Massachusetts High Court Decision Regarding ZIP Codes Increases Consumer Litigation Risk For Retailers

On March 11, 2013, the Supreme Judicial Court of Massachusetts ruled in Tyler v. Michaels Stores, Inc. that a retailer's collection of ZIP codes while processing credit cards can violate Mass. Gen. Laws ch. 93, § 105(a), a Massachusetts statute restricting the collection of personal identification information during credit card transactions. The state court decision, which concluded that the statute was aimed at protecting privacy rather than preventing identity fraud, bolsters a putative class action against the craft retailer that was brought in Massachusetts federal court. The ruling also is likely to precipitate an increase in privacy class action litigation against retailers, particularly those conducting business in Massachusetts.