Urban Outfitters and Free People reached a deal worth roughly $700,000—excluding attorney’s fees and costs—with a class of plaintiffs that claimed the national retailers illegally collected their zip codes.

The class action suit was one of the many filed after Massachusetts’ highest court held that zip codes are personal information under the state’s consumer protection laws and retailers can be liable for collecting and recording them.

Lauren Miller claimed that she provided her zip code during a credit card purchase at Urban Outfitters because she believed it was necessary to complete the transaction; instead, the company used the information to identify her address using a commercially available database in order to send unwanted marketing materials.

To settle the suit, the retailers agreed to provide two subclasses of plaintiffs with gift cards. The “first time” collection class—composed of members that Urban Outfitters and Free People sent marketing materials to after collecting their zip codes for the first time following a credit card purchase in a Massachusetts retail store since August 15, 2009, and March 26, 2010, respectively—will receive a $20 card. The parties estimated that about 32,593 customers of Urban Outfitters and 2,387 customers of Free People will make up this subclass.

In the second group, the “previous collection” subclass includes customers who provided their zip codes when they ordered merchandise over the telephone, Internet, or by mail prior to providing their zip codes in a retail location. The estimated 2,916 (Urban Outfitters) and 242 (Free People) members of this subclass will receive $10 gift cards.

The proposed settlement “substantially achieves” the goal of redressing the retailers’ “unlawful invasion of its customers’ privacy” and alleged violation of Massachusetts consumer protection laws, the plaintiff told the court in her motion for preliminary approval.

“Class Members, as customers of Urban Outfitters and/or Free People, will value the $20 or $10 Certificates they will receive, and there are items at Urban Outfitters and Free People that can be purchased for the Certificate amounts ($20 or $10), so Class Members will be able to use the Certificates without having to spend additional funds,” according to the motion.

In addition to the gift cards, the deal provides that the defendants will comply with all provisions of Massachusetts law going forward.

The total value of the gift cards is estimated to be $731,180. The retailers also agreed to pay two $2,500 incentive awards as well as up to $200,000 for class counsel attorney’s fees and costs.

To read the plaintiff’s motion in support of preliminary approval of the settlement in Miller v. Urban Outfitters, click here.

Why it matters: The deal—totaling almost $1 million, including the settlement fund, payment to class counsel, and incentive awards—is within the range of other agreements in similar suits challenging the collection and use of zip codes. Retailer Michaels agreed to pay $875,000 in a Massachusetts federal court suit that settled last year while $600,000 ended a California suit against OfficeMax.