Fair and Accurate Credit Transactions Act (FACTA)

How FACTA Protects Consumers From Identify Theft

The Fair and Accurate Credit Transactions Act (FACTA) provides important protections for consumers. The law amended the Fair Credit Reporting Act by improving consumer access to credit reports and by making it easier to add fraud reports to credit files. One important but often overlooked FACTA protection prohibits businesses from printing more than the last five numbers of a credit or debit card on the receipt issued to the customer.

When merchants violate FACTA, they expose their customers to the risk of identity theft. Consumers have the right to pursue a legal remedy when that happens. Consumers are entitled to “statutory damages” even if they did not experience identity theft or any other harm. A class action lawsuit is often the most effective way to pursue that remedy.

The Power of FACTA Class Action Lawsuits

A class action lawsuit allows all consumers who were placed at risk of identity theft to seek a collective remedy from the business that violated FACTA. Class action lawsuits transform an individual claim for $1,000 or less into a joint claim that, in many cases, will seek millions of dollars in statutory damages.

Class action lawsuits have the power to persuade businesses to obey consumer protection laws. A merchant sued by just one customer might find it less expensive to settle the claim than to comply with the law. A class action lawsuit, however, empowers consumers to change the way a business prints its receipts.

A class action settlement of a FACTA claim usually includes the merchant’s agreement to comply with the law. It also vindicates the rights of all consumers who were given an unlawful receipt by that business. A class action lawsuit therefore provides an individual consumer with the opportunity to take a meaningful stand against identity theft.

FACTA and Identity Theft

The government’s 2017 Identity Fraud Study found that 15.4 million consumers were victims of identity theft in 2016. Consumers lost a total of $16 billion dollars to thieves who misappropriated their identities. Since 2011, more than $100 billion has been stolen from American consumers by means of identity theft.

Credit card fraud accounts for about 20% of all cases in which identity theft leads to a financial loss. There are several means by which criminals pilfer credit card numbers, but before FACTA was enacted, one of the most common schemes simply required a criminal to steal the consumer’s credit card receipt.

For example, assume a consumer used a credit card to pay for lunch at an airport restaurant. The waiter would run the card and give the consumer two electronically printed copies of the bill. The consumer would sign one while the other functioned as a receipt. But consumers would typically leave the receipt on the table or throw it into the nearest trash bin after leaving the restaurant. A thief merely needed to take the receipt from the table or fish it out of the trash to obtain the customer’s credit card number.

Businesses that comply with FACTA no longer print the full credit card number on receipts. There are still machines in use that make an imprint of the raised numbers on a credit card, but most of those machines have been replaced by machines that print electronic receipts. Receipts on which a card number is hand-written or produced other than by an electronic printer are exempt from FACTA, but credit card companies have required most businesses to process credit card transactions electronically.

How Merchants Violate FACTA When They Print Receipts

A key purpose of FACTA is to prevent criminals from acquiring credit card numbers by stealing or viewing credit card receipts. When merchants provide an electronically printed receipt for a credit card purchase, the receipt must not display more than the last 5 digits of the credit or debit card number.

For instance, a receipt complies with the law if it displays:

***********54321

A receipt also complies with the law if it displays:

************4321

But a receipt violates the law if it displays any other numbers on the card, such as:

5**********54321

54**********4321

54006***********

5***6***7***4**1

In each case, printing the highlighted numbers violates the law because those numbers are not in the last 5 positions.

The law also prohibits merchants from electronically printing the expiration date of the card on the receipt. The receipt therefore violates the law when it includes:

EXP 10/19

EXP 10/2019

EXP **/19

Every business that sells goods or services is subject to FACTA, including:

The law applies to every business that issues receipts for credit or debit card purchases, regardless of its size or locations.

Liability for FACTA Violations

Businesses can be held responsible for the payment of compensation when they willfully violate FACTA. A violation is willful if the merchant intentionally or recklessly disregards the law.

Congress gave businesses three years (until December 2006) to make sure their electronic printers complied with the law if they were using those printers before December 2003. Businesses that began using printers after December 2003 were given until December 2004 to comply with the law.

At this point, every business has had ample time to learn about the law and to make sure its electronic receipt printers are programmed correctly. Businesses that violate the law at this late date are almost always reckless in their failure to assure that receipts do not reveal credit card numbers or expiration dates.

Class Action Credit Card Receipt Lawsuits

Since consumers do not always know whether or how they have been victimized by identity theft, a consumer who receives an electronic receipt that violates FACTA can seek statutory damages of $100 to $1,000. Those damages are payable whether or not an identity theft actually occurred.

Some businesses have ignored FACTA because they believe it is not worth a consumer’s time to bring a lawsuit for $1,000 or less. Class action lawsuits solve that problem. Because a class action lawsuit exposes a business to statutory damages for every receipt it issued in violation of FACTA, class actions change the way a business does business.

A consumer who initiates a class action lawsuit and serves as the lead plaintiff is often rewarded with extra compensation to acknowledge the consumer’s investment of time and energy. If you received an electronically printed receipt that violates FACTA, contact the class action consumer protection lawyers at The Cooper Law Firm to learn how you can participate in a class action lawsuit.

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