FACTA Or Fiction? Printing Electronic Credit Card Receipts Can Cost A Business Millions Of Dollars
November 26, 2007
by Thomas H. Ryerson and Maria Z. Vathis
Since December 4, 2006, a flood of new class action cases have been filed against business owners around the nation. These cases allege willful violations of the Fair and Accurate Credit Transactions Act (“FACTA”), an amendment to the Fair Credit Reporting Act. Retailers and restaurants in Illinois, Indiana, New Jersey, and California, to name a few states, have been involved in this litigation. The complaints typically accuse business owners of placing consumers at risk for identity theft by failing to truncate card numbers and expiration dates on credit card and debit card receipts provided to cardholders during business transactions.
FACTA, which added Section 1681c(g) to the Fair Credit Reporting Act, provides: “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of sale or transaction.” 15 U.S.C. § 1681c. [emphasis omitted].
Whether large or small, all businesses that are not in compliance with FACTA are potential targets of this litigation. The driving force behind this flurry of class action litigation is financial. Statutory damages for a willful violation of FACTA are between $100 and $1,000 per violation, regardless of whether any actual damages were incurred or whether an individual’s identity was stolen. FACTA also provides for the recovery of attorney’s fees, costs and punitive damages for a willful violation. A negligent violation requires proof of actual damages, but a plaintiff may also recover attorney’s fees and costs. The effective date of compliance with FACTA for all business owners was December 4, 2006.
Entities such as Victoria’s Secret, Toys “R” Us, The Gymboree Corporation, California Pizza Kitchen, In-N-Out Burgers, Adidas Promotional Retail Operators, El Pollo Loco, Costco, and IKEA have all been involved in this litigation. Businesses typically claim coverage under their commercial liability policies. If these cases follow the pattern set in earlier Fair Credit Reporting Act class actions, there is the potential for substantial coverage litigation, in addition to high-stakes liability defense of the insureds. We are currently representing a national restaurant chain and are, therefore, on top of the issues involved in these cases. Our litigators have the experience and skills to effectively defend these types of cases. Please contact Thomas H. Ryerson at tryerson@clausen.com or Maria Z. Vathis at mvathis@clausen.com for more information.
