Retailers ultimately benefitted from H.R. 4008, the “Credit and Debit Card Receipt Clarification Act of 2007,” which provided a form of a safe harbor protecting those caught unaware by the law. Unfortunately, while individuals have not suffered actual harm as a result of expiration date printing, FACTA class actions continue. The principal culprit appears to be software updates in point of sale systems, unmasking the expiration date. Since then, retailers have sporadically been caught up in FACTA class actions, and no longer benefit from the safe harbor.
In the case of Subway, it was sued twice in 2007, in 2008, and again in 2009. In 2016, more plaintiffs filed class actions against the operator of the Subway sandwich chain in California and Florida. Following the court’s rejection of Subway’s motion to dismiss, it entered into what appears to be a record-breaking FACTA settlement, approved March 23 by U.S. District Judge Cecilia Altonaga for the Southern District of Florida (Flaum v. Doctor’s Associates, Inc. 0:16-cv-61198).
The Subway litigation and settlement underscores that FACTA suits remain an enormous potential threat, strongly suggesting that retailers conduct periodic FACTA compliance checks. Other FACTA considerations include settlement strategy and format, as well as insurance coverage. For example, a 2010 FACTA suit against Fed Ex Office led to a class settlement allowing individuals who received offending receipts to submit claims. Although each claimant stood to receive a $50 gift card, only a tiny proportion ever submitted claims, making the theoretically large settlement nominal. A large proportion of the original FACTA cases in 2007 were fully covered by either general liability or private D & O insurance coverage despite initial denials. While some insurers adopted specific exclusions since 2007 to carve out coverage for FACTA claims, others have no carve out. The lesson? Check your receipts to avoid claims, and if you draw a claim, check your insurance coverage.