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The Facts on the FACTA Clarification Act


     By Don Coker Banking Consultant & Banking Industry Standard Procedures, et al., Expert Witness

PhoneCall Banking Consultant and Expert Witness Don Coker at (770) 852-2286


Expert Witness: Don Coker
Important New Information on What is Now Considered Willful Violation of FACTA.
Congress passed The Fair and Accurate Credit Transactions Act (“FACTA” or the “Act”), and it was signed into law on December 4, 2003. FACTA became fully effective on December 4, 2006. The purpose of FACTA is to reduce the amount of personal confidential financial information that is generated and thereby reduce the incidence of identity theft, credit card fraud, and debit card fraud. To help accomplish this goal, 15 USC 1681c(g)(1) requires that merchants that issue receipts to individuals truncate all but the last four or five digits of the customer’s credit card or debit card account number and truncate the entire expiration date.

Much confusion resulted from FACTA, and the Act was effectively ignored by some merchants, despite the fact that the Act was widely discussed and publicized before and after its enactment. In response to the many lawsuits that resulted over violations of FACTA, Congress wrote and passed an act to protect businesses that did in fact print expiration dates on credit card or debit card receipts after the effective date of FACTA.

The Credit and Debit Card Receipt Clarification Act of 2007 (the “Clarification Act”) took effect on June 3, 2008. After June 3, 2008, a merchant that prints a credit card’s or debit card’s expiration date on an electronically generated receipt given to a customer is in violation of FACTA, even if the credit card or debit card number is properly truncated.

The so-called Clarification Act was not really meant to “clarify” anything except that it gave past violators a pass for their failure to follow the requirements of FACTA. Specifically, the Clarification Act created a window from December 4, 2004, to June 3, 2008, during which violations of FACTA involving the printing of credit card or debit card expiration dates will not be considered to be willful noncompliance with FACTA.

As a non-attorney banking consultant, my reading of the current requirements for what is now considered to be willful noncompliance with FACTA is:
● The printing on an electronically generated receipt of more than the last five digits of a credit card or debit card account number after December 4, 2006.
● The printing on an electronically generated receipt of the credit card’s or debit card’s expiration date after June 3, 2008, whether or not the credit card or debit card account number is properly truncated.

Despite the five and one half year time frame during which the banking, credit card, and retail industries have been dealing with FACTA, today there are, inexplicably, merchants that continue to violate FACTA. These merchants must immediately take the relatively easy and inexpensive steps required to reprogram their IT systems so that they are in compliance with FACTA. If they fail to do this, it is my professional opinion that there will be another round of FACTA lawsuits aimed at achieving compliance with the requirements of FACTA and the Clarification Act. I have already seen some of these lawsuits.

ABOUT THE AUTHOR: Banking Consultant and Expert Witness Don Coker
Don Coker is an experienced banking expert witness consultant who has worked on over 400 cases including 50 FACTA cases nationwide, and has testified over 100 times since 1989. He is available to discuss FACTA matters and other banking-related matters with attorneys. Atlanta-based working nationwide.

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While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.
For specific technical or legal advice on the information provided and related topics, please contact the author.

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