In Shlahtichman v. 1-800 Contacts, No. 09-4073, slip op. (7th Cir.
Aug. 10, 2010), the 7th Circuit held that the credit card truncation
requirements of the Fair and Accurate Credit Transactions Act of 2003 (FACTA) do
not apply to e-mail order confirmations.
Eduard Shlahtichman purchased contacts online from 1-800 Contacts using his
credit card. After he completed his purchase, 1-800 Contacts sent Shlahtichman a
computer-generated e-mail confirming the purchase that included the expiration
date of his credit card.
Shlahtichman filed suit against 1-800 Contacts, asserting that it violated
the Fair Credit Reporting Act of 1970 (FCRA) as amended by FACTA by including
“the expiration date upon any receipt provided to the cardholder at the point of
the sale or transaction.” 15 U.S.C. § 1681(c)(g)(1). Under FACTA, a plaintiff
may recover statutory damages (without any proof of injury) of $100 to $1,000
per violation without limitation, if the violation of the statute was willful. §
1681n(a)(1)(A), (3). For defendants who might generate hundreds or thousands of
such non-conforming receipts every day, such unlimited exposure in a class
action lawsuit could be ruinous.
1-800 Contacts moved to dismiss the suit, arguing that FACTA “appli[ies] only
to receipts that are electronically printed.” § 1681(c)(g)(1). The district
court agreed, finding that e-mail order confirmations are not electronically
printed receipts under FACTA, and an e-mail confirmation is not provided at the
point of the sale or transaction under FACTA.
7th Circuit Opinion
In an instance of first impression at the appellate court level, the 7th
Circuit affirmed the district court, adopting the majority view of district
courts that the term “electronically printed” only applies to receipts that are
printed on paper, as that understanding confirms to the ordinary meaning of the
In reaching this conclusion, the 7th Circuit analyzed the statutory language
of FACTA and overall statutory context of FACTA. Both the language and context
of the truncated requirement make plain that Congress was regulating only those
receipts physically printed by the vendor at the point of the sale or
transaction, and to apply the statute to receipts that are e-mailed to the
consumer would broaden the statute’s reach beyond the words that Congress
Specifically, the court found that the ordinary or natural meaning of the
term “print” means a recording to paper. Rejecting Shlahtichman’s argument that
“electronically print” includes a document that is opened and displayed on a
consumer’s computer, the court found that such an interpretation is a departure
from the ordinary meaning of the term “print.” FACTA is further aimed at paper
receipts based on the language in the statute that the statute’s ban applies to
receipts that are printed and “provided to the cardholder at the point of the
sale or transaction.” This language contemplates face-to-face transactions that
take place in a bricks-and-mortar store or some comparable physical location.
Finally, the court found that dismissal of Shlahtichman’s complaint was
nevertheless appropriate because 1-800 Contacts did not willfully violate FACTA.
It was objectively reasonable for 1-800 Contacts to believe that the truncation
requirement did not apply to e-mail receipts because no contrary opinion from a
court of appeals or federal agency suggested otherwise.
This is an important decision for the retail and e-commerce industries. While
the decision strictly applies only within the 7th Circuit (Illinois, Indiana and
Wisconsin), as the first and only appellate court decision on the issue, it will
carry persuasive effect elsewhere. Even so, retailers engaged in e-commerce
should consider complying with FACTA’s credit card truncation requirements
simply as a matter of good business practice.