Web Exclusive: Why retailers need your zip code at checkout?

Web Exclusive

(CNN) - You may want to think twice if a sales clerk asks for your zip code after swiping your credit card. Giving that zip-code could lead the retailer and maybe some others, who could be more menacing, to get other information about you. 

Jo Anna Davis says the situation was so absurd, she laughed out loud in her car afterward. She'd tried to return an item at a beauty store near Sacramento. They asked for her zip-code, which she didn't want to give them. 
"When I refused to give my zip code they called the manager.  She wanted it and then said that she couldn't go forward with providing me with a refund or a store credit or whatever," says Jo Anna Davis. 

Davis says it led to an ugly confrontation in the store. For many of us, it doesn't get that far. 
We're often asked for our zip-codes when we make a purchase and think nothing of giving it. But if a sales clerk sees your name while swiping your card, then gets your zip-code... "Stores can take this information to a data-broker and ask them to match up the name with the zip-code in order to get the person's home address.  And they can get other information too.
They might be able to get an e-mail address or a phone number as well," says Chris Hoofnagle, UC Berkeley Law School. 


Chris Hoofnagle, who teaches privacy law at the University of California-Berkeley, says retailers can take that information and target you for marketing campaigns, even share it with other retailers. He says they can gain information about your income, or whether you've gone through bankruptcy.  There are now lawsuits in some states over whether the practice is legal- or should be. Hoofnagle says retailers are usually playing within the rules when they go to data-brokers to get additional information about you.  A worse case scenario, he says, is the possibility that some employees might move outside the lines.

"Employees of a store might decide to stalk you or might simply decide you're good-looking and to show up at your house or call you," says Hoofnagle.

It's Jo Anna Davis's own sense of those possibilities that raises her guard when a clerk asks for a zip-code.  "I am a domestic violence survivor and so I highly regard my privacy.  And whenever there are those reward programs, I do give a fake birthday and you know in this case I could've given them a fake zip-code.  But why should I have to do that?" 

As for beauty-products chain 'Ulta', where Davis had that experience: an official there says it's disappointing to know they've lost a valuable customer, and that the service in one of their stores was less than stellar. The company offered to make it up to Davis, but they didn't comment on the practice of asking for zip-codes. 

We do have to say- that many retailers ask for zip-codes simply to understand where their visitors are coming from- so they can make decisions about how to use advertising resources.


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