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Don’t ask for my ZIP code!

By Janna Herron · Bankrate.com
Friday, March 22, 2013
Posted: 4 pm ET

Retailers in Massachusetts no longer can ask for your ZIP code to complete a credit card transaction, thanks to a recent ruling by the state's Supreme Court. The case underscores the different reasons a consumer's personal information is used for a credit card purchase.

The class-action lawsuit pitted craft supply megastore Michaels against a Massachusetts resident, who claimed that she received mail pitches and marketing calls after she gave the retailer her ZIP code to complete a recent purchase by credit card.

Michaels argued that the ZIP code provided an added layer of security verification to prevent identity theft. The court sided with the resident and said the store broke a state law that forbids retailers from asking for personal information unless it's needed for shipping an order.

The resident who brought the suit won a whopping $25 for violation of privacy.

Other states have similar consumer protection laws against collection of personal information at checkout for marketing reasons, but many consumers may be confused when the request is appropriate.

For example, unmanned gas stations or train kiosks often request the card's billing ZIP code only to verify the cardholder's identity, says Deirdre Cummings, legislative director at the Massachusetts Public Interest Research Group, a consumer advocacy organization.

"Then it's reasonable," she says. "But it's important for state officials to make sure that it's not used for marketing purposes."

Cummings says many retailers match up ZIP codes with credit card accounts and come up with a consumer's address. That way, they can send marketing materials to consumers who have a history of shopping in their stores, instead of blanketing an entire neighborhood with many residents who may never shop there.

The upside is that consumers may get coupons from stores they frequent. The downside, of course, is a cluttered mailbox. Cummings says consumers should simply decline to give their ZIP code when asked at checkout if they don't want more junk mail.

"No one should feel they have to give out personal information to make a purchase," she says.

Do you give out your ZIP code at checkout? What other information have you been asked for?

Follow me on Twitter: @JannaHerron

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