For our in-house counsel clients and friends, here are a few "bits and bytes" from yesterday's "Privacy Litigation Risks: Update from the Trenches" session at the International Association of Privacy Professionals ("IAPP") Summit in Washington D.C.
Collecting Customer Zip Codes: What has been a common practice of many retail businesses – the practice of collecting customer zip codes at the point of sale – is now the subject of multi-state prohibitions and a tsunami of class action lawsuits. 16 states and the District of Columbia now have statutes banning the collection of customer zip codes under certain circumstances. The statutes vary in applicability and exceptions; however, the overall takeaway is that collecting customer zip codes and other PII in connection with sales or credit card transactions needs to be carefully evaluated for risk and compliance.
Data Breaches: Class action litigation following data breaches has featured a multitude of different claims and theories of liability. Claims based on breach of contract, unjust enrichment, bailment, and invasion of privacy have generally been rejected, while claims based on common law negligence and consumer protection statutes are beginning to find some success. At least some courts have allowed such claims to proceed in cases alleging "unreasonable" security measures or deceptive disclosures about security measures. Plaintiffs are still having difficulties establishing actual damages and the requisites for class certification; however, the threat remains, and the defensive costs are mounting.