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Is it wise to give out your Zip Code to a merchant when asked?

This is an article I saw on Forbes, this gave me reason for pause. You might find this useful.

Never Give Stores Your Zip Code. Here’s Why

Why do merchants sometimes ask us for our ZIP code when we buy something?

I recently visited the Mob Museum in Las Vegas, an interesting addition to Sin City’s attractions. I paid my admission with a credit card, prompting the museum ticket seller to ask me: “What’s your ZIP code?”

When I paused for a moment, she added: “It’s for marketing purposes.”

As much as I had heard good things about the museum, I was unlikely to return soon as I live far from Las Vegas, so I was not anxious to receive subsequent marketing. She said it was okay not to give the ZIP code, and then addressed me by name in wishing me a good visit.

Jo Anna Davis remembers one ZIP code request that did not end well. A California victim of domestic violence who works at a group to help other victims, she guards her privacy carefully. Over the years she became a loyal customer of Ulta, the beauty care company. On one occasion she purchased a skin care kit which caused an unpleasant reaction. She brought the kit back to the store for a refund, and the clerk asked for Davis’ ZIP code to process the transaction.

Concerned about her privacy, she declined to provide the information, prompting the clerk to remark that no one had ever refused before. The clerk called the manager, who showed irritation. Davis asked for her receipt back, the manager refused, so she took it herself. An argument ensued. The manager locked the store’s door and demanded it back. “It was absolutely insane. I’m sure I looked rather crazy myself,” Davis says.

The whole scene emerged only because Davis did not want to share her ZIP code. Why make such a big deal over five digits that only records that someone lives in the same area as many thousands of others? Because along with other information, the ZIP code may provide the final clue to figuring out your address, phone number and past purchasing details, if a sales clerk sees your name while swiping your credit card.

How does this work? In one of their brochures, direct marketing services company Harte-Hanks describes the GeoCapture service they offer retail businesses as follows: “Users simply capture name from the credit card swipe and request a customer’s ZIP code during the transaction. GeoCapture matches the collected information to a comprehensive consumer database to return an address.” In a promotional brochure, they claim accuracy rates as high as 100%.

Fair Isaac Corp., a company best known for its FICO credit scores, also offers a similar service which they say can boost direct marketing efforts by as much as 400%. “FICO Contact Builder helps you overcome the common challenges of gathering contact information from shoppers—such as complicating or jeopardizing the sales process by asking for an address or phone number, or complying with regulations,” it says. “It requires minimal customer information captured at point-of-sale, just customer name or telephone number and the customer or store ZIP code.”

Because customers are usually not told that stores are building a marketing database from the transactions, some object.

In one high-profile case, the home furnishings and cookware chain Williams-Sonoma matched names from its credit card sales and ZIP codes with a database to obtain addresses and other information for future marketing. One woman sued, saying she provided her ZIP code thinking it was necessary to complete the credit card transaction. In the resulting case the Direct Marketing Association and privacy groups showed sharply different outlooks on the practice. The case eventually made its way up to the California Supreme Court, which ruled in 2011 that stores cannot require patrons to furnish their ZIP code. California later confirmed the ruling in a law that bars firms from collecting personally identifying information during credit card transaction. Courts in other states such as Massachusetts earlier this year have reviewed the issue.

As for Ulta, I contacted Cynthia Payne, the company’s senior vice president of store operations, to ask about Jo Anna Davis’s experience. “It is extremely disappointing for me to know that we have lost a valuable customer and that the service in any one of my stores was less than stellar,” Payne said. She added the company seeks to provide an exceptional guest experience and she offered to contact Davis to undo the damage from that visit.

Just because businesses ask for a ZIP code does not necessarily mean that they will append data to their files to know where you live, your phone number, email and other information. The process costs money, and unless they have a way to market off the data, there would be no reason to do it.

Ashley Misko, the Mob Museum’s director of marketing, did not observe to code of omerta when I asked what the year-and-a-half old museum does with its customer ZIP codes. She said they do not cross reference names and ZIP codes with other data, but just try to understand where their visitors are coming from.

“Ultimately, understanding how our patrons are finding out about us, which marketing/advertising efforts are affecting them, will give us the ability to make important decisions about our advertising resources and ZIP codes play a huge role in identifying that source,” she said. “We strictly utilize the information we receive to better understand the demographics of the market of those specific ZIP codes.”

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