** FACTA Claims Rejected by Ninth Circuit for Lack of Injury **
By: Brent E. Johnson
The Fair and Accurate Credit Transactions Act (“FACTA”) was enacted in 2003 as an amendment to the Fair Credit Reporting Act (“FCRA”). Most of us are familiar with the provisions of FACTA — not from reading the law — but from observing the changes in our credit card receipts since 2003. [We may be dating ourselves here. We had credit cards prior to 2003.] Prior to FACTA, it was common for receipts to identify the customer’s entire credit card number, which exposed the information to identity thieves. FACTA changed all that, mandating that “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g).
FACTA provides penalties for “willful noncompliance” of between $100 and $1,000 per violation, as well as reasonable attorneys’ fees, costs, and punitive damages. 15 U.S.C. § 1681n. Negligent noncompliance can result in actual damages and attorney fees. 15 U.S.C. § 1681o. All in all, a plaintiff class action law firm’s dream, which was borne out by the hundreds of lawsuits brought after its enactment alleging “willful noncompliance” (therefore, avoiding the problem of proving actual damages).
The disjunctive “or” in FACTA has proved to be confusing and critical, serving as the basis for many of these lawsuits. Companies found themselves staring down the barrel of a class action alleging willful noncompliance because they identified the expiration date on the credit card receipt even though they had truncated the card number. In light of these lawsuits, Congress revisited FACTA in 2008, enacting the Credit and Debit Card Receipt Clarification Act (“Clarification Act”). The Clarification Act granted companies an ex post facto reprieve, “[A]ny person who printed an expiration date on any receipt . . . between December 4, 2004, and [June 3, 2008],” but otherwise complied with FACTA (i.e., listed only the last five digits of the card number) did not willfully violate FCRA. 15 U.S.C. § 1681n.
With that legal backdrop, we turn our attention to one Steven Bassett, who exited a parking garage in the greater Seattle area operated by ABM Services, Inc. (“ABM”) in 2016 and received a receipt bearing his credit card’s expiration date. See Bassett v. ABM Parking Servs., Inc., 883 F.3d 776 (9th Cir. 2018). We will not speculate as to what emotions Mr. Bassett may have experienced upon seeing the expiration date of his credit card brazenly displayed on his receipt, but we do know that he filed a putative class action in the Western District of Washington alleging willful violation of FACTA. As the Ninth Circuit noted, “[Mr. Bassett] did not allege that a second receipt existed, that his receipt was lost or stolen, or that he was the victim of identity theft. Rather, he claimed that ‘the risk of harm created in printing the expiration date on the receipt’ was a ‘sufficiently concrete’ injury . . . .” Id. at 778.
The district court granted ABM’s motion to dismiss based on the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). In Spokeo, which dealt with a different violation of FCRA, the Court held that in order for a plaintiff to have Article III standing, he must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct . . . , and (3) that is likely to be redressed by a favorable judicial decision.” Id. at 1547. The district court determined that Mr. Bassett did not allege that he suffered any injury – the only person who received the expiration date of his credit card was himself.
On appeal, the Ninth Circuit agreed. The Court of Appeals relied on two sister circuit opinions as well as the congressional history underlying the Clarification Act. In passing the Clarification Act, Congress observed that “hundreds of lawsuits were filed [after the enactment of FACTA] alleging that the failure to remove the expiration date was a willful violation . . . even where the account number was properly truncated,” and “[n]one of these lawsuits contained an allegation of harm to any consumer’s identity.” Pub. L. No. 110-241, 122 Stat. 1565 (2008). Congress went on to note that “[e]xperts in the field agree that proper truncation of the card number, by itself as required by the [FCRA], regardless of the inclusion of the expiration date, prevents a potential fraudster from perpetrating identity theft or credit card fraud.” Id. In other words, according to Congress, the disclosure of a credit card’s expiration date, standing alone, cannot result in harm. The Ninth Circuit concluded its opinion with a flourish: “We need not answer whether a tree falling in the forest makes a sound when no one is there to hear it. But when this receipt fell into Bassett’s hands in a parking garage and no identity thief was there to snatch it, it did not make an injury.” Bassett, 883 F.3d at 783.
A word of caution. The Ninth Circuit, as a whole, is extremely cautious when it comes to finding non-injury for Article III standing purposes, particularly when it comes to invasions of privacy, and let that be known in its opinion. The Court distinguished between Mr. Bassett’s case and its earlier decisions involving the Telephone Communications Privacy Act (“TCPA”) (“unrestricted telemarketing can be an intrusive invasion of privacy and [is] a nuisance”) and other FCRA prohibitions (“an employee sufficiently alleged a concrete injury where a prospective employer unlawfully obtained a consumer report about him without his consent, in violation of the employee’s ‘right to information’ and ‘right to privacy’ secured by the FCRA.” Bassett, 883 F.3d at 781. So despite the Court’s decision in Bassett, be careful out there. And don’t be a nuisance.