ABC On Your Side: The Facts about FACTA

The Fair and Accurate Credit Transactions Act (FACTA) was passed under the Fair Credit Reporting Act back in 2003. The law requires that credit card receipts print only truncated portions of the credit card number used for the transaction. Businesses were given until 2006 to comply and since then can be hit with monetary penalties. They are also open to civil lawsuits, and that is the problem. The law has gone from being a tool to battle identity theft and credit card fraud to being a gold mine for trial lawyers who bring suit against small businesses that inadvertently violate the law. 

America’s Best Companies believes that this is both a travesty of justice and a perversion of the law’s original intent. The following is a letter written by ABC President Jim Tracy, and sent to every senator and representative, as well as to the President, which outlines the problem and urges action to put an end to these litigious abuses. Here is the body of Jim’s letter: 

My name is Jim Tracy and I am the President of America’s Best Companies.  We are a small business organization dedicated to helping small business owners realize their dreams- specifically, the American Dream.  We also own a magazine called America’s Best; I have enclosed a recent copy where we featured the President on the cover.  I realize that you are very, very busy, but I am hoping someone will direct this letter to you, and that you will ask someone to look into this matter.  

As the President of a prominent organization, I would be remiss if I did not point out a serious problem for small business owners all across America today.  In 2003, Congress passed a law under the Fair Credit Reporting Act (“FCRA”) called the Fair and Accurate Credit Transactions Act (“FACTA”).  Under FACTA, small business owners were required to “print no more than the last 5 digits of a (credit) card number or the expiration date upon any receipt provided to the card holder at the point of sale or transaction.”  The law allowed the business owner until December of 2006 to comply.  The law also allowed for statutory damages of $100 to $1,000 per occurrence of the violation.  

Today, the Federal courts are filled with class action suits against small business owners who did not comply on time.  Many of these business owners were not even properly informed of the laws.  There are currently many individuals charging items at small businesses who are actually looking for credit card receipts that do not properly “truncate” the credit card numbers.  When they get one of these “golden tickets,” they run to a law firm specializing in litigation (many of the people initiating these actions are attorneys themselves).  These are “slam dunks” for the attorneys and often result in the destruction of the small business. 

In one case here in Chicago, a small business by the name of Bacci Pizza is being sued for $6.5 million dollars because one of their locations (out of 18) allegedly was not truncating the numbers properly for about six months.  The plaintiff is an attorney who could have simply pointed out this error and helped the business owner out by explaining the issue.  Now, if he loses, the owner may have to hand over his business, something he took 25 years to build, just because an attorney who knew this obscure law found a “golden ticket.”  Uncle Julio’s restaurant and Quigley’s Irish Pub here in Chicago share similar fates.  

I do not believe the laws intent was to “kill the American Dream.”  I am hoping you will take the “heroic” step in changing this law and removing thousands of needless cases from our busy courtrooms.  Perhaps a penalty of $1 to $10 per occurrence would be more in order, or a maximum penalty of $10,000 would make sense.  Please contact me if there is anything I can do to expedite a swift ending to this crisis. 

In the last two weeks, I have been carefully scanning my credit card receipts and I can demonstrate three violations of FACTA within two miles of my office.  It would never cross my mind to file lawsuits against these small business owners.  Instead, I have chosen the option of educating these business owners.  After all, do I really deserve to own somebody’s business just because I find a “golden ticket?”  

Please keep up the good work. 

This is the first step, and we here at America’s Best Companies are not going to let this go. We will keep you posted on this and we encourage your comments and questions here, as well as direct action by contacting your senators and congressmen. To paraphrase Jim’s close: Does some lawyer deserve to take your business just because they find a “golden ticket?”