By Jon Hood

April 16, 2009
A federal court reinstated a consumer class action alleging violations of the Fair and Accurate Credit Transactions Act (FACTA), meaning the case will likely be heard by a jury. The suit alleges that vendors violated the Act by printing too much credit card information on consumers' receipts.

FACTA was passed in 2003 as an amendment to the Fair Credit Reporting Act (FCRA). FCRA requires merchants to take certain steps to protect consumers' credit information. FACTA is aimed specifically at protecting identity theft, and provides that "no 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 provided to the cardholder ..."

The plaintiffs in the action, Bobbie Harris and Julie Best Grimes, originally filed separate suits against Mexican Specialty Foods, Inc. and Rave Motion Pictures, respectively. Both complaints requested class certification for a class action lawsuit. The suits defined putative classes consisting of every customer who used a credit or debit card at either merchant's location, and whose receipt included more than the last five digits of their credit card number.

The district court dismissed both actions, ruling that FCRA's damages provision is unconstitutionally vague and thus unenforceable. If a law does not sufficiently define a term or element of an offense, the statute's vagueness renders it unconstitutional. The reasoning behind this is that if a law does not adequately dictate which actions are illegal, people cannot be held to account for taking those actions.

FCRA allows plaintiffs to collect between $100 and $1,000 for "willful violations" of the law. The district court ruled that this provision was unconstitutionally vague because it provided no criteria to allow a judge how much to award a given plaintiff.

The Eleventh Circuit overturned the district court, ruling that the statute is not unconstitutionally vague. The court first noted that other laws, such as the Copyright Act, contain larger damage ranges that FCRA. Further, the court noted that the law sufficiently tells vendors which conduct is illegal (printing more than the last five digits of a credit card number).

The court further ruled that the law did not give juries an excessive amount of discretion in awarding damages, since it limited their awards within a $900 range.

In its ruling, the Eleventh Circuit vacated the district court's dismissal, and sent it back for further proceedings. As a result, Harris's and Grimes's lawsuits, which have since been consolidated, will likely be sent to a jury.

While FACTA originally held merchants liable for printing either more than five digits or the expiration date, they are now only liable for the former. In 2008, then-President Bush signed legislation exempting merchants from liability for simply printing credit card expiration dates on the receipt. The law applied retroactively, wiping out any suits involving illegal printing of expiration dates. Thus, for liability under the Act, a merchant must have printed more than the last five digits of a consumer's cardholder.