9th Circuit Defines FACTA Scope for Electronic Receipts
In Simonoff v. Expedia, Inc. (9th Cir. May 24, 2010), the Ninth Circuit held that an “electronically printed” receipt under FACTA does not include an email receipt displayed on a computer screen.
Congress passed the Fair and Accurate Credit Transactions Act (FACTA) in 2003, as an amendment to the Fair Credit Reporting Act. FACTA restricts the electronic printing of more than the last five digits of a credit card number or card expiration dates, on receipts provided to the cardholder at the point of sale.
In Simonoff, plaintiff purchased travel arrangements online through Expedia’s website. Expedia subsequently emailed a receipt for the purchase to the plaintiff, which included the expiration date of plaintiff’s credit card. Plaintiff sued, claiming that the email receipt sent by Expedia violated FACTA. The district court dismissed plaintiff’s claims under Rule 12(b)(6). Plaintiff appealed.
On appeal, the court considered the plain meaning of the words “print” and “electronically printed” under FACTA. The court looked to dictionary definitions and standard modern usage of the terms to conclude that the ordinary meaning of “print” or “electronically printed” is the physical imprint onto paper or another tangible medium, and that a printed receipt is thus a receipt that exists in physical form and not one electronically displayed on a screen. Furthermore the court concluded that statutory context also confirmed that the word “print” limits FACTA to receipts printed on a tangible medium. The court cited a Seventh Circuit opinion for support and noted that the solid majority of district courts, that have addressed FACTA’s scope, are in agreement. The court affirmed the judgment dismissing plaintiff’s suit.
Editor's note: This article was co-written by Priscilla Taylor, a summer law clerk in the Firm's San Francisco office.
9th Circuit Reverses Denial of FACTA Class Certification
In Bateman v. American Multi-Cinema, Inc., the 9th Circuit last week reversed the district court's denial of class certification in a case alleging violation of the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. 1681c(g)(1), a statute intended to combat identity theft by prohibiting credit and debit card receipts issued to consumers from reflecting the expiration date or more than the last five digits of the card number.
Plaintiff Bateman alleged that defendant had violated FACTA by issuing credit and debit card receipts from automatic ticket machines that included both the first four and last four digits of the card number. Plaintiff filed a putative class action seeking to recover statutory damages for each class member.
The district court denied plaintiff's motion for class certification without prejudice, concluding that plaintiff had failed to demonstrate that a class action would be superior to other available methods of adjudicating his claim, as required under Rule 23(b)(3) where class treatment could result in enormous liability completely out of proportion to any harm suffered by the plaintiff. The district court also held that class certification was not appropriate because defendant demonstrated good faith by complying with FACTA within a few weeks of the filing of plaintiff’s complaint. Plaintiff appealed.
On appeal, the Ninth Circuit reversed and remanded, holding that none of the three grounds cited by the district court—the disproportionality between the potential liability and the actual harm suffered, the enormity of the potential damages, or defendant’s good faith compliance—justified the denial of class certification on superiority grounds, and that the district court abused its discretion in relying on them.
New Furnisher Rules Effective July 1
The new rules for furnishers of credit reporting information take effect on July 1, 2010. Subject to several exceptions, the rules implement two significant changes for furnishers.
First, the rules require furnishers to implement reasonable written policies and procedures regarding the accuracy and integrity of consumer information. Second, the rules require furnishers to conduct a reasonable investigation into disputes related to credit reporting submitted to a furnisher directly by a consumer. The Fair Credit Reporting Act rules now in place require such an investigation only after a furnisher receives notice of dispute from a credit reporting agency. Significantly, if a furnisher provides a specific correspondence address for such disputes, the furnisher need only respond to disputes submitted to that address.
New Duties for Furnishers Under Credit Reporting Rules
Pursuant to final agency rules implementing revisions to credit reporting regulations mandated by the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), significant changes to credit reporting rules will take effect on July 1, 2010.
Subject to several exceptions, the final new credit reporting rules for furnishers require furnishers to conduct a reasonable investigation into disputes related to credit reporting submitted to a furnisher directly by a consumer. The Fair Credit Reporting Act rules now in place require such an investigation only after a furnisher receives notice of dispute from a credit reporting agency. Significantly, if a furnisher provides a specific correspondence address for such disputes, the furnisher need only respond to disputes submitted to that address.
FTC Clarifies FDCPA-FACTA Conflict
In an Advisory Opinion, the Federal Trade Commission has clarified a statutory conflict between the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and its regulations implementing the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), which added new sections to the Fair Credit Reporting Act, ("FCRA"), 15 U.S.C. § 1681 et seq.
Specifically, the the FDCPA provides that "if a consumer has notified a debt collector in writing that 'the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate with the consumer with respect to such debt' (with some exceptions not applicable here)." 15 U.S.C. § 1692c(c). Separately, FTC regulation implementing FACTA "requires furnishers of information to CRAs to report the results of a direct dispute to the consumer, 16 CFR § 660.4(e)(3), or notify the consumer if the furnisher determines the dispute is frivolous or irrelevant, 16 CFR § 660.4(f)(2)."
As written, a furnisher of credit information that contacts a debtor regarding a credit dispute investigation, as required by FTC FACTA regulations, could violate the cease-communication rules of the FDCPA. The FTC Opinion eliminates this conflict, providing:
a debt collector does not violate Section 805(c) of the FDCPA if the consumer directly disputes information after sending a written “cease communication” to the collector, and the collector complies with the Rule by means of a communication that has no purpose other than complying with the Rule by stating (1) the results of the investigation or (2) the collector’s belief that the communication is frivolous or irrelevant.
The Bell Tolls for Some FACTA Class Actions
On June 3, 2008, President Bush signed the Credit and Debit Card Receipt Clarification Act, retroactively amending the statute "to declare that any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale (POS) or transaction between December 4, 2004, and the enactment of this Act, but otherwise complied with FCRA requirements for such receipt, shall not be in willful noncompliance by reason of printing such expiration date on it."
This revision does not remove all liability in this circumstance—a merchant may still be liable for actual damages for a negligent violation—but the amendment significantly reduces the prospect of onerous statutory penalties for a willful violation and, as a result, makes class certification in these cases less likely.
