The National Retail Federation praised the Senate for its passage today of legislation that would protect retailers and restaurants from frivolous lawsuits over credit card expiration dates printed on customers’ receipts.


The legislation would protect merchants from lawsuits for expiration dates printed between the time a rule in the Fair and Accurate Credit Transactions Act (FACTA) went into effect in December 2006 and the time the measure is signed into law. But merchants would still be required to both truncate card numbers and leave off expiration dates going forward.


“The confusing manner in which this provision was written has caused hundreds of retailers and restaurants to inadvertently run afoul of the law,” NRF Senior Vice President and General Counsel Mallory Duncan said. “The vast majority of merchants made a good faith effort to comply with the law by truncating credit card numbers but were unaware of Congress’ apparent intent that expiration dates be omitted. Including expiration dates on receipts has done nothing to put consumers at risk, but opportunistic attorneys have nonetheless seized on this ambiguity in the law to file lawsuits that threaten innocent businesses with hundreds of millions of dollars in penalties. This legislation will put a stop to that effort to shake down America’s merchants.”

The Senate approved the Credit and Debit Receipt Clarification Act by voice vote today. The measure was approved by the House on May 13 and now heads to President Bush for his signature. The bill was sponsored as H.R. 4008 in the House by Financial Services Committee member Representative Tim Mahoney, D-Fla., and as S. 2978 in the Senate by Banking, Housing and Urban Affairs Committee member Senator Charles Schumer, D-N.Y.


The bill says a business that printed an expiration date on a receipt over the past 18 months cannot be found in violation of the Fair Credit Reporting Act as long as the merchant truncated the customer’s credit card to no more than the last five digits and complied with other FCRA requirements.


At issue is a provision in the Fair and Accurate Credit Transactions Act – a 2003 update of FCRA – intended to prevent credit card fraud. Under FACTA, merchants were told they could no longer print more than the last five digits of a credit or debit card number “or” the card’s expiration date on receipts after December 4, 2006. Many merchants interpreted the law as meaning they could either truncate the card number or leave off the expiration date, but that they were not required to do both. Most truncated the card number but some continued printing the expiration date, reasoning that the expiration date was of no value without the full card number.


Merchants have been hit with more than 300 class acts lawsuits contending that FACTA required them to take both steps, and seeking fines as high as $1,000 per incident, the maximum allowed under the 2003 law. FACTA does not allow individuals to sue, instead giving enforcement authority to the Federal Trade Commission, but the lawsuits were brought under state laws citing FACTA.


The legislation would protect merchants from lawsuits for expiration dates printed between the time the FACTA rule went into effect and the time the measure is signed into law. But merchants would still be required to both truncate card numbers and leave off expiration dates going forward.


The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail companies, more than 25 million employees – about one in five American workers – and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents over 100 state, national and international retail associations. www.nrf.com