[Congressional Record (Bound Edition), Volume 154 (2008), Part 6]
[House]
[Pages 8881-8884]
[From the U.S. 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 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.

[[Page 8882]]

  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 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.

[[Page 8883]]

  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 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.
  Mrs. MALONEY of New York. Mr. Speaker, I rise in strong support for 
H.R. 4008, the Credit and Debit Card Receipt Clarification Act. This is 
common sense legislation that will free hundreds of businesses, from 
large corporations to ``mom & pop'' operations from legal damages that 
could total hundreds of

[[Page 8884]]

millions or even billions of dollars for their harmless failure to 
redact expiration dates from their credit and debit card receipts.
  This bill only provides relief to companies that otherwise complied 
with the Fair and Accurate Credit Transaction Act, also known as FACTA, 
it preserves the right for a customer to sue if real harm or fraud has 
occurred and it does not eliminate a business's obligation to properly 
truncate the account number or to redact the expiration date from its 
receipts.
  I think it is important to point out that we are talking about 
businesses that did everything they thought they were required to do to 
comply with the new standards set forth by FACTA. These are businesses 
that purchased new machines, installed new hardware and incurred the 
expense of producing what they thought or were told was a compliant 
credit or debit card receipt. These are businesses that when they were 
told that they had to truncate the account numbers of credit and debit 
cards, they did so.
  One of my constituents, Steven Hanson, is such a business owner. He 
is the founder and President of B.R. Guest Restaurants. After FACTA was 
enacted into law, Steve tells me that he and his company spent more 
than $300,000 switching out credit card terminals in his restaurant to 
comply with the new law, only to find out that each and every new 
receipt he processed could result in a $100 to $1,000 fine. Steve tells 
me that B.R. Guest has a pending lawsuit against his company that could 
result in a $100 million liability. This is not a liability that B.R. 
Guest or many businesses could absorb. Without this relief, B.R. Guest 
and hundreds of other businesses could be forced to close up shop.
  In addition to B.R. Guest Restaurants, Zabars, Fairway Markets, 
Scholastic Books, Barneys/Jones Apparel Group, Estee Lauder, The 
Knot.com, Bally's North America, Buy Buy Baby and Ross Stores are among 
the New York Businesses named in similar lawsuits.
  It is also important to note that while the lawsuits filed against 
these companies are seeking damages totaling in the hundreds of 
millions, if not billions of dollars, none of the 500 lawsuits that 
have been filed, make any allegation of consumer harm. Identity theft 
prevention experts have testified that the truncation of the credit 
card numbers accomplishes the intent of the statute because a potential 
fraudster would not be able to perpetrate account fraud without having 
the entire correct credit card number. The real harm to the consumer 
would come if Congress does not act. Consumers will be forced to pay 
higher prices to help these businesses absorb the cost of these 
lawsuits or will be faced with fewer options as businesses are forced 
out of business because they can not afford their cost.
  This legislation enjoys wide bipartisan support and has been endorsed 
by The U.S. Chamber of Commerce, the National Restaurant Association, 
Retail Industry Leaders Association, The National Association of 
Theater Owners, The International Franchise Association, The National 
Council of Chain Restaurants and the Food Marketing Institute.
  Mr. Speaker, as I said, this is common sense legislation and I 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.

                          ____________________