Hi Steve,
Thank you for uploading the data; it was useful.
I do not know if this is by design or not, but the Validate State/Province option does not kick in when the Country field is blank. Your client does not fill in the Country code, but Sample Data customers do. That is the difference.
It doesn't seem like this option should rely on a value in the country code to perform the validation, so I will certainly forward your comments on to R&D.
The workaround would be to put USA into the country field.
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Regards,
Softrak Tech Support