California court makes major credit card ruling

In a unanimous decision, California’s Supreme Court ruled that retailers do not have the right to ask credit card users for ZIP codes when completing a transaction.

The ruling, which overturns the prior legal precedent set in the Song-Beverly Credit Card Act of 1971, would prohibit merchants from asking for this identifying information and recording it when a consumer makes a credit card purchase.

In the court case, Jessica Pineda filed a class-action lawsuit against home goods retailer Williams-Sonoma after her ZIP code was recorded and then sold to third-party companies. While many consumers will likely approve of the decision as an added privacy provision, some financial experts believe outlawing the practice would harm retailer’s ability to market to customers.

“We think it’s a terrible decision because it dramatically expands what personal information is, by including a ZIP code as part of an address,” Bill Dombrowski, president of the California Retailers Association, told CNN. “We are surprised by it.”

However, the ruling allowed for some exceptions. For example, ZIP codes can be collected by merchants in certain scenarios, such as for bank deposits and cash advances.

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