On March 11, 2013, the Supreme Judicial Court of Massachusetts ruled in Tyler v. Michaels Stores, Inc. that a retailer’s collection of ZIP codes while processing credit cards can violate Mass. Gen. Laws ch. 93, § 105(a), a Massachusetts statute restricting the collection of personal identification information during credit card transactions. The state court decision, which concluded that the statute was aimed at protecting privacy rather than preventing identity fraud, bolsters a putative class action against the craft retailer that was brought in Massachusetts federal court. The ruling also is likely to precipitate an increase in privacy class action litigation against retailers, particularly those conducting business in Massachusetts.
In May 2011, Melissa Tyler filed suit against Michaels Stores, Inc. (“Michaels”) on behalf of herself and a putative class of Michaels customers in the federal District Court of Massachusetts. Tyler alleged that Michaels’ electronic recording of customer ZIP codes violated a Massachusetts statute restricting the collection of personal identification information (“PII”) during credit card transactions, thereby permitting her to assert a claim under the Massachusetts Unfair Trade Practices Act, G.L. c. 93A, § 2. Michaels filed a motion to dismiss Tyler’s complaint. The District Court agreed with Tyler that ZIP codes constituted PII under the state’s privacy statute and that Michaels’ electronic terminal contained “credit card transaction forms” within the meaning of the statute. The court ultimately determined, however, that Tyler had not alleged a cognizable injury sufficient to state a claim under the Massachusetts Unfair Trade Practices Act, and therefore granted Michaels’ motion to dismiss Tyler’s complaint.
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