Privacy Law Blog : Privacy Lawyers & Attorneys : Proskauer Rose Law Firm : CAN-SPAM, FCRA, FACTA

This is the first federal appellate court decision to focus on FACTA’s truncation requirements for electronically printed transaction receipts. FACTA’s truncation requirements, 15 U.S.C. § 1681c(g), prohibit the “electronic printing” of any receipt at “the point of the sale or transaction” that contains the expiration date of a consumer’s credit or debit card or more than the last five digits of the credit or debit card account number.

The Seventh Circuit followed the majority view among district courts that “the term ‘electronically printed’ reaches only those receipts that are printed on paper.” The court noted that a printed receipt brings to mind “a tangible document” and “ordinarily connotes recording it on paper.” The court rejected Shlahtichman’s argument that the use of “electronically” in section 1681c(g) evidences a congressional intent to broaden the meaning to include more modern usages. The court instead interpreted that language to suggest an intention to capture receipts that are printed by a machine rather than credit card slips or receipts that are imprinted or handwritten.

Next the court looked to the overall statutory context of FACTA and noted that the truncation requirements apply to receipts “that are printed and ‘provided to the cardholder at the point of the sale or transaction.’” The court concluded that “the statute contemplates transactions where receipts are physically printed using electronic point of sale devices like electronic cash registers or dial-up terminals.”

Finally the court noted that even if email order confirmations were “electronically printed” receipts for FACTA purposes, the dismissal of Shlahtichman’s complaint was appropriate because Shlahtichman sought the statutory damages authorized only for willful violations of the truncation requirement and 1-800 Contacts had not willfully violated the statute.

 We previously posted about the district court’s decision in Shlahtichman v. 1-800 Contacts, Inc., 2009 U.S. Dist. LEXIS 112379 (N.D. Ill. Dec. 2, 2009) here.

On June 26, 2008, in Absher v. Autozone, Inc. et al. (2008), the California Court of Appeal in the Second Appellate District, confirmed that California’s Song-Beverly Credit Card Act of 1971, California Civil Code § 1747.08 (hereinafter, the “Act”) does not apply to a refund for the return of merchandise purchased by credit card.

Under the Act, merchants who accept credit cards as a form of payment may not request or require as a condition to accepting payment by credit card the personal information of a cardholder, which information the merchant causes to be recorded upon a credit card transaction form or otherwise (such as a receipt, etc.). 

In the Absher case, plaintiff Dave Absher (who, when returning merchandise purchased from Autozone, was required to put his name and telephone number on a voucher in order to process the refund), claimed that Autozone’s practices violated the Act. In the trial court, Autozone moved for summary judgment arguing that the statute does not apply to return transactions. The trial court granted Autozone’s motion and the Court of Appeal affirmed the dismissal of plaintiff’s cause of action, holding that the Act’s restrictions are limited to initial purchase transactions and not return transactions. In particular, the court held that the legislative history behind the Act, as well as a policy interest in providing retailers with a reasonable means to safeguard against potential abuses in connection with the return of merchandise, weighed in favor of its interpretation that the Act does not apply where a merchant’s request for personal information is in connection with a refund for the return of merchandise purchased by credit card.

The outcome in this most recent case is not surprising given the court’s other recent decision, on May 22, 2008, which case involved The TJX Companies, Inc., T.J. Maxx of CA, LLC, Marshalls of CA, LLC, Marshalls of MA, Inc. and Marmaxx (collectively, “TJX”), and in which case the California Court of Appeal also narrowed the scope of claims available under the Act in ruling that the statute does not apply to merchandise returns.

Kathryn Conroy, a Summer Associated in Proskauer’s Los Angeles office, contributed to this post.