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Washington, DC - Today, H.R. 4008, the Credit and Debit Card Receipt Clarification Act, authored by Congressman Tim Mahoney (FL-16), passed the House of Representatives by a unanimous vote of 407-0. The bill would amend the Fair and Accurate Credit Transaction Act (FACTA) to ensure that it is not abused by frivolous class-action lawsuits against businesses. Mahoney’s legislation also preserves consumers’ right to sue for negligence resulting in identity theft or credit card account fraud. The legislation will now move to the Senate.
“With a tough economy in Florida and across America, the last thing businesses need are multi-million dollar lawsuits that could force them into bankruptcy, leading to even more lost jobs.” said Congressman Mahoney. “I created this bipartisan legislation to protect consumers while ensuring that the law is not abused.”
In 2003, Congress passed FACTA to improve and strengthen provisions against identity theft. One of the key provisions in this bill requires businesses to limit the amount of information printed on receipts, holding that “[N]o person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number OR the expiration date upon any receipt…” To comply with the new law, businesses began truncating the credit and debit card number printed on receipts down to the appropriate number of digits. Shortly thereafter, however, hundreds of lawsuits were filed against these businesses alleging that the failure to both truncate the card number and redact the expiration date on a receipt was a willful violation of the law. Because FACTA was incorporated into the Fair Credit Reporting Act (FCRA), the statutory damages provisions of the law (between $100 and $1000 per transaction) meant that a company that had printed a million transactions was facing a minimum of $100 million and as much as $1 billion in damages. These lawsuits could force companies into bankruptcy, resulting in lost jobs.
“I appreciate Congressman Mahoney’s willingness to take action and address the concerns of small businesses,” said Arthur Cullen, owner of Havana Harry’s. “Without this legislation, I would be facing lawsuits that could put my business into bankruptcy and my 75 employees would be out of work.”
H.R. 4008, the Credit and Debit Receipt Clarification Act, addresses the unintended consequences of FACTA and makes clear that if a company truncated a consumer’s credit card number, but did not remove the expiration date, then the company did not willfully violate FACTA and cannot be sued for statutory damages. It is important to note that there is no evidence that the failure to redact an expiration date has ever resulted in a consumer being harmed and not one of the lawsuits currently filed alleges any actual harm to an individual’s account or identity. The technical correction, however, would preserve a consumer’s right to sue for negligence in the event someone experiences actual harm or account fraud as a result of having their expiration date printed on their receipt.
“It’s clear that Congressman Mahoney understands business and knows what’s important to get our economy back on track,” said R. Bruce Josten, Executive Vice President, Government Affairs, US Chamber of Commerce. “Mahoney has been an effective ally for the business community since he took office and it’s a true testament to his leadership that this critical legislation passed by an overwhelming margin today.”
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