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ZIP code requests in credit card transactions violates Mass. privacy law

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Massachusetts retailers’ collection of ZIP codes violates a state law that prohibits collection of personal identification information during a credit card transaction, says the state’s highest court.

The Massachusetts Supreme Judicial Court issued its unanimous opinion in Melissa Tyler v. Michaels Stores Inc. in response to a request by the U.S. District Court in Boston, where the lawsuit was originally filed.

According to Monday’s ruling, Ms. Tyler was asked to provide her ZIP code in making purchases at a Michaels retailer store. Ms. Taylor said Irving, Texas-based Michaels used her name and ZIP code in conjunction with other commercially available databases to find her address and telephone number, and she subsequently received unsolicited and unwanted marketing material from the company. She filed a putative class action complaint in May 2011, according to the ruling.

The relevant Massachusetts statute states, “No person, firm, partnership, corporation or other business entity that accepts a credit card for a business transaction shall write, cause to be written or require that a credit card holder write personal identification information, not required by the credit card issuer, on the credit card transaction form.”

The state court held in its closely watched opinion that it disagreed with the federal court’s finding that the statute’s main purpose is to prevent identity fraud, and not to protect consumer privacy, as Ms. Tyler contended.

The court also unanimously held that a plaintiff can bring an action for violation of the statute, absent identity fraud, and that the term “credit card transaction form” in the statute refers equally to electronic and paper transaction forms.

The case was returned to the U.S. District Court in Boston for further proceedings.