Federal Rule Gives Consumers Leverage Against Identity Theft

The Fair and Accurate Credit Transactions Act (FACTA) gives consumers a right to file lawsuits against merchants who allow their electronic receipt systems to print too much credit card information on receipts.

Congress enacted FACTA in 2003, in part, to help protect consumers from identity theft. According to the FTC, identity theft happens more than 9 million times a year in the U.S.

Evidence presented to Congress during the FACTA drafting process showed that printing any more than the last five digits of a credit card number could lead to identity theft and credit fraud. So, under the FACTA receipt rule signed into law, a credit card receipt must show no more than the last five digits of the card number, and it cannot show the expiration date.

For each non-compliant transaction, FACTA provides for statutory damages of $100 to $1,000. Congress allowed for this statutory damage award in recognition of the difficulty of proving actual identity theft when it happens. Successful plaintiffs in a FACTA lawsuit can also recover attorneys’ fees and costs of the litigation.

While the receipt rule applies to any receipts printed from an electronic system, FACTA provides an exception to this requirement for receipts written by hand or created using the old mechanical imprint method.

Damages in a FACTA lawsuit can add up quickly. One misprogrammed point-of-sale terminal could generate hundreds or thousands of noncompliant receipts, creating a basis for millions of dollars in damages. And in situations like that, where one merchant’s action causes similar harm to an entire class of persons, a FACTA class action lawsuit may be an option.

Payouts from these claims can be substantial. One survey of 21 California FACTA class action lawsuits projected they could result in anywhere from $4 billion to nearly $40 billion in damages.

That’s just the 21 FACTA lawsuits surveyed. In the first year after the receipt rule went into effect, over 200 FACTA lawsuits were filed.

The difference between a $100 violation and a $1,000 one is whether it is “willful.” A 2007 U.S. Supreme Court decision clarified that in FACTA receipt cases, the term “willful” also covers both knowing and reckless violations. Recklessness, the court said, requires a high probability of harm that is either known or simply obvious.

“Willful” covers a large set of possible actions by merchants. Congress responded to the court a year later by easing one provision of the receipt rule.

Under these amendments, simply printing the card’s expiration date on a receipt will not by itself be considered a “willful” act subject to the higher statutory damages level, as long as the receipt is otherwise in FACTA compliance and also complies with the rest of the Fair Credit Reporting Act.

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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