () | Archives (26)

I respect the court's decision, my question: class action suit, how much will the attorneys make off of this? Unless "it's not about the money."

"Two lower courts rejected the suit, but the California Supreme Court said..."

This sort of legalistic nonsense results from overly complex laws. There is also the probability that lower courts react to political pressure regardless of their "legal ethics."

The cure could be simple: Make/rewrite all laws applicable to one issue only with no references to pieces of any other extant legislation. Start each with a one-sentence explanation of the law's purpose written in clear, concise standard English. Limit all legislation to one page in 12 point Times Roman. Eliminate the use of "case law" in lower level courtrooms -- try each case solely on its own (de)merits.

Were this done let me apologize to all lawyers for the severe reduction in their earnings!

"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," Justice Carlos R. Moreno wrote for the court.

------------------------------------------
Wrong argument. Talk about being stuck on stupid. The purpose of the zip code was to verify AND mitigate credit card fraud. Consumers end-up paying for charge-backs.

Read my lips Justice Moreno- Want to use a credit card? No zip code, no sale.

Asking for the zip code isn't always a marketing gimmick. Some retailers ask for the zip code as a security measure. They want to confirm that the zip code matches the billing address on the card. If someone has a stolen card it is unlikely that they know the billing address of the card holder.

Does this end the typing of Zip Code in the Gas Pumps?

YES! YES!

Glad that consumers get protected obviously, but once again, merchants get the squeeze. For a small business, you get a slightly better discount rate from the credit card companies for providing matching billing information...it is one protection FOR THE MERCHANT that the card being used is not stolen...the credit card companies will not protest this decision because they will profit from it, and the small merchants of the state will be paying for it once again. Where is the accountability to the merchants of this state who take so much risk with every credit card transaction they do? Seems like there should be another class action lawsuit on the merchants' behalf. Consumers are probably not aware that if their card is used fraudulently, it is the merchant who loses, not the credit card company. The merchant is out the goods or services provided and is not reimbursed by the credit card provider. Now that the merchants cannot ask for security information, fraudulent credit card transactions, especially online, will increase dramatically.

Talk about wasted treasure: all the time and money spent on this. Do something productive... tell them the wrong zip code. Works every time.

Many gas stations ask this when you use your card at the pump. They should ask for PIN instead.

You don't have to give this information just because a merchant asks for it ...

In other parts of the country, Sears asks for a customer's phone number and ZIP code with every purchase. I'd ask if that meant that they weren't going to sell me anything if I didn't give them my private information, loudly enough that anyone at the counter could hear my question.

I've never had someone refuse to take my money for a purchase if I kept my personal information private.

Who cares? Really, who cares? If anyone was the least bit worried about their zip code being revealed they lie and the stores will still ask to see a photo ID. Much ado about nothing.

What about gas stations? Every time I fill up and pay with my card at the pump, it asks for my zip code.

About time. One of my friends was paying cash at Walmart and the register person asked her for her zip code, and she had to insist to the register handler that they don't need that info to process a cash transaction. I'm sure we can find another way to verify cc transactions other than zip codes.

Does this law apply to sales of gasoline, when the pumps ask for a Zip Code? Or Redbox movie rental machines, where they do the same thing? Did the justices order any time frame for implementation of the law?

Joe Shea
Editor-in-Chief
The American Reporter
www.american-reporter.com

Once again affirming California's wonderful, Democratically-induced business-friendly environment. How much did she and her lawyers get paid for this horrible, unspeakable assault on her civil rights?

NEXT!

Good ruling. Unfortunately, the US Supreme Court for Corporation's will over-rule. Just wait.

Good, I always give then a different zip code anyway. None of their business where I live. I am not asking them to deliver the goods.

Whenever I was asked for my ZIP, I'd either say use the store's zip code or use 12345. Sears had a habit of asking for phone numbers. The clerk told me that the number would just stay in the computer and wasn't used for anything so I told him if that's the case, use your phone number. Glad to see this happen, finally.

If merchants have problems with their credit-card agreements, they should take them up with the card issuers, not pass along the paperwork to their customers.

AND, a merchant is NOT allowed to ask for an ID when a customer pays with a Visa or MasterCard credit card, according to their merchant agreement. I can't stand it when someone asks for my ID when using my credit card. You don't need to show it to them; a signature on the credit card is good enough.

Remember, in California, NO ONE can ask you for a phone number when paying for anything.

"If someone has a stolen card it is unlikely that they know the billing address of the card holder."

If they have the actual card, it's not unlikely they have the actual wallet including the real cardholder's driver license which has their zipcode. Likelihood of that zip being the billing zip == high.

i don't think this applies when using the pumps at the gas station-- mostly because some credit cards (NOT debit cards) do no have pins, so the only way the issuing bank can verify it's you is if you enter your billing addy zip-- so this is a sort of a pin. secondly, when you enter it into the gas pump, no one is typing it in for you, no one is recording it-- it's no different than putting in your PIN when using your debit card at any retailer. @Diogenes: if you are IN the store and are using your credit card for a purchase, the only thing the retailer/cashier needs to/can verify is that you are the person whose name appears on the card-- which is why they ask for ID-- they have no way of accessing your billing information to verify anything.

Really I think this court decision is for those stores like Ross, DD's Discount, Sears, etc. that ask for your zip code because they are conducting "surveys." This might very well be true-- they might be trying to determine what demographic visits their store-- but I will say, out of all these stores that have asked me for my zip when making my purchases, there has been only one that has started to send me promotional material-- and I don't even have an account with them.

I worked for a credit card processing company and we're talking about how this will affect our procedures. From what I've heard only Visa will raise a merchant's rates if they submit a credit card transaction with the wrong zip code, which is required by the merchant agreement with Visa. If the merchant submits the transaction as a "card not present" or "mail-order, telephone-order" (commonly known as MOTO) then Visa will not raise the rates if the wrong zip code is submitted. It's only in-person transactions where swiping the card isn't done to get the info off the mag stripe (maybe because the person doesn't have a swiper or the mag stripe is worn out) where the rate is increased if the customer's billing zip code doesn't match what's on file with Visa. So, mostly this will probably have no effect on merchant rates/costs. It may greatly affect the procedures that software and companies use to process credit cards.

I think the gas pumps are going to be fine the way they are. The zip code was already read off the mag stripe and the request to key in the zip code is just to validate that the person holding the card knows what was already on the mag stripe. It reduces fraud without actually gathering personal info (or the person info could already have been gathered off the info on the mag stripe).

Asking for a zip code is done under the guise of security, but as we see here (and as I long suspected), the actual or additional purpose is for marketing and/or data collecting and selling. And companies are already escalating their demands -- just yesterday I was twice asked to enter my social security number when I swiped a credit card at a clothing retailer. Yes - my SOCIAL SECURITY NUMBER. Yes - TWICE. I refused both times, but how many people less consumer-savvy would have just entered it?

I don't put anything past American business these days. Enter my SSN to use a credit card...Unbelievable.

Thank heavens the courts are here to bring some restraint to these self-serving demands.

If I understand this correctly the courts ruled that merchants can't ask the customer to verify the same information that is read from the magnetic stripe. CAn they ask to see the customers ID to verify that the customer is the same person that has the Ccredit card?
Californians do think different than the rest of the world. No where else would people find fault with asking for the zip when using a credit card.

 
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