To settle a pair of class actions alleging that the defendant violated the Massachusetts Consumer Protection Act by collecting zip codes at the time of a credit card purchase, Michaels craft stores has agreed to pay $875,000.
U.S. District Court Judge William G. Young granted preliminary approval of the deal earlier this month.
The suit was filed in the wake of the seminal Pineda v. Williams-Sonoma case in California, where the state’s highest court found that zip codes constitute “personal information” for purposes of the state’s Song-Beverly Credit Card Act.
Hoping to find similar success in Massachusetts, Melissa Tyler filed a putative class action against Michaels. According to the complaint, consumers have a mistaken belief that they must provide their zip code upon request to complete a transaction, and that Michaels “uses a customer’s zip code and name to identify that customer’s address using commercially available databases. Michaels is thus able to use that personal identification information to send unwanted marketing material.”
Although Judge Young initially dismissed her suit, Massachusetts’ highest court ruled last year that zip codes fall under the statute’s definition of “personal information.” Once the suit was reinstated, it was consolidated with a similar class action against Michaels. The parties then reached a deal.
The settlement class is divided into two groups: about 15,000 consumers who received marketing materials solely because they provided their zip codes at the time of purchase, and a group of roughly 4,300 customers who provided their zip codes but whose addresses were obtained from a different source. The first group will receive Michaels vouchers worth $25; the second group will receive $10 vouchers.
In addition to the vouchers, Michaels agreed to comply with Massachusetts’ consumer protection laws going forward and promised to “take reasonable steps” to purge or delete all the consumer addresses gained solely from a zip code request.
On top of the estimated $418,000 in vouchers, Michaels said it would pay $7,500 for incentive awards and $425,000 in class counsel fees.
To read the settlement memorandum, click here.
To read the court’s preliminary approval order, click here.
Why it matters: Similar to the Pineda decision in California, the Tyler case in Massachusetts has launched analogous consumer class actions in the state challenging the collection of zip codes by retailers. Whether the settlement will also provide a model for other cases remains to be seen.