FACTA Liability Protects Consumer Information

Ever check your credit card receipt to make sure the merchant didn’t print your entire account number on it? If they did, they may have incurred liability to you under federal law.

Congress passed the Fair and Accurate Credit Transaction Act, or FACTA, in 2003 as an amendment to the Fair Credit Reporting Act. It is designed to update consumer protections against credit fraud and identity theft. The provision that’s probably most familiar to consumers is the one that allows them to get one free credit report per year from each of the three reporting agencies. But FACTA contains a number of other provisions affecting many different aspects of handling consumer information.

FACTA prohibits businesses from printing more than the last five digits of a card number or the card’s expiration date on a credit card receipt. Each violation of this provision makes the business liable for actual damages caused by the violation or, at a minimum, statutory damages of $100 to $1,000.

The implications for businesses under this rule are considerable. It’s easy to see how, given the large number of credit card transactions any one business may conduct, one misprogrammed credit card terminal can lead to hundreds or thousands of FACTA violations – one for each transaction that generates a receipt. And where actions by a single business affect a large number of consumers in a similar way, they may create a basis for a FACTA class action lawsuit.

A plaintiff does not need to have suffered any actual harm to bring a FACTA class action lawsuit. The statutory damages provision allows consumers to make a claim under FACTA even if they suffered no actual loss.

On the flip side, although FACTA is basically a consumer-friendly law, as a federal law it also preempts certain greater protections afforded by state consumer protection laws. So while FACTA’s provisions are meant to provide a minimum of consumer protection, they function as a maximum as well.

The FACTA Disposal Rule

In addition to receipt printing rules, FACTA also updates the requirements for disposing of information derived from consumer reports. The FACTA “Disposal Rule” requires anyone who uses information from a consumer report for business purposes to dispose of that information in a way that prevents “unauthorized access to or use of the information.” The rule is administered by the Federal Trade Commission, or FTC, which provides guidance on FACTA compliance.

The rule applies to a broad range of persons and businesses, both large and small. It covers actions by insurers, employers, landlords, mortgage servicers, car dealers, and more. “Consumer report” is also a broad concept. It covers not just credit reports but also credit scores, insurance claims, check writing history, reports related to a person’s employment background or history as a residential tenant, and others.

As to exactly what disposal methods are FACTA-compliant, the FTC encourages businesses to take whatever steps would serve the purpose of the Act, but also makes a few specific recommendations. They recommend burning, shredding or pulverizing paper records and deleting or destroying electronic records, both in such a way that the information on them cannot be reconstructed. They also recommend hiring a document disposal service that passes FACTA-muster with an independent auditor. Businesses that take a prudent approach to disposing of consumer report information may be in the clear. However, the broad coverage of FACTA may expose many less diligent businesses to liability for FACTA violations.

Free FACTA Class Action Lawsuit Investigation

If you made one or more purchases and the retailer provided you with a receipt that contained more than the last five digits of your credit or debit card number or the expiration date, you may be eligible for a free class action lawsuit investigation and to pursue compensation for these FACTA violations.

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