Federal Judge Rules Against Retailer In Credit Card Receipt Case

The ongoing lawsuits against major retailers for printing prohibited information on credit card receipts is allowed to proceed, with judge describing a key retail defense "absurd" and "bizarre."

As a series of lawsuits against some of the nation?s largest retailers for illegally revealing too much credit card information on printed receipts winds its way through the courts, one federal judge has ruled that some key retail defenses are "absurd" and "unreasonable."

In a decision handed down May 3, U.S. District Judge Gary Allen Feess ruled for the consumer plaintiffs in one of the cases and against Adidas retail operations. His ruling allowed the lawsuits to proceed intact.

In the initial lawsuits filed early this year, some 50 of the nation?s top retailers?including Rite Aid, Harry & David, Ikea, KB Toys, Disney, Regal Cinemas and AMC Theaters?were accused of printing full credit numbers and/or expiration dates on printed customer receipts, violating a provision of the Fair and Accurate Credit Transactions Act (FACTA).

Although there are many consumer plaintiffs and many retail defendants, the arguments on both sides in the cases is similar. Feess's ruling focused on some of the key retail defenses to the accusations, including that the statute is vaguely worded and might prohibit both an expiration date and a full card number appearing, but not either.

The arguments are critical because many retailers have been caught printing the receipts with the forbidden data so if they can't prevail with legal arguments, they could face mountains of fines. Even worse, despite POS vendor assurances, the forbidden data is still periodically appearing. (Two of those POS vendors have recently been sued by retailers, for not having technologically protected them.)

In the Adidas case, Frees addressed the retail claim that the statute's wording could be interpreted multiple ways.

"The question here is essentially whether (the law) is sufficiently clear that its prohibitions would be understood by an ordinary person operating a profit-driven business. The judge ruled that the FACTA section easily meets this standard because its words have only one reasonable meaning. "No person . . . shall print more than the last 5 digits of the card number or the expiration date upon 'any receipt" clearly means that (1) no person shall print more than the last 5 digits of the card number, and (2) no person shall print the expiration date. In other words, a retailer must print no more than 5 digits of a card number, and also must omit the expiration date - doing either violates the statute."

The judge then shot down the Adidas arguments that the law is confusingly worded. "Adidas attempts to obfuscate this plain meaning by advancing two 'competing' interpretations that border on the absurd. First, Adidas contends that the statute could be read to 'allow a business to print the credit card's expiration date on the receipt so long as no more than the last 5 digits of the card appear.' Second, Adidas argues it could be read so that the phrase 'last 5 digits' modifies both 'card number' and 'expiration date,' and thus that a business would be in compliance so long as it truncated the card number and printed only the last five digits of the expiration date. Each interpretation is bizarre," the judge wrote.

"The first ignores the plain reference to 'the expiration date,' essentially by contending that Congress prohibited only printing both an untruncated card number and an expiration date on the same receipt" the judge said. "This would lead to the absurd result that a firm could print an entire card number so long as it omitted the expiration date. No reasonable person would think that this was Congress' intent."

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