“Sued for seeking a ZIPcode?”

by Ted Frank on April 8, 2009

Overlawyered readers may remember the problem of FACTA lawsuits when a poorly drafted federal law led to attorneys seeking $1000 for every occasion when a credit-card slip showed an expiration date.

Stroock & Stroock’s Daniel A. Rozansky and Scott M. Pearson have an op-ed in today’s San Francisco Chronicle discussing problems with a similar California law. California prohibits businesses from requesting or requiring “personal identification information” while accepting a credit-card payment; this includes address and phone number, but doesn’t specify what else. Entrepreneurial trial lawyers are asking courts to hold that it includes harmless information like ZIP codes: since the statute provides for $1000/violation damages in the absence of a showing of harm without a cap, extortionate lawsuits are easy to create–and a further drag on the already-suffering California economy.

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Sued for seeking a ZIPcode? | Security Hero
04.08.09 at 6:38 pm

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1 Todd Rogers 04.08.09 at 10:42 am

This can have nothing but positive implications for the residents and business owners of The People’s Republic of Kaleefornya.

2 MAS1916 04.08.09 at 12:32 pm

Californians completely deserve this. They can drive their business out of state of off-shore. If the citizenry permits this, they deserve it.

3 kimsch 04.08.09 at 1:58 pm

When using a credit card at a gas station, at the pump, I have been asked to input my zip code. I understood that this was for security. Since using a credit card at a gas pump does not require a signature, entering your zip code shows that you are the probable owner of the card. A thief wouldn’t necessarily know your zip code, but it’s something you could recite blindfolded…

4 kimsch 04.08.09 at 2:34 pm

Some stores will also ask you for your zip code when you are at the cash register. You don’t have to give it if you don’t want to. It’s an informal survey by the store to find out where its customers are coming from. If the store finds that a good portion of its customers are coming from a certain zip code area away from where the store is located, the store owners may want to open a new store in that area.

5 gitarcarver 04.08.09 at 3:02 pm

As a commentor in the source article noted, the agreement the retailer signs with the credit card company is that they cannot ask for additional information.

6 Bumper 04.08.09 at 10:14 pm

That’s a hoot gitarcarver, if I call my VISA company they ask for my zip code to verify me before they will even talk to me or give out any information. Which is kind of dumb when you think about it, because if they steal my VISA bill from the mail box, the bad guys will have my zip code. Also a lot of the pay at the gas pumps around here ask for your zip code before accepting the charge.

7 gitarcarver 04.08.09 at 11:57 pm

That’s a hoot gitarcarver, if I call my VISA company they ask for my zip code to verify me before they will even talk to me or give out any information.

I am not sure what you are saying here. The credit card company can ask you to prove who you are. The retailer cannot. Read the credit card agreement.

Also a lot of the pay at the gas pumps around here ask for your zip code before accepting the charge.

I know they ask for it. Requiring it is a violation of the terms of agreement with the credit card companies.

I was told about this about 9 months ago and was skeptical until I actually read the agreement between the card holder and the company, and then the credit card company and the retailer. It seems weird and I can’t think of why it would be that way, but it is in the contract.

8 Bumper 04.09.09 at 3:50 am

GC,

I was making light of the irony of the CC company doing what these lawyers want to say a retailer can’t.

In the case of the gas pumps, it IS the CC company that is demanding the zipcode in order to approve the transaction and it has to go through the retailer before it gets done.

Always glad I don’t live in California.

9 kimsch 04.09.09 at 1:21 pm

What if a retailer asks for a zip code from every customer regardless of payment method? What if the retailer asks before ringing the order up? What if the zip code is only requested and not required?

10 mojo 04.09.09 at 1:23 pm

Problem?

I think not. It’s written that way by design

11 Todd Rogers 04.09.09 at 6:09 pm

Bravo to mojo.
Why not write (or influence the writing of) the rules so as to make yourself a financial beneficiary by virtue of your career choice? Don’t re-route the river, just build a dam.

12 Erica Vess 04.10.09 at 7:47 am

As someone who takes credit cards at craft fairs with the old-fashioned “knucklebuster” and processes them later that night or often the next day, I need the zip code in order to process the card through my credit card service. I also sure as hell am not letting someone walk away with my merchandise without at least a phone number. In this situation, using a credit card is almost like using a check.

Glad I don’t live in California! (For many reasons.)

13 Steve 04.10.09 at 9:43 am

Strange…
I wonder if they mean that you cannot ask at all or if you just can’t ask for CC trans only?
When I shopped at Radio Shack, they always asked for a phone number regardless of what pay type I was using. In some areas, and I don’t know why only some, the pumps or any other type of automated purchase requires the zip. Being in an industry that has totally automated CC trans, I believe that the CC agreements we have definitely require the ZIP to be entered for a transaction where the presence of the card is not confirmed by an employee. In fact, over the phone deposits for retail locations where I was previously employed here in Illinois, absolutely required the ZIP for the trans to be approved. The trans would not even complete if this was missing.

Also, how does this affect ATM withdrawls? Your card is a “credit card” if it has the Visa or MC logo on it and there is a “transaction” that requires your PIN. That would most definitely fall under “personal identification information.” It even has “personal identification” right in the acronym! Shoot I just gave the lawyers another option.
Stupid unintended consequeces! Or, intended, if you think like a lawyer/politician.

14 MF 04.13.09 at 3:33 pm

Also, how does this affect ATM withdrawls? Your card is a “credit card” if it has the Visa or MC logo on it and there is a “transaction” that requires your PIN. No, it’s a debit card, not a credit card. Different rules apply to debit cards.

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