Los Angeles, CA: A recent California court decision involving giant retailer IKEA has opened the door for wide-scale penalties that businesses may have to pay to consumers regarding what's printed on consumer credit card receipts.
The Fair And Accurate Credit Transactions Act or FACTA (part of the Fair Credit Reporting Act , limits what can be printed on an electronically printed credit card receipt. The statute was passed to protect credit and debit card holders against identity theft and prohibits merchants from printing more than five digits of the credit card number, and from printing the card's expiration date.
But many businesses, including IKEA, have been including far more of the credit card information than permitted. IKEA has been sued in the United States District Court for California's Central District by an individual customer for a violating the statute. IKEA went to court arguing that the case should be thrown out before it ever got to trial, because FACTA could not be enforced by an individual consumer but only by the government.
IKEA lost. The decision came in a potential class action brought by a customer by the name of Saed Eskandari against IKEA U.S. Inc., for damages for willful violation of FACTA. The apparent result is that IKEA will have to compensate individual customers for each time IKEA printed out a credit receipt showing more numbers than they should have (or the card expiration date)--unless IKEA comes up with some other good defense before trial.
That means, if you kept the receipts from IKEA or any other U.S. retailer showing more than the last five digits of your credit card number, or your card's expiration date, then you could be entitled to $100 or more for each receipt.
"IKEA and other businesses have apparently been lax about their compliance with the federal Fair Credit Reporting Act," says Los Angeles consumer lawyer Ray Gallo, of Gallo & Associates. "The Act expressly prohibits vendors from printing more than five digits, or a card expiration date, on a transaction receipt, and the reason for this provision in the legislation is to help prevent credit card fraud and 'identity theft'. Yet companies that you would think would be very careful about compliance with the FCRA are in fact printing far more than they are supposed to on these receipts. This case may require retailers to pay significant penalties to their customers for ignoring these federal consumer protections against identity theft"
Justice J. Selna, in denying the motion to dismiss the case, ruled March 12th that the right to enforce the prohibition is not just a right of a public regulatory body, but is also a private right of action for an individual consumer. This means that an individual credit card user, on being given a credit receipt containing prohibited information, can sue the business for at least $100. And that's $100 per receipt.
Since the beginning of this year more than 100 class action lawsuits have been started against some of the biggest retailers in the country, including IKEA, Costco, Victoria's Secret, Toys "R" Us, and Avis and Budget car rental agencies. Their preliminary defenses are being thrown out of court.
This is going to be interesting. It might be time to see how many old receipts you have at home that violate the FCRA, and if you find any, apparently all you'll need is a good lawyer.