Massachusetts is now poised to become the second state to consider whether retailers who request and store zip codes during the course of a credit card transaction violate a consumer privacy statute. A complaint entitled Tyler v Michaels Stores, Inc. was filed May 23, 2011 in the federal court for the District of Massachusetts. Plaintiff, who seeks class action status, alleges that the Massachusetts General Laws Chapter 93, Sec. 105 prohibits a retailer from recording personal identification information, not required by the credit card user, during the course of a credit card transaction. The statute defines PII to include (but is not limited to) the credit card holder’s address or telephone number.
This statute is of course similar to the Beverly-Song Credit Card Act in California which prompted the February 2011 Pineda decision by the California Supreme Court. In fact, the Tyler plaintiff quotes both the Beverly-Song Act and the Pineda decision in her complaint.
Claimant alleges that the retailer Michaels asks consumers for their zip code when checking out and records it in an electronic credit card transaction form. Claimant asserts that Michaels uses this data not for verification but for its own marketing purposes to obtain an address and/or telephone number. Claimant says this violates the Massachusetts Unfair Trade Practices Act Ch. 93A, which permits trebled damages, and provides Michaels with unjust enrichment because the PII has a monetary value to Michaels. Claimant seeks the $25 minimum amount permitted by Massachusetts for a statutory violation, which could be trebled under Ch. 93(A). The relief sought could mean substantial damages considering the number of credit card transactions that would have occurred during the alleged class period of 2007-2011.
In addition to California and Massachusetts, 12 other states (and D.C.) have similar statutes: Delaware, Georgia, Kansas, Maryland, Minnesota, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Washington, D.C. and Wisconsin.
Retailers cannot count on the legislatures to protect them. California lawmakers drafted a bill in response to Pineda, but the bill (as drafted by the California senate on June 22, 2011) exempts only gas stations, not other retailers, from requesting zip codes. The Pineda bill applies to goods and services; the Massachusetts law applies only to goods. Are banks and other service industries at risk in California?