Seventh Circuit Affirms District Court Decision that "Electronically Printed" Receipts Under FACTA Does Not Include Receipts Emailed to Consumers

Posted on August 24, 2010 by Charley Lozada

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 No. 09-4073 (7th Cir.; Aug. 10, 2010) is available here. The court affirmed the dismissal of Shlahtichman’s complaint against 1-800 Contacts Inc. that involved an electronic order confirmation containing Shlahtichman’s credit card expiration date.

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.

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Federal Regulators Propose Federal Privacy Notice and Seek Comments

Posted on March 21, 2007 by Proskauer Rose LLP

On March 21, 2007, eight federal regulatory agencies (“Joint Agencies”) with jurisdiction over Gramm-Leach-Bliley Act (“GLBA”) regulated “financial institutions” issued an interagency proposal for a new model privacy form. The proposal is the result of a lengthy process the Joint Agencies began in 2001 to improve the format of GLBA privacy notices to make them more comprehensible to consumers. In addition to a lack of clarity, the Joint Agencies and consumer and privacy advocates have been concerned about the length of notices and the overuse of legal terms. 

Section 503 of the GLBA, 15 U.S.C. § 1603 and current rules, require financial institutions to provide their customers with a notice that describes, among other things, how they protect nonpublic personal information, the categories of nonpublic personal information collected, the affiliates and the nonaffiliated third parties to whom such information is disclosed, and a description of the customer’s right to prevent certain disclosures to nonaffiliated third parties. These notices must be provided at the outset of the institution’s relationship with a customer and, in the case of long-standing relationships, on an annual basis. Current rules do not mandate a standard format or particular wording for the notices, however, they provide sample clauses that financial institutions can use to satisfy the notice requirements.     

While the Joint Agencies had deferred policy action in the midst of studying how to improve privacy notices, on October 13, 2006, President Bush signed the Financial Services Regulatory Relief Act of 2006 (“Regulatory Relief Act”). Section 728 of the Regulatory Relief Act amended Section 503 of the GLBA (15 U.S.C. § 1603) to require the Joint Regulators to propose a model form by April 11, 2007. Although financial institutions will not be required to use the model form, the Regulatory Relief Act includes a safe harbor that deems any financial institution using the form to be in compliance with the Section 503 disclosures.    

The model form is largely based on a report issued by the Kleimann Communications Group in March 2006. The proposed model form would be 2-3 pages, depending on whether there is an opt-out. The first page would include general background information and a keyframe with why, what and how information regarding a financial institution’s use of personal information, reasons for sharing, and opt-out rights. The second page includes supplementary information such as definitions and further explanatory information in the form of Frequently Asked Questions. The final page includes an opt-out form for those financial institutions that share information in a manner that triggers consumer opt-out rights. The proposed rules would require a minimum font size and that financial institutions provide sufficient spacing between lines of type with further recommendations on font type, spacing, paper size and color. One year after enactment of the model proposal, financial institutions will lose any safe harbor from using the sample clauses in the current rules for their notices.     

Comments on the proposal will be due 60 days from publication in the federal register, which is expected later in March. The Joint Agencies are seeking comment on the content of the model form, including whether modifications to the opt-out are necessary and whether financial institutions intend to incorporate the Fair Credit Reporting Act opt-out for affiliate marketing into the form, the format of the form, and other issues such as the likelihood financial institutions will use the form and issues regarding some financial institutions’ requirement that consumers provide their social security numbers to opt-out. Interested parties need only submit comments to one of the Joint Agencies.   

The Joint Agencies include the Office of the Comptroller of the Currency, Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; Office of Thrift Supervision, Treasury; National Credit Union Administration; Federal Trade Commission; Commodity Futures Trading Commission; and the Securities and Exchange Commission.
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