Antitrust Law Daily Wrap Up, PRIVACY—D.D.C.: Requesting ZIP codes from consumers upon credit card purchases did not violate D.C. laws, (Mar 17, 2014)

By Thomas G. Wolfe, J.D.

Although consumers in a proposed class action claimed that two retailers violated District of Columbia laws by requesting their ZIP codes when the consumers purchased merchandise at the retailers’ stores with their credit cards, the U.S. District Court for the District of Columbia ruled that the consumers failed to state a claim upon which relief could be granted. In dismissing the proposed class action with prejudice, the federal trial court determined that, under District of Columbia law, a ZIP code did not constitute an “address”; the retailers did not condition the credit card transactions on the consumers’ providing the ZIP codes; and the retailers recorded the ZIP code information separately—not on the credit card transaction form (Hancock v. Urban Outfitters, Inc., March 14, 2014, Howell, U.S. District JudgeB.).

Background. In May 2013, Whitney Hancock, one of the named plaintiffs, maintained that she made a credit card purchase at an Anthropologie, Inc. store and was asked for her ZIP code. Likewise, in June 2013, the other named plaintiff, Jamie White, maintained that she was asked for her ZIP code on two separate occasions when she purchased items at an Urban Outfitters, Inc. store with her credit card. White alleged that she provided her ZIP code to the cashier, who entered it into Urban Outfitters’ “point-of-sale register,” and not into “the credit-card-swipe machine.” Similarly, Hancock alleged that she provided her ZIP code to the cashier at the Anthropologie store, and the “cashier entered the information into Anthropologie’s point-of-sale register.”

In addition, both Hancock and White alleged that both retail stores had a “corporate policy” of asking for ZIP codes from consumers. According to the complaint, there were many other people, constituting the purported class of aggrieved persons, who also purchased merchandise “from the Defendants in the District of Columbia via credit card, and whose ZIP codes were requested or recorded.”

Accordingly, in their proposed class -action complaint, Hancock and White alleged that the requests by the two retailers for their respective ZIP codes violated two District of Columbia statutes: the Use of Consumer Identification Information Act (CII Act) and the Consumer Protection Procedures Act (DCCPPA). The court was called upon to rule on the defendant retailers’ joint motion to dismiss the consumers’ complaint for failure to state a claim upon which relief could be granted.

CII Act claims. With few exceptions (not applicable to the case), the CII Act (D.C. Code §47-3153(a)) prohibits any person, “as a condition of accepting a credit card as payment for a sale of goods or services,” from requesting or recording the address or telephone number of “a credit card holder on the credit card transaction form.”

In reviewing the CII Act claims by the consumers, while the court acknowledged that a ZIP code is part of an “address,” the court rejected the consumers’ argument that a ZIP code is, by itself, an address, or is at least an essential part of an address. Moreover, even if a ZIP code were deemed to be an “address,” the consumers failed to adequately plead that the two retailers conditioned the use of a credit card for their purchases on the retailers’ providing the ZIP code, the court maintained.

The court noted that the consumers’ complaint alleged that their ZIP codes were recorded into the pertinent “point-of-sale” register, but not into the “credit-card-swipe machine.” In underscoring this distinction, the court stated that although the CII Act “does not define the term ‘credit card transaction form,’ common sense would equate this ‘form’ with the credit card receipt to be signed.” Further, the court asserted that “it appears that the defendants took steps specially designed to adhere to the law by affirmatively separating the ZIP code information from the credit card information.”

In ruling that the consumers failed to adequately plead the necessary elements set forth in the CII Act provision ((D.C. Code §47-3153(a)), the court indicated that its ruling was supported by the legislative history of the CII Act. “It was this recording of addresses, telephone numbers, and drivers’ license numbers [on] credit card sales slips, as well as the requesting and recording of credit card numbers on personal checks, that were the particular consumer threats to be remedied by the CII Act,” the court emphasized.

DCCPPA claims. The court next addressed the consumers’ DCCPPA claims. While the consumers did not specify in their complaint the sections of the DCCPPA the retailer defendants were alleged to have violated, in their opposition to the defendants’ motion to dismiss their complaint, the consumers stated that they intended to more particularly allege violations of certain DCCPPA provisions. For instance, they invoked subsections under the DCCPPA provision (D.C. Code §§28-3904) prohibiting a person from: (i) making a misrepresentation concerning a material fact which has a tendency to mislead; (ii) failing to state a material fact if that failure tends to mislead; and (iii) using “deceptive representations or designations of geographic origin in connection with goods or services.”

At the outset, the court noted that the consumers’ DCCPPA claims were “predicated on their erroneous interpretation of the CII Act, namely, that it is illegal to request a ZIP code from a consumer.” As a result, the court ultimately found that, even under a liberal interpretation of the DCCPPA, the consumers’ complaint “failed to allege the affirmative misrepresentation or omission of any material fact, since the request for a consumers’ ZIP code is not impermissible under the CII Act, and the plaintiffs have not made any factual allegations from which it can be inferred that the provision of a ZIP code was required for the credit card transactions at issue.”

Since the court determined that any amendment to the consumers’ complaint “would be futile,” the court dismissed the consumers’ proposed class action with prejudice.

The case is No. 13-939 (BAH).

Attorneys: Mikhael D. Charnoff (Perry Charnoff PLLC) for plaintiffs. James Michael Burns (Dickinson Wright, PLLC) for defendants Anthropologie, Inc. and Urban Outfitters, Inc.

Companies: Anthropologie, Inc.; Urban Outfitters, Inc.

Cases: Privacy StateUnfairTradePractices DistrictofColumbiaNews