[Congressional Record Volume 154, Number 78 (Tuesday, May 13, 2008)]
[House]
[Pages H3729-H3732]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CREDIT AND DEBIT CARD RECEIPT CLARIFICATION ACT OF 2007
Mr. MAHONEY of Florida. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 4008) to amend the Fair Credit Reporting Act to
make technical corrections to the definition of willful noncompliance
with respect to violations involving the printing of an expiration date
on certain credit and debit card receipts before the date of the
enactment of this Act.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4008
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Credit and Debit Card
Receipt Clarification Act of 2007''.
SEC. 2. FINDINGS; PURPOSE.
(a) Findings.--The Congress finds as follows:
(1) The Fair and Accurate Credit Transactions Act (commonly
referred to as ``FACTA'' ) was enacted into law in 2003 and 1
of the purposes of such Act is to prevent criminals from
obtaining access to consumers' private financial and credit
information in order to reduce identity theft and credit card
fraud.
(2) As part of that law, the Congress enacted a
requirement, through an amendment to the Fair Credit
Reporting Act, 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 card holder at the
point of the sale or transaction.
(3) Many merchants understood that this requirement would
be satisfied by truncating the account number down to the
last 5 digits based in part on the language of the provision
as well as the publicity in the aftermath of the passage of
the law.
(4) Almost immediately after the deadline for compliance
passed, hundreds of lawsuits were filed alleging that the
failure to remove the expiration date was a willful violation
of the Fair Credit Reporting Act even where the account
number was properly truncated.
(5) None of these lawsuits contained an allegation of harm
to any consumer's identity.
(6) Experts in the field agree that proper truncation of
the card number, by itself as required by the amendment made
by the Fair and Accurate Credit Transactions Act, regardless
of the inclusion of the expiration date, prevents a potential
fraudster from perpetrating identity theft or credit card
fraud.
(7) Despite repeatedly being denied class certification,
the continued appealing and filing of these lawsuits
represents a significant burden on the hundreds of companies
that have been sued and could well raise prices to consumers
without corresponding consumer protection benefit.
(b) Purpose.--The purpose of this Act is to ensure that
consumers suffering from any actual harm to their credit or
identity are protected while simultaneously limiting abusive
lawsuits that do not protect consumers but only result in
increased cost to business and potentially increased prices
to consumers.
SEC. 3. CLARIFICATION OF WILLFUL NONCOMPLIANCE FOR ACTIONS
BEFORE THE DATE OF THE ENACTMENT OF THIS ACT.
(a) In General.--Section 616 of the Fair Credit Reporting
Act (15 U.S.C. 1681n) is amended by adding at the end the
following new subsection:
``(d) Clarification of Willful Noncompliance.--For the
purposes of this section, any person who printed an
expiration date on any receipt provided to a consumer
cardholder at a point of sale or transaction between December
4, 2004, and the date of the enactment of this subsection but
otherwise complied with the requirements of section 605(g)
for such receipt shall not be in willful noncompliance with
section 605(g) by reason of printing such expiration date on
the receipt.''.
(b) Scope of Application.--The amendment made by subsection
(a) shall apply to any action, other than an action which has
become final, that is brought for a violation of 605(g) of
the Fair Credit Reporting Act to which such amendment applies
without regard to whether such action is brought before or
after the date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule the gentleman from
Florida (Mr. Mahoney) and the gentlewoman from Illinois (Mrs. Biggert)
each will control 20 minutes.
The Chair recognizes the gentleman from Florida.
General Leave
Mr. MAHONEY of Florida. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks on this legislation and to insert extraneous material
thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. MAHONEY of Florida. Mr. Speaker, I yield myself as much time as I
may consume.
Mr. Speaker, I rise today in strong support of H.R. 4008, the Credit
and Debit Card Receipt Clarification Act.
I would like to begin by thanking Members of both sides of the aisle
for helping bring this commonsense legislation to the floor, including
Ranking Member Bachus, Representative Melissa Bean, Michele Bachmann
and
[[Page H3730]]
many others. I would also like to thank my chairman, Representative
Barney Frank, and his staff for their efforts in bringing this
important piece of legislation to the floor.
Mr. Speaker, in 2003 Congress passed the Fair and Accurate Credit
Transactions Act, the FACT Act, to ensure that Americans could continue
to rely on the efficiencies of the 21st century financial and credit
system while being protected from identity theft, credit card fraud and
other financial crimes.
This important law has given consumers new and important rights. For
example, the FACT Act provides consumers with the right to obtain one
free copy of their credit record from each of the three major credit
bureaus every 12 months. In addition, this legislation created the
Financial Literacy and Education Commission to better help Americans
understand and manage their finances.
One provision in the FACT Act was intended to enhance consumer
protection from credit card fraud by limiting the amount of information
printed on receipts from a credit card or debit card transaction.
Today, when consumers go into a convenience store, restaurant or
retailer, they will notice that their credit card receipt does not
contain the full credit card number. This small but important change to
their credit card receipts helps prevent criminals from obtaining the
receipt and using it to make fraudulent purchases.
{time} 1700
Unfortunately, this provision, as drafted, has caused a great deal of
confusion and is now at the center of hundreds of lawsuits all over the
country. Specifically, it required that ``no person that accepts credit
cards or debit cards for the transaction of business shall print more
than the last five digits of the card number or the expiration date
upon any receipt provided to the cardholder at the point of the sale or
transaction.'' The overwhelming majority of businesses believed that
they were in compliance with this provision of the law by truncating
the card number and printing the expiration date of the credit card.
Furthermore, the publicity surrounding the passage of the act,
whether it was press accounts of the President's statement at the
signing of the subsequent Federal Trade Commission press release
describing the new requirements of the bill, pointed entirely to the
truncation of the credit card number.
I would like point out that experts agree that the truncation of the
card number, by itself, regardless of whether or not the expiration
date was redacted from the receipt, removes the single most crucial
piece of information that a criminal would need to perpetrate account
fraud.
I can understand the shock that many of these businesses must have
felt when, thinking that they had taken all the steps necessary to
protect their customers and comply with the law, they were later served
notice of a pending class action lawsuit against them accusing them of
violating the FACT Act because they had failed to redact the expiration
date in addition to truncating the credit card number.
When you consider that the law levies between a $100 and $1,000 fine
for each credit card receipt, the amount of liability threatens to
bankrupt healthy, successful businesses.
While most, if not all these companies, have quickly resolved the
issue by instructing their point-of-sale vendors to also redact the
expiration date, they continue to face these lawsuits. Not only have
these lawsuits been filed against large corporations, they have been
filed against small businesses.
Last month I was contacted by Arthur Cullen. Mr. Cullen and his wife,
Nieves, are the owners of Havana Harry's Restaurant in south Florida.
Mr. Cullen states in his letter that he and his wife began his business
with a dream and some savings.
Today, Havana Harry's employs 75 people and serves more than 4,000
people on a weekly basis. Like so many others, Mr. Cullen believed he
was complying with the FACT Act by truncating the credit card number.
Unfortunately, a lawsuit was filed against his business because he also
failed to delete the expiration date. As a result of the lawsuit, Mr.
Cullen is concerned about the future of Havana Harry's.
My legislation is designed to provide relief to people like Mr.
Cullen, proud entrepreneurs and small business owners, who did
everything they thought was necessary to comply with the FACT Act.
H.R. 4008 makes a technical correction to the FACT Act to free
hundreds of businesses from potential exposure to statutory damages
that could total hundreds of millions or even billions of dollars
solely because of their past harmless failure to redact the expiration
date from an otherwise FACT Act complaint receipt.
Let me be clear, not one of these suits has alleged any harm to the
consumer. In the event that a consumer does experience identity theft,
account fraud, or some other harm, my legislation preserves a
consumer's right to sue.
Finally, H.R. 4008 does not eliminate a business' obligation to
properly truncate the account number or to redact the expiration date
from its receipts, and it does not protect merchants who printed more
than the account number permitted by the FACT Act.
With a struggling economy in Florida and across America, the last
thing businesses and consumers need are lawsuits that needlessly drive
up costs. These abusive lawsuits will likely result in higher prices to
the public and could even result in bankruptcies and more job losses.
I urge all of my colleagues to join me in voting ``yes'' for this
commonsense fix to a problem that has the potential to put out of
business thousands of successful businesses which will ultimately hurt,
rather than protect, consumers.
Mr. Speaker, I reserve the balance of my time.
Mrs. BIGGERT. Mr. Speaker, I yield myself such time as I may consume.
I would like to thank the gentleman from Florida (Mr. Mahoney) for
his work on this bill. I am pleased to be a cosponsor of the bill and
urge my colleagues to support it.
In short, the bill makes a technical correction to a law Congress
passed in 2003, The Fair and Accurate Credit Transactions Act, or
FACTA. FACTA currently requires businesses to truncate a customer's
credit or debit card number to five numbers. Many businesses complying
with this requirement truncated the credit card number, but kept the
expiration date of a customer's credit card on the receipt.
Very shortly after the FACTA was enacted, hundreds of lawsuits were
filed against businesses because the plaintiffs claimed that expiration
date should count as part of a customer's credit card number.
One such business is Home Run Inn, a family-owned business that makes
``Chicago's Finest Pizza,'' located in Woodridge, Illinois. It was not
the intention of Congress to include the expiration date as part of the
credit card number and caused this confusion. To my knowledge, no
consumer has been harmed or been a victim of identity theft or fraud as
a result of his or her credit card expiration date being printed on a
receipt.
Therefore, this bill clears up the matter. If this bill becomes law,
attorneys will no longer be tempted to file lawsuits against
businesses, but consumers harmed by a business who was violating FACTA
can still file a lawsuit.
Again, I urge my colleagues to support the bill and reserve the
balance of my time.
Mr. MAHONEY of Florida. Mr. Speaker, I yield to my distinguished
colleague and friend from Illinois (Ms. Bean) as much time as she may
consume.
Ms. BEAN. I thank the gentleman for yielding.
Mr. Speaker, I rise in strong support of H.R. 4008, The Credit and
Debit Card Receipt Clarification Act, which makes a technical
correction to The Fair and Accurate Transactions Act, FACTA.
As a strong advocate for increased security of individuals' personal
financial data, I support the provisions to fight ID theft included in
FACTA, which was signed into law in 2003. The bill sought to protect
the privacy of the information and the consumers' credit report, assist
victims of identity theft and prevent fraudulent credit transactions.
In particular, section 133 of FACTA, which went into effect in
December of 2006, prohibits merchants from printing more than the last
five digits of a consumer's credit and debit card numbers
[[Page H3731]]
or the expiration date on printed receipts. Some interpreted this to
mean don't print either/or, others said print neither.
While I support the general intent of this section, it is noted by
many identity theft experts that individuals who commit fraud by
stealing consumers' credit and debit card numbers cannot do so without
having the entire correct account number.
Section 113 eliminates one avenue for these criminals to steal
account numbers by prohibiting the printing of full account numbers on
paper receipts. Due to the vagueness of section 113 and lack of
guidance from the FTC, the agency responsible for enacting the section,
many businesses only truncated a consumer's credit or debit card
number, and now hundreds of businesses across the country are facing
lawsuits for failing to redact the expiration date from an otherwise
FACTA compliant receipt.
In my home State of Illinois, over 20 businesses, large and small,
are facing millions of dollars of unnecessary lawsuits that could put
them out of business.
Since the lawsuits have been filed, most businesses have updated
their cash registers to ensure they are in full compliance with either
interpretation of FACTA. Unfortunately, they still face pending
lawsuits that will exacerbate the economic pressures these businesses
are already facing in today's market.
I met a local restaurateur who was so adamant about fighting these
predatory class action lawsuits that he is also paying the legal fees
for a small coffee shop owner who could not possibly afford the legal
bills.
To ensure that our small businesses are not unjustly targeted, I was
proud to cosponsor this bill and join my colleague from Florida, Tim
Mahoney, in introducing H.R. 4008. This bill provides a technical
correction to make businesses compliant with section 113 of FACTA if
they had properly truncated a consumer's credit or debit card number
but failed to redact the expiration date up to the point of enactment
of this bill.
It does not protect businesses who failed to truncate a customer's
account number. While H.R. 4008 preserves a consumer's right to sue in
the event of actual harm or account fraud, it is important to note that
of the over 500 lawsuits already filed, none have made any allegation
of consumer harm.
This bill is a commonsense solution to a significant problem many of
our local businesses are facing, particularly in these challenging
economic conditions. I urge my colleagues to support H.R. 4008.
Mrs. BIGGERT. Mr. Speaker, I yield such time as she may consume to
another member of the Financial Services Committee, Mrs. Bachmann from
Minnesota.
Mrs. BACHMANN. Mr. Speaker, I rise as the chief cosponsor of H.R.
4008 to support this important bill, and I want to associate myself
strongly with the remarks from the gentleman from Florida (Mr. Mahoney)
and thank him for the important work that he brought to bear on this
bill, also Ms. Bean for her work on the bill and also for Mrs. Biggert,
as well, for working with me to help protect American business and
consumers from frivolous lawsuits.
Millions of consumers across America will experience a little extra
pain in the pocketbook unless Congress passes The Credit and Debit Card
Receipt Clarification Act and businesses across America, both large and
small, from Main Street to Wall Street will be hurt as well.
They are watching Congress this week to see if we care; and, second,
to see if we are paying attention to them. They are watching us to see
if we can work across the aisle, which I am happy to say we are working
across the aisle, to pass a simple but critical update to The Fair and
Accurate Credit Transaction Act, otherwise known as FACTA. In an effort
to prevent theft and fraud, Congress required through FACTA that
businesses print, as was stated earlier in our testimony, only the last
five digits or less of a person's credit card or just the expiration
date on transaction receipts.
Many companies made sure that they printed no more than five digits
of the receipt, but they also printed the expiration date. Many simply
just weren't clear on the new requirement.
Unfortunately, trial lawyers in America saw opportunity knocking, and
they found a way to take advantage of this situation. Lawyers' eyes lit
up with dollar signs, and they began filing suits against companies
across the United States. Any company that kept printing the expiration
date, along with a few of the cards' digits, instead of just one or the
other, became a potential litigation target.
However, identity theft prevention experts say that five digits of a
credit card, plus an expiration date printed out on a receipt, are not
enough to steal someone's account. All of these people, however, are
being sued on a technicality that poses no threat to people's credit or
their debit accounts.
Take, for example, in my district, the Rockler Companies, Inc., one
of the many family-owned businesses in my district. Rockler sells and
distributes products to the woodworking community, and, unfortunately,
they became a fallen victim to just such a frivolous lawsuit.
Unfortunately, they have already had to pay out over $30,000 in legal
expenses for this wonderful small business in Minnesota, not because
they did anything wrong, but because Congress, because this body,
accidently left open a legal loophole. That's $30,000, something that
can mean life or death for one of America's small businesses.
This bill on the floor today is very important. It may not seem like
much, but H.R. 4008, The Credit and Debit Card Receipt Clarification
Act, closes that loophole. It liberates American businesses, usually
small businesses, from frivolous lawsuits.
They still have to update their receipts. They still have to comply
with FACTA, but they can't be dragged through years of lawsuits because
they printed a credit card expiration date.
If they print enough information to give thieves a toe-hold, they
still can be sued. If they print over five digits of the card number,
they still can be sued. If they do anything that puts customers'
accounts in real jeopardy, they can be sued. They cannot be sued for
this remote congressional technicality. That's only right.
With H.R. 4008, consumers will be protected on both ends of the
transaction. After all, who will pay the real price for this?
Businesses across America will have to offset the cost of these
lawsuits by raising their prices, if they can, and American consumers
will be left holding the short end of the stick, or the business will
suffer.
At a time when Americans are already squeezed by the rising cost of
living, by outrageous prices of gasoline at the pump, this is the last
thing we need right now in our American economy. I am so happy that we
are working together hand-in-hand across the aisle to show the American
people that Congress is actually listening to them today, listening to
their concerns and acting wisely on their behalf.
The Credit and Debit Card Receipt Clarification Act is pretty simple,
it's no nonsense, it's fair, it's necessary, and it's bipartisan. That
is good for businesses, it's good for consumers, and I thank and urge
all of my colleagues in the House and ask them to join both Congressman
Mahoney and myself in supporting this wonderful bill.
Mr. MAHONEY of Florida. Mr. Speaker, I reserve the balance of my
time.
Mrs. BIGGERT. Mr. Speaker, I yield back the balance of my time.
Mr. MAHONEY of Florida. Mr. Speaker, I would like to thank Chairman
Frank, Ranking Member Bachus and my cosponsors, Congresswomen Bachmann,
Biggert and Bean, who helped me with this legislation, and 48 others
who stood up for small businesses who are, right now, concerned about
their viability as they are faced with the specter of a frivolous
lawsuit.
{time} 1715
I would just say that time is running out. I also would like to thank
Senator Schumer for dropping the corresponding legislation in the
Senate and I ask my Senate colleagues to act quickly because small
businesses need relief immediately.
Mr. BACHUS. Mr. Speaker, I support H.R. 4008 and commend the primary
sponsors of the legislation, the gentleman from Florida, Mr. Mahoney,
and the gentlewoman from Minnesota, Mrs. Bachmann, for bringing it
forward.
In 2003, Congress passed the Fair and Accurate Credit Transactions
Act, FACT Act, to
[[Page H3732]]
improve our nationwide credit reporting system and provide consumers
with important new protections against identity theft, including the
right to a free annual credit report. As the principal House author of
the FACT Act, I can personally attest that when Congress passed that
landmark legislation, it was never our intent to create opportunities
for frivolous litigation. Because H.R. 4008 helps to clarify and
underscore that intent, I am proud to cosponsor it.
One of the many consumer protections we included in the FACT Act was
a provision that prohibited merchants from printing ``more than the
last 5 digits of the card number or the expiration date upon any
receipt provided to the card holder at the point of the sale or
transaction.'' Unfortunately, enterprising trial lawyers have sought to
exploit this provision by bringing hundreds of lawsuits against
businesses, large and small, for failing to redact the expiration date
from credit and debit card receipts. The suits allege that this failure
constitutes a willful violation of the FACT Act, even though many
retailers believed they complied with the law by truncating account
numbers on receipts. And a ``willful violation'' can put a company out
of business: penalties for such violations under the Fair Credit
Reporting Act are statutory damages of not less than $100 and not more
than $1000 dollars per consumer, as well as punitive damages and
attorney's fees.
Thankfully, we can fix this problem, and it is fair and reasonable
for us to do so. Truncating the account number is sufficient in almost
every instance to protect consumers against identity theft and credit
card fraud, and there are no reported cases of consumers suffering harm
from the appearance of account expiration dates on their receipts.
Common sense alone should tell us that there are no grounds for these
punitive suits, but common sense is sometimes not enough.
Representatives Bachmann and Mahoney have offered a simple, technical
fix that will address this problem where common sense has failed. Mr.
Speaker, I strongly support their legislative solution and urge its
adoption.
Mr. MAHONEY of Florida. Mr. Speaker, I have no further requests for
time, and I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Serrano). The question is on the motion
offered by the gentleman from Florida (Mr. Mahoney) that the House
suspend the rules and pass the bill, H.R. 4008.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. MAHONEY of Florida. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
____________________