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Hughes adds that while the big brands are
well aware of the FACTA lawsuit factory, he believes second-tier
merchants may be the next target. “A lot of the big targets have
already been hit or have fixed their systems,” he says. Plaintiffs are
going to look for the next tier of potential, “and that's going to be
the regional providers — the regional restaurants, catalogers and
retailers.”
He
adds: “The cases are very easy to bring; they're relatively inexpensive
and, generally speaking the statute does not require any actual harm.
That's a tremendous incentive for plaintiffs to bring these lawsuits.”
Bob
Botelle, vice president of merchant services for payment processing
firm Litle & Co., says there is no excuse for merchants who
continue to issue credit-card receipts with expiration dates on them,
but some still do.
He
adds that it is the payment processor's responsibility to make sure its
merchant customers are compliant with laws such as FACTA. His firm
downloaded software to all its customers about five years ago to that
end.
To
be payment card industry (PCI) compliant, all card-not-present
transactions must be encrypted so the customer's card number can't be
seen within the organization, Botelle says.
Also, Visa and MasterCard are levying fines of thousands of dollars a month on companies that are non-PCI-compliant, he adds.
“I
am surprised that any merchant with the knowledge of what Visa and
MasterCard are doing with PCI and identity theft and credit card fraud,
would put anything referencing a credit card on a statement,” he says.
Botelle says mail order packing slips should contain no reference whatsoever
to customers' credit cards. “There are phishing scams out there where
people can make up cards using the last four digits and the expiration
date,” he says. “Companies shouldn't be putting the expiration date
anywhere.”
So
how, more than four years after it was passed, is it possible that
merchants could be issuing credit card receipts in violation of FACTA?
In
a large company, the credit card processing, which deals with all the
PCI requirements, “is far removed from the fulfillment area,” says
Botelle. “And a lot of these are old mainframe pick-and-pack systems.
And if the people who are packing the product don't know what to look
for, they may not even know they're in violation.”
He
adds: “I can safely say that there are companies that should be
PCI-compliant that are not, and there are still systems out there that
are not compliant printing these sheets. They're a target for lawsuits
and they're a target for Visa and MasterCard.” (For more on PCI, see “In praise of PCI,” on page 46.)
The good news
Last year, merchants scored some key victories over FACTA plaintiffs. In the case of Soualian V. International Coffee & Teas,
for example, a district judge agreed with the defendant that the case
did not meet the “superiority” test — meaning that a class action suit
in this case was not the best way to remedy the situation — and refused
to certify the case as a class action.
The
court also ruled that certifying the suit as a class action might
result in disastrous consequences to the company and put thousands of
employees out of work, all over a mistake that didn't hurt anybody.
The
judge in the International Coffee & Teas case cited some of the
reasoning in the Cost Plus case to reach the ruling. The plaintiff in
that suit tried to certify and class 3.4 million people against a
company whose net sales revenue is $20 million a year, according to the
AEI's Frank. Moreover, International Coffee & Teas helped its case
by correcting the situation as soon as the company learned of it, the
court said.
“By
immediately remedying their misconduct upon receiving the plaintiff's
complaint, defendants demonstrated good faith and nullified any
deterrence benefit that might have been derived from a class action,”
the court said.
Though
these decisions offer hope, Hughes warns not to get too excited. “You
can't take away from [the developments in California] that all the
courts will follow those decisions.”
Meanwhile,
if you haven't, check those receipts and remove the expiration dates,
says Hughes. “It's just not worth the fight to argue that,” he says.
