Fair and Accurate Credit Transactions Act

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On February 4, 2021, the Eleventh Circuit affirmed the dismissal of a customer’s proposed class action lawsuit against a Florida-based fast-food chain, PDQ, over a data breach. The three-judge panel rejected the argument that an increased risk of identity theft was a concrete injury sufficient to confer Article III standing,…

In a decision filed September 27, 2010, the U.S. Court of Appeals for the Ninth Circuit reversed a California district court’s refusal to certify a class action alleging violations of the Fair and Accurate Credit Transactions Act (“FACTA”). The Ninth Circuit ruled that none of the three grounds advanced below – the disproportionality between the potential liability and the actual harm suffered, the enormity of the potential damages, or the defendant’s good faith compliance with FACTA after being sued – justified denying class certification on superiority grounds. The Ninth Circuit’s decision narrows, if not eliminates, the potential for disagreement among district courts on an issue that has for some time been a fly in the ointment for class action plaintiffs (and their attorneys) hoping for big paydays on account of harmless technical violations of FACTA.
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On February 3, 2010, the U.S. District Court for the Western District of Pennsylvania preliminarily approved a class action settlement between Aramark Sports, LLC and a class of approximately 5,000 customers who made credit or debit card purchases from stores at PNC Park in Pittsburgh, Pennsylvania. If approved, the proposed settlement would resolve allegations made by the plaintiffs that Aramark violated the Fair and Accurate Credit Transactions Act’s (“FACTA”) truncation requirements by electronically printing receipts that contained (a) more than the last 5 digits of the plaintiffs’ credit or debit card numbers and/or (b) the expiration date of such cards.
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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 differs” from the address the CRA has on file for that consumer. The Address Discrepancy Rule then requires users of consumer reports to develop and implement written policies and procedures to respond to receipt of a discrepancy notice. There are two components to the policies required by the Rule: the first relates to the user’s evaluation of the address discrepancy; the second relates to the user’s potential obligation to report the consumer’s address to the CRA.

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…

Section 214 of Fair and Accurate Credit Transactions Act (“FACTA”) was enacted to amend the Fair Credit Reporting Act (the “Act”) to give consumers the right to restrict certain entities from using certain information received from their affiliates to make solicitations to that consumer unless the consumer has been provided (1) “clear and conspicuous” notice that the consumer’s information will be shared for such purposes, and (2) an opportunity to opt out of having such information shared for such purposes.
On November 7, 2007, the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration issued a joint final rule (along with the Federal Trade Commission (FTC) and the Securities and Exchange Commission(SEC), which separately adopted and proposed, respectively, similar regulations) under the amended Act (the “Affiliate Marketing Rule” or “Final Rule,” codified at 12 C.F.R. Parts 41, 222, 334, 571 and 717) governing the use of specific consumer information obtained by covered entities from their affiliates for certain marketing purposes.
The Affiliate Marketing Rule became effective on January 1, 2008, and compliance by covered entities is required by October 1, 2008.
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According to regulations published by the Federal Trade Commission and the federal banking agencies, covered companies that hold any customer accounts must implement identity theft prevention programs that identify and detect “Red Flags” signaling possible identity theft. Companies establishing such programs must create policies and procedures not only to recognize and detect Red Flags, but also to respond to Red Flags by preventing or mitigating potential identity theft. Furthermore, companies must develop reasonable policies and procedures to verify the identity of a customer opening an account, and must also periodically update their identity theft programs. The rules went into effect on January 1, 2008, and businesses must comply by November 1, 2008.
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On December 18, the FTC announced a settlement in its 15th case (and its first in 13 months) addressing the data security practices of companies handling sensitive consumer information. American United Mortgage Company agreed to pay a $50,000 penalty for failing to implement reasonable safeguards to protect customer information and failing to provide customers with privacy notices.
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