Fair Credit Reporting Act Amendments

Floor Speech

FAIR CREDIT REPORTING ACT AMENDMENTS -- (Senate - May 20, 2008)

BREAK IN TRANSCRIPT

Mr. SCHUMER. Mr. President, I am glad we have just passed H.R. 4008. I thank all of my colleagues and Representative Mahoney in the House, who authored the Credit and Debt Card Receipt Clarification Act. I introduced an identical bill on the Senate side, which was S. 2978. The House passed this bill last week by the unanimous vote of 407 to 0.

H.R. 4008 is a narrow, commonsense bill that will smooth the transition to new rules for printing credit card receipts under the Fair and Accurate Credit Transaction Act, or FACTA.

FACTA says the credit card receipts can only display one of two things: either the last five digits of the credit card account number or the expiration date.

Unfortunately, the law was not as clear as it could have been, and many companies misunderstood this requirement. They redacted account numbers in order to comply with FACTA but mistakenly left expiration dates in place.

But unlike the State laws after which it is modeled, FACTA is tied to a statutory damages provision that sparked the filing of hundreds of class action lawsuits against companies whose sole error was printing expiration dates on receipts.

Let's be clear. These lawsuits are not alleging that consumers were harmed in any way. I will repeat that. The lawsuits are not alleging that consumers were harmed in any way. In fact, experts on identity theft will tell you that printing the expiration date doesn't present any risk of fraud or identity theft, as long as the account number is truncated.

Yet companies are facing sky-high liability of up to $1,000 per receipt. Some of them are large retail businesses; most of them are small mom-and-pop stores. The damages in these cases are so huge that judges have refused to certify class actions because the lawsuits could actually destroy the companies--small and large.

The long list of defendants in these cases includes many major corporations--we have all heard of the hotels, restaurant chains, et cetera--as well as little mom-and-pop stores.

It is fair to say that these lawsuits will actually hurt consumers because companies will be forced to raise prices, or even close stores, in order to cover the cost of legal fees and expensive settlements. This is at a time when our economy and businesses--particularly those dealing with retail--are already struggling to rebound from tough times.

So the bill is a win-win proposition for everyone. It stops destructive lawsuits against companies that made a harmless error in the past, but it also ensures that consumers can still sue in any case where they were actually harmed.

Going forward, companies will still have to meet the same strict rules Congress originally passed in fact. I am glad the Senate was able to take quick action on this important bill.

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