The ZIP Code Collection Debate Rages On

As of last week, two states have now declared that asking for customers’ ZIP codes in-store at the point of sale violates their privacy laws.

The Massachusetts Supreme Judicial Court ruled last week that retailers that record customers’ ZIP codes when they make credit card transactions can be sued under Massachusetts consumer privacy law because they're retaining personal identification information. California's Supreme Court made a similar ruling in 2011.

Privacy advocates are concerned. According to a March 19 CNBC article, privacy advocates are urging consumers to jusy say no when asked by retailers for their ZIP code. Why? Because "that simple decision can result in more junk mail headed your way and more telemarketers disrupting your day," said Paul Stephens, director of policy and advocacy for Privacy Rights Clearinghouse, a nonprofit watchdog group, in the article.

Stephens said that unlike swiping your credit card at the cash register, pairing your ZIP code with your name can help "merchants figure out your mailing address, phone number and specific demographic information."

Once a retailer has this information, it can then send you a catalog or even sell your profile to a data broker. It happens all the time, but most people have no idea of the implications of revealing their ZIP code, Stephens said.

Retail trade associations, of course, counter that collecting such data is beneficial to consumers.

“Asking for generic information helps retailers tailor merchandise, customize advertising and marketing — promotions, deals and coupons — and individualizes services,” said Stephen Schatz, a spokesman for the National Retail Federation, in a statement. “Thus, retailers may ask for general info such as ZIP codes in order to better know and serve their customers.”

As a retailer, and consumer, where do you stand on this issue? Let us know by posting a comment below!