Kohl's Slammed with Lawsuits For Collecting Zip Codes at Checkout

Kohl's (NYSE: KSS) is heading to court to defend itself against a slew of ZIP code class action lawsuits. The filings allege that ZIP codes amount to personal identification information, which merchants in Massachusetts are prohibited from collecting when customers use credit cards.

The Wisconsin-based company is among many that have been sued since high courts in the state ruled that stores can no longer collect personal data from shoppers. The law was adopted in 1991 and says merchants generally cannot record a customer's address, phone number or any other identification information as a condition of a credit-card purchase.

A ZIP code alone isn't enough to identify a specific person, but security analysts say that a ZIP code combined with the name from a credit card often can produce a customer's address, which could lead to identity theft.

In Massachusetts, a single law firm has filed at least seven ZIP code class actions in the past 10 months, with three of them — against Kohl's, J.C. Penney and Williams-Sonoma — naming the same customer as plaintiff. While Kohl's has denied any wrongdoing, the retailer has agreed to pay up to $563,000 to settle the suit. The company has also set up a gift-card fund in the amount of $425,000. The funds will be divided equally among customers who file valid claims proving that they shopped at Kohl's and were required to share ZIP codes during checkout. Kohl's also will pay up to $135,000 to the plaintiff's lawyers, and $3,000 to the lead plaintiff herself.

California is another state that has banned retailers from collecting ZIP codes, and last year, Kohl's agreed to pay $872,500 to settle a similar lawsuit there.

For more see:
-this Brenner Settlement website
-this Milwaukee Journal Sentinel article