Mohammad Nilforoush

In Long v. Tommy Hilfiger U.S.A., Inc., the U.S. Court of Appeals for the Third Circuit held that the Fair and Accurate Credit Transactions Act (FACTA) requires merchants to completely omit credit card expiration dates from receipts, instead of only redacting a portion of the date. The Court held that Tommy Hilfiger U.S.A. (Hilfiger) did not willfully violate FACTA. By interpreting the term “expiration date,” however, the Court increased the likelihood that printing a portion of the date on receipts will constitute a willful violation of FACTA.

FACTA prohibits merchants from printing credit card expiration dates on receipts provided to the customer. While a plaintiff’s recovery under FACTA is limited to actual damages for a negligent violation, the statute allows for between $100 and $1,000 in statutory damages, as well as punitive damages, for willful violations.[1] Appellant Randy Long had purchased neckwear at a Hilfiger store, and his receipt included “04/##” in the expiration date field.[2] Long alleged that this was a willful violation of FACTA. The District Court granted Hilfiger’s motion to dismiss, in which Hilfiger argued that printing the month alone did not constitute printing the expiration date, and even if it did, such violation was not willful.

On appeal, the Third Circuit first decided that Hilfiger violated FACTA by printing Long’s credit card expiration month on the receipt.[3] In its decision, the Court considered FACTA’s use of the term “expiration date.” Hilfiger argued that the printed information only constituted an “expiration date” if the date on the receipt was ascertainable. The Court found Hilfiger’s interpretation inconsistent with the statute’s goal of preventing identity theft because it would allow merchants to only redact a single digit in the date. According to the Court, different merchants could then redact different portions of the expiration date, thus allowing someone with multiple receipts to piece together the complete date.[4] Additionally, the Court reasoned that Congress did not intend to allow a portion of the expiration date because while FACTA included language that prohibited printing more than five digits of the card number, it did not use similar language for the date. Congress also did not add any such language when passing an act to clarify FACTA in 2008.[5] Therefore, the Court found that FACTA requires all the information printed in the expiration date field on the front of the card to be omitted from receipts.

The Third Circuit then considered whether Hilfiger’s violation of FACTA was willful. Because Long did not suffer any actual damages, he could only recover under FACTA if Hilfiger’s violation amounted to a willful violation. To determine willfulness, the Court relied on the Supreme Court’s test from Safeco Insurance. Co. of America v. Burr, 551 U.S. 47 (2007), where a violation is willful if the action shows “that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.”[6] Under the Safeco test, a violator’s interpretation must not only be erroneous, but also “objectively unreasonable.”[7] The Court found Hilfiger’s interpretation of the statute to be reasonable because the phrase “expiration date” was not defined in the statute, and Hilfiger could reasonably believe that the statute did not apply to its actions based on what it considered to be the plain meaning of the phrase. Furthermore, the court found that Hilfiger’s actual interpretation of the statute at the time of the violation was irrelevant because the Safeco analysis only requires an objectively reasonable interpretation of the statute that would allow Hilfiger’s conduct.[8] As a result, Hilfiger’s violation was not willful, and Long could not recover damages.

Lack of guidance from other circuits on the issue was one of the factors that led the Third Circuit to find that Hilfiger’s violation was not willful. Now that a federal appeals court has interpreted the use of the term “expiration date” in FACTA, future violations run an increased risk of being found willful, subjecting the violator to statutory and punitive damages.