A putative class-action lawsuit was filed recently in Massachusetts against arts and crafts retailer Michaels Stores alleging that the company violates state consumer protection law by collecting and recording consumers’ zip codes during credit card transactions.
According to the complaint filed by Massachusetts resident Melissa Tyler, the zip codes are combined with consumers’ names and home mailing addresses and used “for intrusive marketing purposes” such as Michaels’ own direct marketing or the sale of such information to third parties. Massachusetts law provides that “No person . . . that accepts a credit card for a business transaction shall write, cause to be written or require that a credit card holder write personal identification information, not required by the credit card issuer, on the credit card transaction form. Personal identification information shall include, but shall not be limited to, a credit card holder’s address or telephone number.”
According to the suit, Michaels’ employees do not request zip codes for verification purposes, but to engage in data mining.
“Like crows collecting shiny bits of silver to line their nests, retailers like Michaels use whatever means necessary to collect consumer data so that they can better market their wares,” the plaintiff alleged.
For support, the suit cites to the highly publicized California Supreme Court decision in Pineda v. Williams-Sonoma, where the court held that zip codes constituted “personal identification information” and their collection by Williams-Sonoma violated state law. The suit seeks an injunction from the further collection of zip codes and asks that the court treble the class’s statutory damages of $25 each, as well as award damages for unjust enrichment.
To read the complaint in Tyler v. Michaels Stores, click here.
Why it matters: When the Pineda decision was released, retailers with a presence in California faced a change in their practices. But with Tyler’s Massachusetts suit, it looks like the Pineda case will have an even more widespread impact, with consumers in other states bringing similar suits. Retailers who have a practice of collecting consumers’ zip codes – or other personal information – should be aware of their relevant state law.