ZIP code ruling zipping San Francisco retailers into court

A recent California Supreme Court decision making it illegal for retailers to ask credit card-paying customers for their ZIP codes has unleashed a flood of class-action litigation in San Francisco and other counties.

Attorney Gene Stonebarger, lead counsel in the Supreme Court case against San Francisco-based Williams-Sonoma that was decided in February, said last week there are now more than 150 class-action lawsuits in California against several companies.

About 40 have been filed in San Francisco Superior Court, he said.

The companies include Bed, Bath & Beyond, Big 5 Sporting Goods, Burlington Coat Factory, J.C. Penney, Kohl’s, Office Depot, Officemax, The Gap, Pier 1 Imports, Urban Outfitters and Wal-Mart.

“It’s an unfortunate by-product of the California Supreme Court decision, and that decision has started a floodgate of litigation,” said Bill Dombrowski, president of the California Retailers Association. He said most of the cases would prove “unfounded.”

The plaintiffs are alleging that the retailers collected ZIP code information from customers using credit cards under the false pretense that the information was required to process the transactions. In actuality, they argue, it was being collected for marketing purposes.

“It’s deceptive conduct,” Stonebarger said. “The companies are knowingly invading the privacy of their customers.”

An attorney representing Williams-Sonoma and other companies involved in the lawsuits said he could not comment on pending litigation.

Dombrowski asserted that the companies were not using the information for marketing purposes. “Most of the time, it’s being used to verify the credit card is your credit card, so it’s for fraud prevention,” he said.

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