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Supreme Court hears FCRA Lawsuit about Credit Card Receipts

October 12, 2012

The Supreme Court recently heard oral argument in the case of U.S. v. Bormes.  This is the most recent attempt to exploit a provision – 15 U.S.C. §1681c(g) – that was added to the FCRA in 2003 and became effective in 2006.  It prohibits anyone who accepts a credit card as payment from printing “more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder.”  Mr. Bormes is a lawyer who used his credit card to pay fees when he used PACER – the electronic filing system in the federal courts.  He alleges that PACER’s receipts contained the expiration date of his card, which would make the government liable to him under § 1681c(g).

Argument in the Supreme Court appears to have focused on whether the government can be liable to Mr. Bormes at all – i.e., whether the government is not liable, even though a private business might be, due to the doctrine of sovereign immunity.  That issue is outside the scope of this blog, and I won’t attempt to address it.  The district court held that the government couldn’t be liable; the appeals court held that it could be; and now the Supreme Court is going to get the last word.

What I would like to note is that even if Mr. Bormes convinces the Supreme Court that the government could be liable to him, he will still have a mountain to climb to actually get any money.  There was a slew of FCRA class actions involving credit card receipts and §1681c(g) a few years back – I even co-wrote an article about it that is now out of print.  To summarize, the plaintiffs in these actions (including Mr. Bormes here) will only be able to recover if either:  a) they demonstrate that the presence of an expiration date on their receipt actually harmed them; or b) they demonstrate that the government acted “willfully,” in which case they will get statutory damages of $100 to $1000 per receipt.

Nearly all of these cases were either settled for relatively small sums or else dismissed outright by the courts.  There is no evidence that printing an expiration date on a credit card receipt has ever harmed anyone or could ever harm anyone, so there are no “actual damages” to compensate.  And there is no evidence that the defendants in these cases (including the government here) acted willfully – at most they dropped the ball when this little-known provision of the FCRA became active.  Moreover, the stark contrast between the actual damages ($0) and the statutory damages (millions or even billions of dollars, if there are thousands of receipts multiplied by $100 or $1000 each) convinced many courts to refuse to award statutory damages even though the FCRA would have permitted them.

Of all the trial court opinions that dismissed these lawsuits, my favorite is Howard v. Hooters, No. H-07-3399, 2008 U.S. Dist. LEXIS 30776 (S.D. Tex. April 5, 2008).  The judge there wrote this:

“Steve Howard complains that Hooters printed a receipt that included the expiration date of his credit card. While he says this exposed him — and many others — to an increased risk of credit fraud, he only knows that the Fair and Accurate Transaction Act prohibits receipts’ having expiration dates of a consumer’s credit card. See 15 U.S.C. § 1681c(g).

“Howard was not injured as a consequence of the data shown on his receipt from Hooters — no fraud, no sleepless nights, nothing.

“He sues for himself and everyone else who has been similarly not victimized. His facts consist entirely of this single, individual error. Howard insists that many other customers were similarly exposed. If so, they too were simply not injured. Further, Hooters has already changes its procedures and is no longer printing expiration dates on its receipts. In essence, Howard wants this court to certify a class that has suffered no injury from a statutory violation that is no longer occurring. No class will be certified.”

Even if the Supreme Court agrees with the appellate court that the government could in theory be liable to Mr. Bormes, and sends his lawsuit down to the trial court for further proceedings, the government will be able to point to this Hooters case and to other, similar cases and likely settle for a pittance or get the suit thrown out.  Lawsuits like this – clearly driven by lawyers who are attempting to exploit a provision in the law to collect money even though nobody has been or could be harmed – are what give law and lawyers a bad name.


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