As a consumer, perhaps you have noticed a change in the information printed on your credit card receipts. As a retailer, hopefully you know that such receipts are subject to new requirements. As of December 4, 2006, the Fair and Accurate Credit Transactions Act ("FACTA"), which amended the Fair Credit Reporting Act ("FCRA"), requires that "no person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number or the expiration date on any receipt provided to the cardholder at the point of the sale or transaction." 15 U.S.C. Sec. 1681c(g). The statute is susceptible to attack on a number of grounds, including that it is grammatically incorrect and vague, thus subjecting it to varying interpretations and extensive litigation. In light of the present ambiguity, all merchants that electronically print credit or debit card receipts should: 1) truncate the credit or debit card numbers; and 2) omit the expiration date on the copy they give their customers.
While FACTA was intended to help prevent identity theft, it has caused an explosion of consumer class actions against retailers and restaurants in federal courts around the country. The class actions allege "willful" violations of FACTA, which allow plaintiffs to seek statutory damages of $100 to $1,000 for each violation alleged, plus punitive damages, costs of the action and attorney's fees. The lawsuits do not allege negligence or seek actual damages, presumably because the putative class members have not suffered any actual damages. These class actions tend to include bald allegations that the violations of FACTA were "willful," but until the Supreme Court recently ruled, a split existed among the circuit courts of appeal as to what constitutes a "willful" violation.
In Safeco v. Burr/Geico v. Edo (consolidated), decided June 4, 2007, the Supreme Court ruled that a company can be held liable for a willful violation of FCRA not only by knowingly violating the statute, but also by recklessly disregarding its requirements. Whether a company’s conduct is found to be reckless, the Court determined, is an objective standard--namely, whether the company’s action entails a risk so great that it is known or obvious that harm would result from the violation. The Court found that Geico did not violate the FCRA; and although Safeco might have, its action was not reckless and thus not "willful."
The Supreme Court’s decision will no doubt have a significant impact on the scores of FACTA class actions pending nationwide. While these cases have yet to be decided and there are procedural and substantive defenses to the FACTA claims, proper steps should be taken to comply with FACTA. Otherwise, a company runs the risk of violating FACTA and becoming the latest target of a class action lawsuit.
If you have any questions regarding compliance with FCRA, as amended by FACTA, or any related litigation, please contact Daniel A. Kaufman at 312.836.5077 or email@example.com, or Laura Shroyer Liss at 312.222.5798 or firstname.lastname@example.org.