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LOS ANGELES � More than 60 lawsuits have been filed in the past two months against major retailers and restaurants for failing to comply with a new provision governing credit card transactions. The suits, filed in California, allege that the companies violated a provision of the federal Fair and Accurate Credit Transactions Act that forbids cash register receipts from displaying the expiration date or more than the last five digits of a customer’s credit card number. The provision became effective on Dec. 4, 2006. The suits, filed as class actions, seek damages of $100 to $1,000 per violation. “Some of our clients are past victims of identity theft who take these issues very seriously,” said Greg Karasik, a senior litigator at Los Angeles-based Spiro Moss Barness Harrison & Barge, which has filed three dozen of the suits. “We’ll find out through these lawsuits exactly what these companies did and didn’t do as to why they didn’t comply with the law.” TOO MANY DIGITS? The Fair and Accurate Credit Transactions Act, which is part of the Fair Credit Reporting Act, was passed in 2003 to aid in preventing identity theft. The “truncation” provision, which is the subject of the suits, “was designed to prevent credit card fraud by making sure the copies of credit card receipts that we throw away don’t contain too many digits or the expiration of the card,” said Mark Thierman, a solo practitioner in Reno, Nev., who filed dozens of the suits as co-counsel with San Francisco’s Keller Grover. Keller Grover and Spiro Moss are among a handful of small plaintiffs’ firms that have filed the suits. The defendants include Ross Stores Inc., FedEx Kinko’s Office and Print Services Inc., Toys ‘R’ Us Inc., Cost Plus Inc. and California Pizza Kitchen Inc. Some of the suits allege that the companies displayed too much of a customer’s credit card number on the receipts. Others claim that the receipts included the expiration date. In some cases, the receipts had both. Karasik said several of the defendant companies have quickly fixed their registers since being sued for noncompliance. In those cases, the lawsuits are seeking damages for violations preceding the company’s changes but after Dec. 4, he said.
The suits were filed in California, in part, because the Ninth Circuit has established a less rigid standard for suing a company for ‘willful noncompliance’ under the Fair Credit Reporting Act.

“To the extent that some of these companies have shown how quickly they were able to comply, that certainly suggests a lack of any good reason for not doing so beforehand,” he said. The recent effective date for the provision applies only to registers in use before Jan. 1, 2005. Machines that were put into use after that date had to be in compliance immediately. But Karasik said the suits could involve both new and old machines. He said the suits weren’t filed until two months ago because the plaintiffs, as customers, did not know whether the registers are new. He said more lawsuits could be on the horizon. Greg Johnson, a partner in the Sacramento office of Pillsbury Winthrop Shaw Pittman, which is defending several of the companies in the suits, said some of his clients believed they did not have to comply with both requirements. He said the act is unclear in that respect. “It could also be read if you do one or the other, you’re in compliance,” he said. PROVING INTENT The suits were filed in California, in part, because the Ninth Circuit U.S. Court of Appeals has established a less rigid standard for suing a company for “willful noncompliance” under the Fair Credit Reporting Act. The Ninth Circuit interprets noncompliance as “reckless disregard” of the act, while other circuit courts have required plaintiffs to prove the companies intentionally and knowingly violated the act. “You don’t have to prove intent, just that they did what they did and the actions were on purpose,” Thierman said of the Ninth Circuit standard. He added, “You don’t have to prove the guy said, ‘I’m going to break the law.’” The split in the circuits over “willful noncompliance” is the subject of two cases that have been consolidated before the U.S. Supreme Court. Safeco Insurance Co. of America v. Charles Burr, 06-84, and GEICO General Insurance Co. v. Ajene Edo, 06-100 (U.S.). In both cases, the consumers failed to receive an “adverse action notice” from an insurance company, which is required under the Fair Credit Reporting Act when negative information on a consumer’s credit report affects the offered price. The consumers have alleged “willful noncompliance” against the insurance companies. Oral arguments in both cases took place on Jan. 16. Amanda Bronstad is a reporter with The National Law Journal, a Recorder affiliate based in New York City.

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