The Court hearing the Target data security breach litigation issued a ruling on December 2, 2014, largely denying Target’s motion to dismiss the Consolidated Amended Class Action Complaint in the Financial Institutions Cases. In his decision, Judge Magnuson found that Target owed the issuer banks a duty to protect customer data from hackers, a determination that… Continue Reading
On August 7, 2014 the PCI Security Standards Council issued new guidance to supplement PCI DSS Requirement 3.0 and help organizations reduce the risks associated with entrusting third-party service providers (“TPSPs”) with consumer payment information. More and more merchants use TPSPs to store, process and transmit cardholder data or manage components of the entity’s cardholder… Continue Reading
On June 29, 2012, New Jersey Governor Chris Christie signed into law legislation amending New Jersey’s unclaimed property law relating to the escheat of abandoned stored value cards (SVCs) to the state. Under the original unclaimed property law, which took effect July 1, 2010, SVCs that were inactive for two years were presumed abandoned, and New Jersey required that the monetary value associated with the inactive cards be escheated to the state. Additionally, SVC issuers were required to (a) “obtain” the name and address of each card owner or purchaser, and (b) “at a minimum, maintain a record of the zip code of the owner or purchaser” of each SVC. Under the amended law, SVCs are presumed abandoned after five years of inactivity (as opposed to two years), and SVC issuers have a forty-eight month grace period before they are required to collect the names, addresses, and zip codes of SVC owners or purchasers. Issuers that do not collect purchasers’ names and addresses in the normal course of business or during a card-registration process are exempted from collecting purchasers’ names and addresses under the law, but they are still required to collect and maintain purchasers’ zip codes.
It should be noted that the unclaimed property law potentially conflicts with a separate New Jersey law protecting the personal information of credit card holders (N.J. Stat. § 56:11-17 (2012)). That law makes it unlawful for any person to require the disclosure of any personal identification information from a credit card holder that is not required to complete the transaction as a condition of allowing the card holder to use the credit card to complete the transaction. While we await the resolution of this potential conflict, courts may rule that no conflict exists: § 56:11-17 only addresses credit card use, but the state’s unclaimed property law makes no distinction between payment methods (and, therefore, doesn’t condition the use of a credit card on the collection of personal information).
On Thursday, October 28, 2010, the PCI SSC promulgated version 2.0 of its Data Security Standard and its Payment Application Data Security Standard (“PA DSS”).
On August 10, 2010, the U.S. Court of Appeals for the Seventh Circuit upheld an earlier ruling by the Northern District of Illinois Eastern Division that email order confirmations are not “electronically printed” receipts under the Fair and Accurate Credit Transactions Act (“FACTA”) amendments to the Fair Credit Reporting Act. Shlahtichman v.1-800 Contacts Inc., Case… Continue Reading
Heartland Payment Systems, Inc. reached a settlement with MasterCard on May 19, 2010 for losses resulting from Heartland’s massive 2008 data security breach.
On March 25, 2010, the Federal Trade Commission (“FTC”) announced that it had entered into a settlement with entertainment operator, Dave & Buster’s, Inc., for alleged violations of Section 5(a) of the FTC Act, and for “engag[ing] in a number of practices that, taken together, failed to provide reasonable and appropriate security for personal information on its networks.”
The settlement marks the 27th case brought by the FTC against a company for insufficient data security practices.
Judge John W. Darrah of the Northern District of Illinois Eastern Division held that FACTA’s prohibition against the electronic printing of a debit or credit card’s expiration date on receipts was inapplicable to e-mail order confirmations.
Section 315 of FACTA requires institutions that utilize consumer reports (“users”) to develop and follow certain procedures when notified of an address discrepancy by a national CRA (Equifax, Experian and TransUnion). Under FACTA, national CRAs are required to issue a “notice of address discrepancy” when an address provided by a user requesting a consumer report “substantially… Continue Reading
The Fair and Accurate Credit Transactions Act (“FACTA”) amendments to the Fair Credit Reporting Act prohibit, among other things, the printing of expiration dates on receipts presented to credit or debit card holders. Two recent cases from the U.S. District Court for the Southern District of Florida, Smith v. Zazzle.com, Inc. (see our blog post… Continue Reading
On December 8, 2008, in Smith v. Zazzle.com Inc., No. 08-22371-CIV-KING, 2008 U.S. Dist. LEXIS 101050 (S.D. Fla. Dec. 9, 2008) Judge James Lawrence King of the Southern District of Florida held FACTA’s credit card number truncation requirement inapplicable to receipts displayed on-screen or printed by online customers. Judge King dismissed the case on this… Continue Reading
On December 19, 2008, in Party City Corp. v. The Superior Court of San Diego County, the California Court of Appeal in the Fourth Appellate District held that zip codes are not “personal identification information” under California’s Song-Beverly Credit Card Act of 1971, California Civil Code Sec. 1747.08 (the “Act.”). The Act prohibits a retailer… Continue Reading
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.
New amendments to the Fair and Accurate Transactions Act (“FACTA”) (itself an amendment to the Fair Credit Reporting Act (“FCRA”)) bar consumers from alleging willful violation and seeking statutory damages based on the printing of credit card expiration dates on receipts where the account number is otherwise properly truncated in accordance with FACTA. This development means the end is near for scores of class action lawsuits filed last year.
On May 22, 2008, the California Court of Appeal narrowed the scope of claims available under California’s Song-Beverly Credit Card Act of 1971, California Civil Code § 1747.08, ruling that the statute is subject to the one-year statute of limitations of Code of Civil Procedure section 340 and does not apply to merchandise returns.
On Saturday, California Governor Arnold Schwarzenegger vetoed AB 779, legislation that would have amended California’s landmark data security breach legislation. The bill would have been the first to follow law enacted by Minnesota earlier this year and effective August 1, 2007, that amended Minnesota’s security breach notification law by, among other things, prohibiting businesses from retaining certain payment card data after authorization of a transaction.
Since December 4, 2006, consumers have filed dozens of class actions against retailers and other businesses across the country alleging “willful” violations of the Fair and Accurate Credit Transactions Act (“FACTA”) amendments to the Fair Credit Reporting Act (“FCRA”), prohibiting the printing of more than five digits, or the expiration date, of a credit card on receipts provided to the customer. Defendants in those cases have been waiting anxiously for the Supreme Court to rule in Safeco Insurance Co. of America, et al. v. Burr, et al., 551 U.S. _____ (2007), a factually inapposite matter in which the Court granted certiorari to determine whether “reckless disregard” suffices for willfulness under the statute. In a decision that raises as many questions as it answers, the Supreme Court held on June 4, 2007 that “reckless” failure to comply with FCRA can be considered willful. The Court’s opinion begs the question whether it was objectively reasonable for retailers to continue the printing of expiration dates on customer receipts after FACTA took full effect.