CADA Open Road

Fair Credit Reporting Act
Credit Card Receipts: Is Your Slip Showing?
By Jean Noonan*

Can you imagine accepting a customer's credit or debit card for a $30 oil change and winding up owing the customer $1,000? That nightmare is threatening to be real for scores of businesses from Florida to California that are being sued by customers for providing credit and debit card receipts that contain the card's expiration date.

An often-overlooked provision of the Fair Credit Reporting Act amendments became effective on December 1, 2006. It says that the electronically printed credit and debit card receipts you give your customers must shorten - or truncate - the account information. You may include no more than the last five digits of the card number, and you must delete the card's expiration date. For example, a receipt that truncates the credit card number and deletes the expiration date could look like this:

ACCT: ***********12345

EXP: ****

Most electronic card machines have been modified to truncate the account number. But quite a few merchants are still handing out receipts that include the card's expiration date. That's a violation of the FCRA, say a number of courts that have considered these cases. Attorneys have filed class actions all across the country seeking up to $1,000 per credit card receipt for this mistake. The FCRA allows consumers to receive a statutory damage award from $100 to $1,000 for each willful violation of the Act, and each receipt can be a separate violation.

Congress added this provision to the FCRA in 2003, as part of its effort to prevent identity theft. It was concerned that a consumer's credit card slip could fall into the wrong hands, letting a thief use the account number and expiration date for fraudulent purchases. But this provision was phased in gradually. Merchants using newer machines had to comply by December 2004. Merchants with older machines had until December 2006. Since that time, all merchants using electronic machines have to truncate account information, including masking the expiration date.

In addition to class action and individual suits from customers, dealers also must worry about the Federal Trade Commission. The FTC has hinted that it may bring enforcement actions against companies whose credit card slips are showing a little too much information. When the Feds come calling, the penalties jump to as much as $11,000 per violation.

A few details of this new law are worth noting. First, it applies only to electronic receipts, not to receipts that are handwritten or imprinted. Second, it applies only to the receipt copy you give the customer, not to the merchant copy you retain. Of course, separate federal laws require you to safeguard customers' personal information, including account numbers. So although your copy of the receipt can show the full account number and expiration date, you must keep it secure.

So now is the time to be sure your equipment complies with this law - and that your slip is not showing more than it should.

*Jean Noonan is a partner in the Washington, D.C. office of Hudson Cook, LLP. She is a recognized speaker on Fair Credit Reporting Act issues and can be reached at 202.327.9700 or by e-mail at jnoonan@hudco.com.