In a case watched closely by merchants, the state Supreme Court ruled unanimously that California retailers may no longer collect ZIP Codes from credit card customers, except in limited cases.
The high court determined that ZIP Codes were "personal identification information" that merchants can't demand from customers under a state consumer privacy law. Merchants typically use ZIP Codes to determine where their customers live and for other marketing purposes.
The ruling will affect more than a dozen lawsuits against major retailers that seek and store consumer ZIP Codes, said Gene J. Stonebarger, an attorney for a woman whose lawsuit triggered the ruling.
Stonebarger said the decision would help protect consumers from credit card fraud and identity theft.
Eli Portnoy, a retail and marketing expert, said businesses will just be more creative in how they gather information on consumers in the future. He noted that there has been "a gathering storm, a backlash," from consumers tired of having to reveal personal information.
"But companies will still find ways," he said. "The goal in any business is to know your customers as well as you can."
Jeremy Zawodny, 36, a software engineer from Groveland, Calif., said it "always creeped me out" to be asked for his ZIP Code every time he bought something at the grocery store.
"It's like, you don't need to know that information just because I'm giving you money for a product," he said. "You'd think more people would want to know what their information is being used for if they're giving it out."
Once, at an Office Max store, he said, the checkout cashier asked for his ZIP Code and Zawodny responded: "No, but can I have your home address?"
The ruling still allows ZIP Codes to be collected under certain circumstances, such as at gas station pumps where the information is requested for security reasons and in transactions that involve shipping. The law also allows ZIP Codes to be requested when a credit card is used as a deposit or for a cash advance, the court said.
Merchant requests for ZIP Codes have been "widespread" because it is extremely valuable information for retailers, Stonebarger said.
The Folsom, Calif., lawyer filed the lawsuit on behalf of Jessica Pineda of Menlo Park, Calif., and sought class-action status. Pineda contended that home-goods chain Williams-Sonoma Inc. asked her for her ZIP Code when she purchased an item with her credit card.
She said the store used her name and ZIP Code to identify her address and then stored the information in a database for later marketing. She also contended that he store had the ability to sell her information to other businesses.
The retailer argued that ZIP Codes did not provide personal information because they pertained to a group, not an individual. It also said that an adverse ruling should be applied only to future cases because the penalties could be ruinous and the law was vague.
Two lower courts rejected the suit, but the Supreme Court said a ZIP Code was part of a person's address and therefore covered by the state's 1971 Credit Card Act.
The high court rejected the retailer's assertions.
"The Legislature intended to provide robust consumer protections by prohibiting retailers from soliciting and recording information about the cardholder that is unnecessary to the credit card transaction," Justice Carlos R. Moreno wrote for the court.
The court said retailers may still ask consumers to produce a driver's license for identification purposes but may not record the personal information on it.
The case was sent back to the lower court for further proceedings. State law sets a maximum $250 for the first violation and $1,000 for each further violation. The amount of penalties awarded is determined by a judge.
Times staff writer Tiffany Hsu contributed to this report