Businesses Are Losing The Right To Ask For Customer ZIP Codes

In the near future, you might not have to decide.

Last month the Massachusetts Supreme Court ruled that collecting ZIP codes at the checkout counter is a violation of state privacy laws. Massachusetts isn't the first state to make this practice illegal — California also prohibits gathering customers' personal information during transactions — and it probably won't be the last.

The ruling came after a customer sued arts-and-crafts suppliers Michaels for collecting her ZIP code, using it to figure out her address and phone number, and targeting her home for direct mail advertising (a.k.a. junk mail) and telemarketing.

Personal data obtained at the checkout counter is often used to research a customer's address and phone number for direct advertising. Companies have also been known to sell said personal information to a data broker, essentially forwarding it to other marketers.

As personal information is increasingly disseminated to marketers, a debate is growing over the implications this type of data collection has on personal privacy, free speech, and democracy.

The Massachusetts ruling could be an indication of more to come in the consumer privacy debate. Christopher Wolf, director of the Privacy and Information Management practice group at the law firm Hogan Lovells, urges marketers to pay attention to the Massachusetts decision as a precedent has been set for customers to sue companies for privacy infringement.

"We're going to see more of [these types of lawsuits] in part because of the growing number of studies that indicate how easy it is to identify someone with very limited amounts of information," Wolf said.