The Facts on the FACTA Clarification Act and the Potential for Compliance Lawsuits

TASA ID: 322

Congress passed The Fair and Accurate Credit Transactions Act ("FACTA" or the "Act"), and it was signed into law on December 4, 2003.  FACTA became fully effective on December 4, 2006.  The purpose of FACTA is to reduce the amount of personal confidential financial information that is generated and thereby reduce the incidence of identity theft, credit card fraud, and debit card fraud.  To help accomplish this goal, 15 USC 1681c(g)(1) requires that merchants that issue receipts to individuals truncate all but the last four or five digits of the customer's credit card or debit card account number and truncate the entire expiration date.

Much confusion resulted from FACTA, and the Act was effectively ignored by some merchants, despite the fact that the Act was widely discussed and publicized before and after its enactment.  In response to the many lawsuits that resulted over violations of FACTA, Congress wrote and passed an act to protect businesses that did in fact print expiration dates on credit card or debit card receipts after the effective date of FACTA. 

The Credit and Debit Card Receipt Clarification Act of 2007 (the "Clarification Act") took effect on June 3, 2008. After June 3, 2008, a merchant that prints a credit card's or debit card's expiration date on an electronically generated receipt given to a customer is in violation of FACTA, even if the credit card or debit card number is properly truncated.

The so-called Clarification Act was not really meant to "clarify" anything except that it gave past violators a pass for their failure to follow the requirements of FACTA.  Specifically, the Clarification Act created a window from December 4, 2004, to June 3, 2008, during which violations of FACTA involving the printing of credit card or debit card expiration dates will not be considered to be willful noncompliance with FACTA.

From my non-attorney banking consultant viewpoint, my reading of the current requirements for what is now considered to be willful noncompliance with FACTA is:

•        The printing on an electronically generated receipt of more than the last five digits of a credit card or debit card account number after December 4, 2006.
•        The printing on an electronically generated receipt of the credit card's or debit card's expiration date after June 3, 2008, whether or not the credit card or debit card account number is properly truncated.

Despite the five-and-one-half-year time frame during which the banking, credit card, and retail industries have been dealing with FACTA, today there are, inexplicably, merchants that continue to violate FACTA.  These merchants must immediately take the relatively easy and inexpensive steps required to reprogram their IT systems so that they are in compliance with FACTA.  If they fail to do this, it is my professional opinion that there will be another round of FACTA lawsuits aimed at achieving compliance with the requirements of FACTA and the Clarification Act.  I have already seen some of these lawsuits. 

About the Author

This Banking Expert has worked on over 50 FACTA cases nationwide and is available to discuss FACTA matters with attorneys. 

This expert provides consultation, fact examination and analysis, advice, Affidavits, Declarations, reports, and sworn testimony at deposition and in court for parties engaged in litigation involving lending, loan closing, and all areas of banking and finance.

His expert witness experience and background includes over 400 cases for plaintiffs and defendants nationwide, over 100 testimonies, and 12 courthouse settlements in all areas of banking, finance, FACTA issues, real estate, economic damages, identity theft, business valuation, intangible asset valuation, and many related matters going back to 1989.  He renders impartial opinions and is privileged to be listed in the databases of recommended expert witness consultants of both the Defense Research Institute and the American Association for Justice.

This expert's clients have included 8 of the top 10 banks in the country, over 60 banks worldwide including 12 of the top 45 banks in the world, 8 of the top 10 mortgage banking companies in the country, 33 of the country's top 250 law firms, and numerous governmental clients including many banking regulators (FDIC, FSLIC, RTC and others), IRS, USAID, U.S. Air Force, State of New York, State of Texas, World Bank, International Accounting Standards Board, and hundreds of others.

His employment experience includes Citicorp, Ford Credit, and entities that are now JPMorgan Chase Bank, Bank of America, Regions Financial, and Guaranty Bank, as well as a two-year stint as a high-level governmental financial institution regulator.

This expert holds a B.A. degree from the University of Alabama, and completed postgraduate and executive education work at Alabama, the University of Houston, Southern Methodist University, Spring Hill College, and the Harvard Business School.

In addition to lending and banking, this expert provides consulting services in many additional areas including business valuations, intangible asset valuations, business plan writing, feasibility studies, marketing studies, bank taxation matters, anti-money laundering policies and procedures, policy and procedure manuals for financial institutions and other organizations, merger and acquisition due diligence and assistance, research, and many other related areas.

As part of his wide-ranging consulting activities, this expert has been called on by clients in 27 countries for work assignments involving 56 countries.

He is widely published on banking and financial subjects and is often sought out by the media for interviews and comments.

This expert serves clients worldwide from his office in the metro Atlanta, Georgia USA area.

This article discusses issues of general interest and does not give any specific legal, medical, or business advice pertaining to any specific circumstances. Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

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