The Fair and Accurate Credit Transactions Act [wikipedia] is shaping up to be one of the more misguided pieces of legislation following the CAN-SPAM Act. 

To me, these two pieces of legislation are all that is necessary to illustrate that creating federal legislation with nominal damages available to private consumers for claims that can be pled with simple cookie cutter pleadings is a recipe for disaster. 

FACTA is a law that prohibits the listing of (i) any more than the last five digits of credit card numbers or (ii) expiration dates on point of sale receipts.  The law creates a civil cause of action and provides for statutory damages in the amount of $100 - $1000. 

The folks at overlawyered took a look at the industry that the law spawned.  And it’s not pretty.  What is particularly striking to me is the cookie cutter pleadings that are routinely filed against smaller (mom and pop) type of businesses.  Check out an example of a Complaint here.

It’s one thing to bring an action against a multi-national conglomerate.  It’s another to bring an action against a restaurant whose bottom line (and the wages/profits of the individual workers) may well be affected by a lawsuit where the underlying harm is questionable, at best.  The sad part is that I would bet many of the plaintiffs would not be interested in being named plaintiff if they had any idea of like results of the lawsuit. 

The defense bar fights on.  Some have hailed the recent clarification by the Court as to what constitutes a “willful” violation in the Fair Credit Reporting Act context as an effective bar to class certification.  

Others have pointed to the lack of a link between the plaintiff’s claim and an actual injury.  Indeed, one law firm’s exhortation to prospective plaintiffs confirms that lawyers are not looking for injured plaintiffs necessarily – one website states expressly that: 

It is not necessary that any identity theft have actually occurred.

So, these lawsuits could potentially end up the way of CAN-SPAM claims in the Western District, where a federal judge granted summary judgment against a plaintiff on standing/lack of injury grounds. 

Obviously, groups are scrambling to push through a legislative fix.  The National Restaurant Association issued a release last week, hailing sponsorship of “clarifying” legislation, which would provide that compliance with the truncation requirement would constitute good faith compliance, even if the expiration dates are left on the receipt. 

In the meantime, go on and show your support to restaurants like Cafe Iberico. 

correction:  thanks to Al Iverson for catching the typo.  The merchant should not print any more than the last five digits of the card.