D.C. Courts, Big Data and ZIP Code Collection Class Action Lawsuits

How courts see the practice of merchants engaging in ZIP code collection relies in large part on the local statutes governing personal identifying information. It is one reason why residents of the District of Columbia failed in their attempt to join a number of successful ZIP code class action lawsuits. What this means, especially related to decisions in other jurisdictions, as well as the ability of companies that engage in data mining, remains to be seen.

The D.C. case involved Urban Outfitters and revolved around the Use of Consumer Identification Information Act. A federal judge dismissed the Urban Outfitters ZIP code class action lawsuit because the statute specifically uses the phrase “the address or telephone number” and, as such, considered the ZIP code an unessential component of an address. As a result, Hancock v. Urban Outfitters was dismissed.

Another reason cited by the judge in dismissing the class action lawsuit  regarding personal identifying information was that the request for a ZIP code came after a credit card was swiped, although it is unclear whether or not that came before a receipt. While the statutory language differs, this is not the view currently held by the highest state courts in Massachusetts and in California.

Favorable Massachusetts and California Rulings

ZIP code collection lawsuits have been much more successful in California after the ruling in Pineda v. Williams-Sonoma Stores, finding that zip codes could be considered personal identifying information pursuant to the state’s Song-Beverly Credit Card Act and therefore could not be required in order to complete a transaction.

Massachusetts has a law on the books that shares similarities with both the California and District of Columbia statutes. The state supreme court there ruled that just because the language referred to paper forms, the collection of ZIP codes on electronic devices was a logical continuation of what the legislature was trying to protect. While the analysis in the decisions differed slightly, the benefits for consumers in both states ended up being quite similar when they work with ZIP code collection class action lawsuit attorneys.

Why ZIP Code Collection Matters for Analytics and Big Data

While some judges have been hesitant to ascribe significant meaning to ZIP codes, there are concerns that it is used in data mining as one element to triangulate consumers. For example, in 2000, one researcher found that 87 percent of all Americans could be identified with their ZIP code, birth date and gender.

An investigative story in The New York Times in 2012 also lent credence to the idea that relatively innocuous pieces of data could lead to fascinating conclusions. It focused on the retailer Target, which by collecting data regarding the purchases of some of its shoppers, was actually able to guess with stunning accuracy which were women who were pregnant or about to become pregnant. This life change, as well as other inflection points in consumer behavior, are critical to retailers.

They have found through extensive data mining that most consumers who make a choice of a supermarket or retailer for specific goods tend to stick with that outlet for lengthy periods of time. The few chances they have to influence this decision making is following a move, career change, or as Target found out, the addition of a child to the family. Even ZIP code collection, as part of a store’s rewards programs, can indicate the possibility of one of the first two inflection points.

Moving Forward for Personal Identifying Information Statutes

While the California Supreme Court decided to extend the definition of personal identifying information in Song-Beverly to include ZIP codes on their own, many judges, such as the ones in the District of Columbia, have kept to strict interpretations of the statutory language protecting consumers. Since many states have laws on the books offering similar, but not necessarily the same, protections to consumers, a key point in future ZIP code collection class action lawsuits will rest with the judges. If they choose to stick to the exact definitions provided in the laws, then companies will be able to make more use of the data. One upshot for plaintiffs would be if they looked to the legislative record for the goals of state representatives when they drafted these bills. Much has changed in data mining research in the past several years, let alone when each piece of legislation was first signed into law.

You May Be Eligible for a Legal Remedy

If you are a Massachusetts or California resident who had to provide your ZIP code as part of a credit card transaction, you may be eligible to pursue a legal remedy. The first step is to submit your information at the Merchant ZIP Code Collection Class Action Lawsuit Investigation for a free case review.