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Technical Violations of the Fair and Accurate Credit Transaction Act (FACTA)

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By: Jonathan H. Krol, Esq.

January 25, 2017

In ­ Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724, 2016 U.S. App. LEXIS 22139, the Seventh Circuit Court of Appeals recently weighed in on a hotly-debated issue: whether a technical violation of a statute (without more) is sufficient to satisfy the injury-in-fact requirements of Article III standing.

Under Article III of the U.S. Constitution, federal courts have jurisdiction to hear cases or controversies. Federal jurisprudence has long recognized that a litigant must suffer an injury-in-fact to have standing to bring a case in federal court, and an injury-in-fact requires not only that a plaintiff allege an injury that is particularized, but also an injury that is “concrete.”

In recent years, courts have wrestled with whether a bare statutory violation (often of a consumer protection law such as the Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), or Telephone Consumer Protection Act (TCPA)) without independent or additional harm can satisfy the “injury-in-fact” standing requirement. In Spokeo, Inc. v. Thomas Robins, 136 S. Ct. 1540 (2016) (a case brought under the FCRA), the Supreme Court made clear that a plaintiff bears the burden of establishing “that he or she suffered ‘an invasion of the legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Spokeo, 136 S. Ct. at 1548.  A concrete injury must “actually exist.” It must be “real,” and not “abstract.” Id.

Finding that the Ninth Circuit had failed to properly address the “concrete” prong of the analysis below, the Spokeo Court decided to remand the case for further proceedings. This left the door open for lower courts to continue to debate the issue, resulting in a continued split of authority. See Tyus v. United States Postal Serv., No. 15-CV-1467, 2017 U.S. Dist. LEXIS 833, at *5-6 (E.D. Wis. Jan. 4, 2017) (noting the “split among courts as to whether a ‘bare violation’ of the FCRA’s disclosure and pre-adverse action notice provisions is in and of itself a ‘concrete harm’ sufficient to give a plaintiff standing to pursue such a claim in federal court”).

In December 2016, the Seventh Circuit joined a growing number of courts to address the issue since the Spokeo decision was rendered last May. In Meyers, the plaintiff brought a claim under the Fair and Accurate Credit Transaction Act (FACTA) (a 2003 amendment to the FCRA) after he used a credit card to pay at the defendant restaurant. FACTA provides that "[n]o person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction." 15 U.S.C. § 1681c(g)(1). Plaintiff discovered that his credit card receipt did not truncate the expiration date as required under the law, and he sued the restaurant for the violation.  Importantly, the plaintiff discovered the violation immediately, and nobody else even saw the non-compliant receipt.

In reaching a decision, the court discussed recent precedent:

As Spokeo explained, “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” [Spokeo, 136 S. Ct.] at 1549. In other words, Congress’ judgment that there should be a legal remedy for the violation of a statute does not mean each statutory violation creates an Article III injury. See Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d 583, 590-91 (7th Cir. 2016) (rejecting the argument that a violation of the Real Estate Settlement Procedures Act, without more, is a sufficient injury-in-fact after Spokeo). Such an injury “must be ‘de facto’; that is, it must actually exist.” Spokeo, 136 S. Ct. at 1548.

Meyers, 2016 U.S. App. LEXIS 22139 at *6-7 (7th Cir. 2016). The court then concluded that Spokeo compels a finding that the plaintiff did not meet the injury-in-fact requirement for Article III standing:

The allegations demonstrate that Meyers did not suffer any harm because of Nicolet's printing of the expiration date on his receipt. Nor has the violation created any appreciable risk of harm. After all, Meyers discovered the violation immediately and nobody else ever saw the non-compliant receipt. In these circumstances, it is hard to imagine how the expiration date's presence could have increased the risk that Meyers’ identity would be compromised.

 Id. at *7 (citation omitted).

Meyers is important because it was issued by a federal circuit court and will carry greater precedential weight than most post-Spokeo decisions, which have emanated from district courts.  As such, it will prove useful when defending against claims premised on technical statutory violations.  Still, the legal landscape is far from settled, and it is likely that the Supreme Court will grapple with the issue again in the not so distant future.  

If you have any questions regarding Meyers v. Nicolet Restaurant or wish a copy of the opinion, or otherwise have a question regarding an issue of standing, or consumer protection and credit reporting laws, please feel free to call any member of our Financial Services Liability Practice Group. 

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.

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