What Made News?
Ikea recently argued that a class action filed against it based on alleged violations of California’s Song-Beverly Act should not be maintained. Ikea admits that its sales registers prompt sales associates to collect ZIP codes from consumers, but it argues that associates often bypass the prompt. Because it does not have a policy to collect ZIP codes, Ikea claims that it cannot be held liable for the alleged illegal ZIP code collections.
Details of the Case
Consumers across the country have become accustomed to cashiers’ requests for ZIP codes, phone numbers, or other information at the point of sale. Although the requests are permitted in some states, other states — in particular, California — have strict laws prohibiting retailers from requesting personal information from customers paying with credit cards except in certain limited circumstances.
As we have previously reported, scores of class action lawsuits have been filed against California retailers alleging that they illegally collect customer information. In the class action pending against Ikea, the lead plaintiff argued in trial recently that Ikea’s sales associates routinely asked California consumers for ZIP codes at the point of sale after the register prompted the associate to make the request. The class plaintiff claims that a sales associate directly asked for her ZIP code while she was checking out at an Ikea register and using a credit card in violation of the law.
After the class plaintiff made her case, Ikea filed a motion for judgment or, alternatively, class decertification. All along, Ikea has maintained that, although its registers prompt employees to collect ZIP codes, it has no policy to collect them, and employees will instead often enter an invalid ZIP code — such as five zeros — to bypass the system to finish up the sale. Ikea also argues that there is no way for Ikea to distinguish between ZIP codes that were lawfully collected for shipping or installation purposes and those that were not, meaning that there is no way to accurately determine how many violations occurred or who the class members actually are. As a result, Ikea claims, the class should be decertified.
What is the Takeaway?
Cases brought under California’s Song-Beverly Act highlight the complexities of point-of-sale data collection laws and emphasize the need for retailers to be cognizant of the laws in every state in which they have stores. Here, Ikea has argued that it did not violate California law because it did not have a policy to collect ZIP codes. The retailer’s position would be stronger, however, if it pointed to a written data collection policy not to collect ZIP codes from California consumers.
Arent Fox has assisted retailers in drafting data collection policies and training manuals that comply with various state laws, and we have helped retailers sued for improper ZIP code collections to defend against the claims based on the policies we drafted. Arent Fox will continue to monitor the law as it relates to the collection of customer data. Please contact Sarah L. Bruno, Anthony V. Lupo, Leah C. Montesano, or Daniel B. Jasnow with questions.