FACTA clarified
Restaurant operators are hailing a law that clarifies confusing language in the Fair and Accurate Credit Transactions Act (FACTA).
The Credit and Debit Card Receipt Clarification Act, passed by Congress in May, clears up inconsistencies in FACTA. The National Restaurant Association (NRA) and members of the restaurant industry have lobbied for months for the FACTA fix.
“We are grateful for the bipartisan effort to resolve this important issue,” said John Gay, the NRA’s senior lobbyist. “The Credit and Debit Card Receipt Clarification Act will ensure that frivolous lawsuits brought on by FACTA are put to an end.”
Congress members of both parties supported nearly identical versions of the FACTA-fix legislation. Both versions clarified the definition of “willful noncompliance.”
Under the Credit and Debit Card Receipt Clarification Act, merchants who truncated credit card numbers to the last five (or fewer) digits but didn’t delete expiration dates won’t be considered willfully noncompliant with FACTA. The law applies to electronically printed receipts provided to customers at the point-of-sale. From this point on, regulators will expect merchants to restrict the digits and remove the expiration date.
U.S. Senator Charles Schumer (D-N.Y.), who introduced the Senate version, acknowledged that FACTA wasn’t as clear as it could have been. Many companies redacted account numbers but mistakenly left expiration dates in place.
Since FACTA took full effect in December 2006, more than 250 businesses faced class action lawsuits for alleged FACTA violations. They include large restaurant companies, family-owned operations and small regional chains.
Because FACTA is tied to a statutory damages provision, it sparked hundreds of class action lawsuits against companies “whose sole error was printing expiration dates on receipts,” Schumer noted. The lawsuits typically didn’t allege consumer harm, but companies faced “sky-high liability” of up to $1,000 per receipt, Schumer pointed out.
“The damages in these cases are so huge that judges have refused to certify class actions because the lawsuits could actually destroy the companies,” he said.
About the law
FACTA, passed by Congress in 2003, prohibits businesses from showing expiration dates and more than the last five digits of a credit card number. The law applies to electronically printed receipts, not those that are handwritten or imprinted, provided to consumers at the point of sale.
The law was enacted in two phases. Merchants with newer credit card payment machines had to comply in December 2004. Those with older machines had to comply by December 2006. Since then, all merchants that electronically print credit card receipts must comply—for receipts provided to customers. Click here for more information.
Article reprinted courtesy of the National Restaurant Association.