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CHICAGO, June 5, 2014 /PRNewswire/ -- February 2014 marked the three-year anniversary of the California Supreme Court opening the doors to class-action litigation against retailers for alleged collection of consumers' ZIP codes in connection with credit card transactions.
McGladrey's ZIP code data collection suits: A growing litigation trend explains that the highest courts in California and Massachusetts have rendered decisions as to the scope and breadth of their respective states' law, in both cases broadly construing their statutes to say that collection and/or recording of ZIP codes was prohibited in these circumstances. These decisions have led to nearly 200 putative class action lawsuits (roughly 150 in California and nearly 40 in Massachusetts). Interestingly, a District of Columbia (D.C.) federal court recently dismissed a similar suit alleging violation of a narrower D.C. statute, holding that a ZIP code is not itself an address.
Sixteen states and the District of Columbia have laws that restrict merchant collection of personal identification information (PII) at the point of sale (POS) in conjunction with a credit card sales transaction, and it is necessary to appreciate these state differences when developing strategies. These disparate laws and court rulings highlight the variety of what may be required for compliance with specific state POS requirements.
Each of the seventeen different PII collection statutes has distinct language, some untested. Understanding the risks associated with the collection of this information is essential. McGladrey's ZIP code data collection suits: A growing litigation trend goes into further details regarding the associated legal challenges, as well as prevention efforts, on how to protect your business.
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