Class Cert. Proposed in Wal-Mart ZIP Code Class Action Lawsuit

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Wal-Mart customers on Thursday moved to certify a class action lawsuit alleging that, since January 2012, Wal-Mart has been illegally collecting ZIP codes from customers paying with credit cards.

The Wal-Mart class action lawsuit alleges that the Song-Beverly Credit Card Act, enacted in California, bars retailers like Wal-Mart from asking for and keeping a record of personal information in credit card transactions. California residents Amy Fraiser and Paula Haug allege in the Wal-Mart ZIP code class action lawsuit that they both were asked to provide their ZIP codes when using their credit cards to make purchases at Wal-Mart.

Fraiser alleges that she “entered into multiple purchase transactions during the class period at [Wal-Mart’s] stores in California utilizing her American Express credit card and has been required to input her ZIP code during each of those transactions in order to complete those transactions.” Haug alleges that she also “has entered into several credit card purchase transactions during the class period at [Wal-Mart’s] stores in California utilizing both an American Express and Visa credit card” and “[i]n each of those instances, she was required to input her ZIP code in order to complete the transaction.”

Haug also alleges that “[i]n more than one recent instance while making a purchase transaction at [Wal-Mart’s] store while utilizing her American Express credit card, she refused to input her ZIP code and offered to instead show the cashier her valid California driver’s license to authenticate her identity” however, “[t]he cashier merely referred the issue to a manager who refused to explain why she needed to input her ZIP code and refused to look at her driver’s license to verify her identity.”

The plaintiffs argue that even if Wal-Mart requested the ZIP codes to prevent fraud and the information was provided voluntarily, the Song-Beverly Act provides that “even if a consumer voluntarily provides personal identification information to a retailer, there is a significant risk of identity theft and credit card fraud if personal identification information is provided along with the consumer’s credit card information at the cash register (and to the same cashier).” A 1991 amendment to the law “closed a loophole in the statute that allowed retailers to ‘request’ but not ‘require’ credit card customers to provide personal identification information,” the Wal-Mart class action lawsuit states.

“Following the clear amendment, requesting and recording a cardholder’s personal identification information is prohibited ‘even if the consumer’s response was voluntary and made only for marketing purposes,'” conclude the plaintiffs in their motion.

The plaintiffs argue class certification is appropriate for the Wal-Mart ZIP code class action lawsuit because “[i]n the present case, [Wal-Mart] acknowledges that it requested and recorded the ZIP codes from every American Express credit card customer who entered into a purchase transaction of at least $50,” as well as from Discover and Visa card users, and “[t]he size of this class alone almost certainly exceeds 100,000 individuals.” Additionally, the plaintiffs allege that the Song-Beverly Act “establishes penalties of up to two hundred fifty dollars ($250) for the first violation and up to one thousand dollars ($1,000) for each subsequent violation,” amounting to claims worth well over $100 million.

The lead plaintiffs, Amy Fraiser and Paula Haug, are represented by James M. Lindsay of Lindsay Law Corp.

The Wal-Mart ZIP Code Collection Class Action Lawsuit is Amy Fraser et al. v. Wal-Mart Stores Inc., Case No. 2:13-cv-00520, in the U.S. District Court for the Eastern District of California.

UPDATE: Wal-Mart filed an opposition to the certification motion on June 5, 2014, arguing that the Plaintiffs’ claims lack evidence and seek to represent an “overbroad” Class with no legal claim.

UPDATE 2: On June 21, 2016, Walmart says a recent Supreme Court decision should put an end to an ongoing class action lawsuit over the retailer’s collection of customers’ ZIP codes.

UPDATE 3: On Oct. 24, 2016, a federal court judge denied Walmart’s motion to decertify a class action lawsuit claiming the retail giant illegally collects ZIP codes from shoppers paying with credit cards, an alleged violation of the Song-Beverly Credit Card Act.