Recent Credit And Debit Card Law Eliminates Merchant Liability

This past June, President Bush signed H.R. 4008, the Credit and Debit Card Receipt Clarification Act of 2007 into law. This was an important measure as it did away with possibly billions of dollars of damages against merchants who were hits with class action suits regarding credit card (and debit card) receipts. The law put relief into for hundreds of businesses in the U.S. who were facing law suits because of a technical violation. Merchants faced expensive law suits due to their printing of consumer's credit and debit card expiration dates on point of sale (POS) receipts.

Back in 2003, the United States Congress had added the provision, the Fair and Accurate Credit Transactions Act or "FACTA" to the Fair Credit Reporting Act ("FCRA"). Some misunderstood the language and made other changes except the deletion of the expiration date. What it means to merchants is this: as the law states, as long as the merchants complied with all the other FCRA requirements regarding receipts, they are not considered in willful non-compliance because of the error in printing the expiration date, and therefore can't face fines or prosecution for having done so (from December 4, 2004 until the law passed, June 3, 2008); therefore, they no longer face paying expensive law suit judgments (and having to raise prices to recover their losses). For the consumer, the act meant a reduced chance of ID thieves accessing important information for committing credit card fraud; it certainly doesn't prevent it, but it is a measure of prevention as expiration dates are crucial for gaining approvals on card purchases.

As merchants no longer print more than the last five digits of the card number or the expiration date, it greatly reduces the chance of thieves accessing enough information via the receipt to make fraudulent purchases. (The law means consumers won't face higher prices for the merchants' goods since they're not forced to recover the expenses of the law suits against them.) The act's sponsor was Representative Tim Mahoney (D-FL) and numerous co-sponsors also supported it; it was introduced in October, 2007, passed the house on May 13 and the Senate on May 20, 2008 and became law (Public Law # 110-241) on June 3rd as mentioned earlier. It was an important act and resulting law in the ongoing war of identity theft and credit card fraud, which costs merchants and consumers millions every year.