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.
BackgroundEduard 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 term “print.”
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 actually used.
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.
Implications
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.