Check Your Receipts: Maybe You Can Sue!

By August 8, 2007Briefly Legal

Interesting little item from the Nashville-based lawfirm of Waller Landsen. Congress passed the Fair and Accurate Credit Transactions Act in 2003, moved in part by concerns about identity theft. New law means new opportunities for many in the class-action biz.

Approximately 200 putative class action lawsuits have been filed across the United States since December 2006 against a wide variety of retailers and franchisors, including national brands such as Victoria’s Secret, Costco Wholesale, FedEx, Toys “R” Us, Budget and Avis car rental companies, Wendy’s, TGI Friday’s and a number of regional and local brands. While the lawsuits have focused on retailers and franchisors, any company that accepts credit and debit cards for the transaction of business – from hospitals and healthcare providers to auto dealers – is a potential target. State consumer protection statutes and deceptive trade practices statutes are frequently pleaded with federal claims.

FACTA was enacted in 2003, and became fully effective in December 2006. FACTA was intended to protect consumer privacy and prevent identity theft. Willful violations of FACTA may subject the violator to statutory penalties in the amount of $100 up to $1,000 per “violation.”

Seizing on what they claimed was an ambiguity in the law, the plaintiffs’ class action bar began filing cookie-cutter lawsuits almost as soon as the FACTA amendment became effective. Nearly all of the defendants in these lawsuits had truncated cardholders’ numbers as the statute provides — typically including only the last four or five digits of the cardholders’ numbers on the POS receipt. Many of the defendants, however, did not “mask” the cardholders’ expiration dates, causing the plaintiffs’ class action bar to allege statutory violations.

Has any real harm been asserted? Oh, probably not. But that doesn’t prevent the lawsuits…and the increased costs to businesses eventually paid by the consumer.

Join the discussion 2 Comments

  • guest says:

    Jeremy — that’s false. (You should watch the documentary “Maxed Out” if you want to know why credit card companies charge such ridiculously high rates — because they pay lobbyists who ALLOW them to charge those rates and because it’s profitable).
    The FACTA lawsuits are suing businesses (not credit card companies) that needlessly risk customer’s identities. Even more compelling is that credit card companies (MC and Visa) created their own policies BEFORE this statute went into effect that required the same. The credit card companies warned businesses of the identity theft risks years before the lawsuits began (and the statute took effect), requiring truncation of credit card numbers and expiration dates.

    You should do your research before blindly attributing everything to what you call “frivolous” lawsuits. (Although I do agree to a certain extent that there are certain frivolous lawsuits out there, and yes, they do create costs, I do think that you always have to take the good with some bad. I can’t bear to think of the million ways corporate america would abuse consumers without some check in place.)

  • This is the reason that rates are so high on credit cards these days. ALl of these frivolous lawsuits are driving up the defense costs associated with the credit card companies and therefore they have to find a way to pass that cost onto the consumer because god forbid they foot the bill for their pown problem, and then it ends up costing the average joe thousands more in interest on his cards every year… senseless.

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