FACTA (Fair and Accurate Credit Transactions Act of 2003) allows consumers to be able to obtain a free credit report once every twelve months from each credit reporting agency. More importantly, the act was created to help reduce identity theft. With the state of our current economy, credit card and identity theft is on the rise. This is affecting not only consumers but merchants alike.
On November 1st 2008 FACTA has a deadline in place called the Identity Theft Red Flags Rule. Red Flags are indicators of a possible risk of identity theft. Red Flag rules listed in Section 114 of FACTA explains each rule and how to develop ID theft prevention programs. These rules apply to any business, bank, or issuer that offers credit or any type of finance option. Many financial institutions are not taking the deadline seriously since the first Office of Thrift Supervision audits will not occur until February of 2009. Merchants all together have become savvier and typically try to comply and report any red flags, but some may not know who to report these red flags to.
Although we all want our credit card information to be secure, it seems that merchants are not getting a fair shake when it comes to FACTA. Many class action lawsuits have been filed against a number of retailers. Recently, there was a class action law suit filed seeking willful damages based on printing of credit card expiration dates on receipts. The merchant was seeking $100 to $1000 for each violation. This applies to both paper and electronic receipts. Most mom and pop merchants would expect that their card processor would ensure that they are up to code. This is not always the case. Merchants should review the FACTA rules regardless of their size. The Supreme Court is currently reviewing willfulness and “reckless disregard” and expects to have a decision this quarter.