Why Do Retailers Ask For My Zip Code? Should I Give it to Them?

Posted on Credit 312

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Remember the last time you used a credit card at either the mall or at a gas station?  You were likely asked to either punch in your zip code or were asked verbally by the check out clerk. Have you ever wondered why they need that information? It’s certainly not a mandatory attribute in order for your credit card to work. There must be some other reason….or reasons.

Retailers are asking for your zip code for two reasons…fraud prevention and marketing. The marketing aspect of it is pretty invasive, using your name combined with your zip code to unlock the more valuable data such as address, email address, phone number and even income. When you marry a name and a zip code the retailer can then buy your contact information from a list broker.

Clearly the more they know about you the more they can target their marketing. Some people are okay with it because they want the marketing offers and special deals. Others are more creeped out that a 3rd party knows so much about them. What do you do…just give a fake zip code? Or you could refuse to give any zip code altogether. Or, you can do what I do…not worry about it. I’m on the do not call list so they’re not allowed to call me anyway. And the junk mail…I just trash it.

When an “in-store” retailer asks you for your zip or your phone number you have to understand that it’s all about marketing. You can either refuse to give them the info or you can give them fake info.

For the scenarios where a gas station is asking for your zip code it’s definitely for fraud prevention. Every single one of you who has a credit card has a billing address.  And that billing address has a zip code. When you swipe your card they are asking for your billing zip code in hopes that IF a fraudster has your card he or she will not know your billing zip code. When they enter the incorrect zip code the transaction is denied.

Because of this issue with transaction approvals giving a fake zip code is not only unwise but it will lead to your card being denied. And that’s not where it ends. The issuer could close down your card if they become aware of mismatched card/zip combos being given at a gas pump. In that case you should absolutely give your correct zip code and not worry about a marketing aspect to the disclosure.

Frankly, your data is already SO available that withholding a zip code is meaningless.  But, if it makes you feel more in control over then by all means withhold it. Just be aware that it’s very easy for anyone to buy your name, address, contact information and even Social Security Number.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, founder of www.creditexpertwitness.com and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  You can follow John on Twitter here.