FACTA Check: Credit and Debit Receipts Can Show Injury-in-Fact


In a series of recent decisions that have important implications for retailers, large and small, federal courts have allowed consumer class actions to proceed against businesses for violation of the Fair and Accurate Credit Transactions Act (“FACTA”), even where the consumers did not allege actual damages resulting from the violation.

FACTA requires businesses that accept credit or debit cards to truncate all but the last five digits of a consumers’ card numbers and prohibits printing of credit or debit card expiration dates on all electronically-printed receipts. Although the statute was enacted in 2003, its truncation provisions were phased into effect based on the date that businesses put cash registers or other receipt-printing machines into use. FACTA’s truncation requirements became fully effective for all businesses on December 4, 2006. Since then, numerous lawsuits have been filed against businesses based on alleged failures to properly censor data printed on customers’ receipts. Court rulings in recent FACTA cases underscore the importance of routine monitoring of retailers’ point-of-sale systems to ensure ongoing compliance with FACTA’s truncation requirements.

Last month, a federal judge in Florida rejected luxury shoe, handbag and accessory retailer Jimmy Choo’s motion to dismiss a proposed class action filed by a customer who alleges that Jimmy Choo willfully violated FACTA by issuing her a receipt containing her credit card’s expiration date. (Wood v. J Choo USA, Inc., Case No. 15-cv-81487 (S.D. Fla. Aug. 10, 2016). Jimmy Choo argued that the customer did not have standing to bring a claim under FACTA because she did not allege that she suffered any actual injury (such as identity theft) as a result of Jimmy Choo’s inclusion of her credit card expiration date on her receipt. In its motion, Jimmy Choo relied, in part, on Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016), a recent Supreme Court decision in which the Court held that a plaintiff must show that he or she suffered a “concrete and particularized” injury to have standing. The court in Florida ultimately rejected Jimmy Choo’s argument, finding that the customer’s allegation that Jimmy Choo violated her procedural right under FACTA to receive a receipt that protected her personal financial information constituted sufficient injury to confer standing. According to the court’s ruling, that injury occurred as soon as the improperly truncated receipt was printed.

Similar decisions have been reached by federal courts in California and Florida in FACTA class actions brought by consumers who alleged no harm other than an increased risk of credit and debit card fraud or identity theft.  (Flaum v. Doctor’s Associates, Inc., Case No. 16-61198-CIV (S.D. Fla. Aug. 29, 2016); Cesare v. Lab. Corp. of Am. Holdings, Case No. SACV160006DOCKESX (C.D. Cal. May 31, 2016). Additionally, the United States Court of Appeals for the Second Circuit recently vacated a New York federal court’s ruling dismissing a FACTA lawsuit against retailer The Donna Karan Company, and allowed the plaintiffs to re-plead their claims based on the standards set forth in the Spokeo ruling. (Cruper-Weinmann v. Peris Baguette Am., Inc., Case Nos. 14-3709 and 15-464 (2d Cir. June 30, 2016).

Businesses that fail to bring their registers and other point-of-sale systems into compliance with FACTA’s truncation requirements can be liable to consumers for damages, including statutory damages ranging from $100 to $1,000 per violation and punitive damages. In addition to actual, statutory and punitive damages, FACTA provides for an award of attorneys’ fees and costs to plaintiffs who prevail in enforcement actions brought under the statute. Considering the staggering number of potential plaintiffs in any given FACTA class action and the scope of damages that could result, retailers should take heed of courts’ recent decisions, and should implement routine measures by which point-of-sale systems are monitored for compliance with truncation requirements. Retailers should also be sure that their employees are educated on FACTA’s requirements for protection of consumers’ personal information.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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