September 08, 2011 Articles

The Perils of Collecting Information at the Register

A practice at one time widely considered legal under California's Credit Card Act—collecting customers' ZIP codes—is now unlawful under certain circumstances.

By Austin V. Schwing and Matthew S. Kahn

On February 10, 2011, the California Supreme Court issued its decision in Pineda v. Williams-Sonoma, 51 Cal. 4th 525 (Cal. 2011), holding that a retailer can violate California’s Song-Beverly Credit Card Act when it collects a customer’s zip code in connection with a credit-card transaction. Pineda created an avalanche of class actions against retailers doing business in California—more than 200 class actions were filed in the next few months—and caused retailers across the country to carefully reexamine their sales processes for credit-card transactions.

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