January 15th, 2013

If you used a credit card during the holiday season and the retailer asked you for your zip code during the transaction, you probably did not think much of it. Some politely decline to provide this information, and others do so without trepidation. According to a California law, however, retailers may be breaking the law by requesting such information.

The Song-Beverly Credit Card Act of 1971 was designed to protect consumers’ personal information by preventing it from being stored and eventually sold to third parties. Under a 2011 opinion by the California Supreme Court, (Pineda v. Williams-Sonoma Stores, Inc.) it was found that the act of requesting consumers’ zip codes to complete credit card transactions violated the Act. Retailers could be subject to a $250 fine for the first violation and up to $1000 for subsequent violations.

A federal court in California recently approved a class action settlement stemming from Song-Beverly Act violations committed by Wisconsin-based retailer Kohl’s. According to a report, shoppers believed that providing their zip codes was a required part of transactions where credit cards are involved. (We can speculate that consumers may have believed that it was a security measure).

The settlement is the latest in a number of Song-Beverly Act class actions. Other big box retailers Crate & Barrel, Bed, Bath & Beyond, and Cost Plus World Market have been named in class action suits as well. The class in the immediate case is projected to include shoppers who initiated a credit card transaction at a California Kohl’s between March 2010 and October 2012. Affected shoppers will reportedly receive up to $500 in gift cards to Kohl’s.

We will continue to monitor this line of cases as we suspect that other retailers will be held accountable under the law.

Source:, Judge approves Kohl’s zip code class action settlement, January 14, 2013

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