Christina Spicer  |  December 31, 2021

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Fair and Accurate Credit Transactions Act (FACTA) Overview

The Fair and Accurate Credit Transactions Act, or FACTA, is a federal law written to protect consumer credit information. The Act, passed in 2003 as an amendment to the Fair Credit Reporting Act, was designed to “improve the accuracy of consumers’ credit-related records,” according to the Federal Trade Commission (FTC).

FACTA contains a number of consumer-friendly provisions, including the rights of consumers to obtain copies of their credit reports, credit scores, and information about how that score is calculated. In addition, FACTA’s provisions include protections against identity thefts and secure data storage.

The few FACTA protections are simple, but nevertheless help to prevent consumers from suffering identity theft and fraud. FACTA protections can be strengthened immeasurably when consumers are able to recognize violations of the rules, helping to determine if a company has complied with these rules.

Many provisions of FACTA protect consumers from credit fraud and identity theft by making it easier and less expensive to keep an eye on their credit records.

When something amiss does happen, FACTA creates further protections to help get the problem resolved. FACTA violations are subject to statutory damages of up to $1,000 per violation – whether the consumer suffered any real injury, such as identity theft. The violation itself is penalized.

FACTA Protects Card Numbers on Receipts

One of the most aggressively consumer-friendly provisions of FACTA protects the potentially sensitive credit information that may be inadvertently printed on retail receipts. By limiting the information that can be printed, FACTA also limits the amount of information a potential fraudster has access to via receipts.

Among the transaction information that businesses print on their retail receipts may be the card numbers and expiration dates of the credit cards and debit cards used to pay the transaction. FACTA imposes limits on how much of that information may appear on a receipt.

Diligently checking your receipts can not only protect one consumer’s information, but also the information of other consumers that may have been exposed as well. FACTA protects consumers by letting them bring a FACTA lawsuit against merchants who print receipts that do not comply with the truncation requirement.

Credit Card Truncation

Businesses that accept credit or debit cards are prohibited from printing certain pieces of information on their receipts under FACTA. The purpose is to prevent would-be identity thieves from accessing customers’ credit or debit card information and charging the accounts.

According to the FTC, no more than the last five digits of the credit card may be printed on a receipt and the expiration date may not be printed at all. For example, a receipt may read:

**** **** **** 5432 exp **/**

Truncation requirements are quite precise, and with good reason, according to the FTC.

Credit card numbers on sales receipts are a ‘golden ticket’ for fraudsters and identity thieves,” notes the FTC on its website. “Savvy businesses appreciate the importance of protecting their customers – and themselves – from credit card crime.”

Examples of truncation that is not compliant with FACTA include printing anything other than the last five digits of the card number, printing an expiration date, or even printing the full card number of a receipt.

When FACTA was enacted in 2003, the law gave businesses time to implement the new requirements when it came to truncation; however, as of 2006, all businesses should be in line with the new regulations.

FACTA and Identity Theft

FACTA also provides “Red Flags Rules,” provisions that require creditors, banks, and credit unions to create programs to prevent identity theft. Identity theft programs under FACTA should work to detect and mitigate instances of theft, as well as prevent them from occurring.

The provisions are called the “Red Flag Rules” because certain suspicious activities on an account can trigger red flags. Red flags include introducing personal identifying information into accounts and certain suspicious documents.

What is FACTA Disclosure?

One provision of FACTA allows consumers to get one free copy of their credit report per year from each of the three major reporting bureaus – Equifax, Experian, and Trans Union. Other circumstances can trigger entitlement to additional copies at no additional charge.

FACTA also protects consumers who suspect they may be the victim of identity theft by letting them place a fraud alert on their credit record.

FACTA Lawsuits

As the FTC notes, credit and debit card numbers on a receipt are a free pass to those who would use them to create a fake credit card. FACTA provisions regarding truncation are strict, and violations can lead to steep damage awards.

Enforcement of FACTA isn’t just in the hands of the FTC. FACTA allows consumers who receive non-compliant credit or debit card receipts to file a civil lawsuit against the business that issued the receipt. In some cases, incentive awards for plaintiffs have reached as high as $20,000, and many businesses have gone on to settle these lawsuits.

Filing a Lawsuit

Businesses of all kinds, from very small companies to massive ones, have been subject to FACTA lawsuits. Given that each violation can result in a substantial fine, class action lawsuits can result in damaging consequences for businesses.

While businesses should be aware of the potential cost of FACTA violations, they can follow some straightforward safeguards to ensure they do not commit FACTA violations. Additionally, holding businesses accountable for FACTA violations potentially protects thousands of consumers from identity theft and fraud.

Because FACTA violations are tied to electronically printed receipts, FACTA violations committed via an improperly programmed machine can print thousands of these receipts. In a class action suit where these violations are uncovered, a business may be required to award plaintiffs statutory damages of millions of dollars in total, as well as whatever punitive damages the court deems necessary.

It is relatively simple to prove the company violated FACTA, because the proof of violation is found printed clearly on the bottom of receipts. Take note of whether or not receipts follow receipt rules for both card numbers and expiration dates. If they do not, then a FACTA lawsuit may be filed against the business responsible.

Reporting non-compliant receipts protects future consumers from identity theft, as well as holding businesses who fail to properly protect this valuable information accountable.

FACTA Class Action Lawsuits

Consumers who have proof that a business did not comply with FACTA rules are allowed under law to file lawsuits against the businesses that committed the violation, collecting damages as well as attorney’s fees.

If a plaintiff can show that the violation was committed knowingly or willfully, the business that printed the noncompliant receipt could be on the hook for as much as $1,000 in damages per violation.

For larger businesses, those damage awards can add up fast. Businesses that operate on a nationwide scale and that fail to properly program their point-of-sale equipment can print thousands of noncompliant receipts in a single day, which can create an entire class of affected consumers who may be entitled to damages following a FACTA class action lawsuit. Big businesses caught up in one of these claims have faced claims of damages that initially reached into the millions and sometimes billions of dollars.

Please note: Top Class Actions is not a settlement administrator or law firm. Top Class Actions is a legal news source that reports on class action lawsuits, class action settlements, drug injury lawsuits and product liability lawsuits. Top Class Actions does not process claims and we cannot advise you on the status of any class action settlement claim. You must contact the settlement administrator or your attorney for any updates regarding your claim status, claim form or questions about when payments are expected to be mailed out.