Credit and Debit Card Receipt Clarification Act of 2007

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4008) to amend the Fair Credit Reporting Act to make technical corrections to the definition of willful noncompliance with respect to violations involving the printing of an expiration date on certain credit and debit card receipts before the date of the enactment of this Act.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and to insert extraneous material thereon.

Mr. Speaker, I yield myself as much time as I may consume.

Mr. Speaker, I rise today in strong support of H.R. 4008, the Credit and Debit Card Receipt Clarification Act.

I would like to begin by thanking Members of both sides of the aisle for helping bring this commonsense legislation to the floor, including Ranking Member Bachus, Representative Melissa Bean, Michele Bachmann and

many others. I would also like to thank my chairman, Representative Barney Frank, and his staff for their efforts in bringing this important piece of legislation to the floor.

Mr. Speaker, in 2003 Congress passed the Fair and Accurate Credit Transactions Act, the FACT Act, to ensure that Americans could continue to rely on the efficiencies of the 21st century financial and credit system while being protected from identity theft, credit card fraud and other financial crimes.

This important law has given consumers new and important rights. For example, the FACT Act provides consumers with the right to obtain one free copy of their credit record from each of the three major credit bureaus every 12 months. In addition, this legislation created the Financial Literacy and Education Commission to better help Americans understand and manage their finances.

One provision in the FACT Act was intended to enhance consumer protection from credit card fraud by limiting the amount of information printed on receipts from a credit card or debit card transaction. Today, when consumers go into a convenience store, restaurant or retailer, they will notice that their credit card receipt does not contain the full credit card number. This small but important change to their credit card receipts helps prevent criminals from obtaining the receipt and using it to make fraudulent purchases.

Unfortunately, this provision, as drafted, has caused a great deal of confusion and is now at the center of hundreds of lawsuits all over the country. Specifically, it required that ``no person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.'' The overwhelming majority of businesses believed that they were in compliance with this provision of the law by truncating the card number and printing the expiration date of the credit card.

Furthermore, the publicity surrounding the passage of the act, whether it was press accounts of the President's statement at the signing of the subsequent Federal Trade Commission press release describing the new requirements of the bill, pointed entirely to the truncation of the credit card number.

I would like point out that experts agree that the truncation of the card number, by itself, regardless of whether or not the expiration date was redacted from the receipt, removes the single most crucial piece of information that a criminal would need to perpetrate account fraud.

I can understand the shock that many of these businesses must have felt when, thinking that they had taken all the steps necessary to protect their customers and comply with the law, they were later served notice of a pending class action lawsuit against them accusing them of violating the FACT Act because they had failed to redact the expiration date in addition to truncating the credit card number.

When you consider that the law levies between a $100 and $1,000 fine for each credit card receipt, the amount of liability threatens to bankrupt healthy, successful businesses.

While most, if not all these companies, have quickly resolved the issue by instructing their point-of-sale vendors to also redact the expiration date, they continue to face these lawsuits. Not only have these lawsuits been filed against large corporations, they have been filed against small businesses.

Last month I was contacted by Arthur Cullen. Mr. Cullen and his wife, Nieves, are the owners of Havana Harry's Restaurant in south Florida. Mr. Cullen states in his letter that he and his wife began his business with a dream and some savings.

Today, Havana Harry's employs 75 people and serves more than 4,000 people on a weekly basis. Like so many others, Mr. Cullen believed he was complying with the FACT Act by truncating the credit card number. Unfortunately, a lawsuit was filed against his business because he also failed to delete the expiration date. As a result of the lawsuit, Mr. Cullen is concerned about the future of Havana Harry's.

My legislation is designed to provide relief to people like Mr. Cullen, proud entrepreneurs and small business owners, who did everything they thought was necessary to comply with the FACT Act.

H.R. 4008 makes a technical correction to the FACT Act to free hundreds of businesses from potential exposure to statutory damages that could total hundreds of millions or even billions of dollars solely because of their past harmless failure to redact the expiration date from an otherwise FACT Act complaint receipt.

Let me be clear, not one of these suits has alleged any harm to the consumer. In the event that a consumer does experience identity theft, account fraud, or some other harm, my legislation preserves a consumer's right to sue.

Finally, H.R. 4008 does not eliminate a business' obligation to properly truncate the account number or to redact the expiration date from its receipts, and it does not protect merchants who printed more than the account number permitted by the FACT Act.

With a struggling economy in Florida and across America, the last thing businesses and consumers need are lawsuits that needlessly drive up costs. These abusive lawsuits will likely result in higher prices to the public and could even result in bankruptcies and more job losses.

I urge all of my colleagues to join me in voting ``yes'' for this commonsense fix to a problem that has the potential to put out of business thousands of successful businesses which will ultimately hurt, rather than protect, consumers.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield to my distinguished colleague and friend from Illinois (Ms. Bean) as much time as she may consume.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I would like to thank Chairman Frank, Ranking Member Bachus and my cosponsors, Congresswomen Bachmann, Biggert and Bean, who helped me with this legislation, and 48 others who stood up for small businesses who are, right now, concerned about their viability as they are faced with the specter of a frivolous lawsuit.

I would just say that time is running out. I also would like to thank Senator Schumer for dropping the corresponding legislation in the Senate and I ask my Senate colleagues to act quickly because small businesses need relief immediately.

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Madam Speaker, due to illness, I was unable to participate in the following votes. If I had been present, I would have voted as follows:

May 13, 2008: Rollcall vote 306, on motion to suspend the rules and agree--H. Res. 1181, Expressing condolences and sympathy to the people of Burma for the grave loss of life and vast destruction caused by Cyclone Nargis--I would have voted ``aye.''

Rollcall vote 307, on motion to suspend the rules and pass--H.R. 6022, Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act--I would have voted ``aye.''

Rollcall vote 308, on motion to suspend the rules and pass--H.R. 4008, Credit and Debit Card Receipt Clarification Act of 2007--I would have voted ``aye.''

May 14, 2008: Rollcall vote 309, question of consideration on the role--H. Res. 1189, providing for consideration of the conference report to accompany H.R. 2419, the Farm, Nutrition, and Bioenergy Act-- I would have voted ``nay.''

Rollcall vote 310, on ordering the previous question on the rule--H. Res. 1189, providing for consideration of the conference report to accompany H.R. 2419, the Farm, Nutrition, and Bioenergy Act--I would have voted ``nay.''

Rollcall vote 311, on agreeing to the resolution--H. Res. 1189, providing for consideration of the conference report to accompany H.R. 2419, the Farm, Nutrition, and Bioenergy Act--I would have voted ``nay.''

Rollcall vote 312, on motion to suspend the rules and agree--H. Res. 1134, Supporting the goals and ideals of Mental Health Month--I would have voted ``aye.''

Rollcall vote 313, on motion to suspend the rules and agree--H. Res. 1176, Supporting the goals and ideals of National Train Day--I would have voted ``aye.''

Rollcall vote 314, on motion to recommit conference report with instructions--H.R. 2410, the Farm, Nutrition, and Bioenergy Act--I would have voted ``aye.''

Rollcall vote 315, on agreeing to the conference report--H.R. 2410, the Farm, Nutrition, and Bioenergy Act--I would have voted ``nay.''

Rollcall vote 316, on motion to suspend the rules and agree to, as amended--H. Res. 1133, Congratulating Winona State University on winning the 2008 Division II men's basketball championships--I would have voted ``aye.''

Rollcall vote 317, on ordering the previous question--H. Res. 1190, Providing for the adoption of the concurrent resolution, S. Con. Res. 70, the Congressional Budget Act--I would have voted ``nay.''

Rollcall vote 318, on agreeing to the resolution--H. Res. 1190, Providing for the adoption of the concurrent resolution, S. Con. Res. 70, the Congressional Budget Act--I would have voted ``nay.''

Rollcall vote 319, on motion to suspend the rules and agree to--H. Res. 1173, Recognizing AmeriCorps Week--I would have voted ``nay.''

Rollcall vote 320, on motion to instruct the conferees on--H.R. 4040, Consumer Product Safety Commission Reform Act--I would have voted ``aye.''

Rollcall vote 321, on motion to instruct the conferees on--S. Con. Res. 70, the Congressional Budget Resolution--I would have voted ``aye.''

Rollcall vote 322, on motion to suspend the rules and agree to, as amended--H. Res. 789, Honoring public child welfare agencies, nonprofit organizations and private entities providing services for foster children--I would have voted ``aye.''

May 15, 2008: Rollcall vote 323, on ordering the previous question-- H. Res. 1197, Providing for consideration of the Senate amendment to H.R. 2642, Military Construction and Veterans Affairs and Related Agencies Appropriations Act--I would have voted ``nay.''

Rollcall vote 324, on agreeing to the resolution--H. Res. 1197, Providing for consideration of the Senate amendment to H.R. 2642, Military Construction and Veterans Affairs and Related Agencies Appropriations Act--I would have voted ``nay.''

Rollcall vote 325, on motion to suspend the rules and pass, as amended--H.R. 5614, Original Saint-Gaudens Double Eagle Ultra-High Relief Palladium Bullion Coin Act--I would have voted ``aye.''

Rollcall vote 326, on motion to suspend the rules and pass, as amended--H.R. 406, Alice Paul Women's Suffrage Congressional Gold Medal Act--I would have voted ``aye.''

Rollcall vote 327, on motion to suspend the rules and pass, as amended--H.R. 5872, Boy Scouts of America Centennial Commemorative Coin Act--I would have voted ``aye.''

Rollcall vote 328, on agreeing to the Senate amendment with amendment No. 1--H.R. 2642, Military Construction and Veterans Affairs and Related Agencies Appropriations Act--I would have voted ``present.''

Rollcall vote 329, on agreeing to the Senate amendment with amendment No. 2--H.R. 2642, Military Construction and Veterans Affairs and Related Agencies Appropriations Act--I would have voted ``nay.''

Rollcall vote 330, on agreeing to the Senate amendment with amendment No. 3--H.R. 2642, Military Construction and Veterans Affairs and Related Agencies Appropriations Act--I would have voted ``nay.''

Mr. Speaker, I rise as the chief cosponsor of H.R. 4008 to support this important bill, and I want to associate myself strongly with the remarks from the gentleman from Florida (Mr. Mahoney) and thank him for the important work that he brought to bear on this bill, also Ms. Bean for her work on the bill and also for Mrs. Biggert, as well, for working with me to help protect American business and consumers from frivolous lawsuits.

Millions of consumers across America will experience a little extra pain in the pocketbook unless Congress passes The Credit and Debit Card Receipt Clarification Act and businesses across America, both large and small, from Main Street to Wall Street will be hurt as well.

They are watching Congress this week to see if we care; and, second, to see if we are paying attention to them. They are watching us to see if we can work across the aisle, which I am happy to say we are working across the aisle, to pass a simple but critical update to The Fair and Accurate Credit Transaction Act, otherwise known as FACTA. In an effort to prevent theft and fraud, Congress required through FACTA that businesses print, as was stated earlier in our testimony, only the last five digits or less of a person's credit card or just the expiration date on transaction receipts.

Many companies made sure that they printed no more than five digits of the receipt, but they also printed the expiration date. Many simply just weren't clear on the new requirement.

Unfortunately, trial lawyers in America saw opportunity knocking, and they found a way to take advantage of this situation. Lawyers' eyes lit up with dollar signs, and they began filing suits against companies across the United States. Any company that kept printing the expiration date, along with a few of the cards' digits, instead of just one or the other, became a potential litigation target.

However, identity theft prevention experts say that five digits of a credit card, plus an expiration date printed out on a receipt, are not enough to steal someone's account. All of these people, however, are being sued on a technicality that poses no threat to people's credit or their debit accounts.

Take, for example, in my district, the Rockler Companies, Inc., one of the many family-owned businesses in my district. Rockler sells and distributes products to the woodworking community, and, unfortunately, they became a fallen victim to just such a frivolous lawsuit. Unfortunately, they have already had to pay out over $30,000 in legal expenses for this wonderful small business in Minnesota, not because they did anything wrong, but because Congress, because this body, accidently left open a legal loophole. That's $30,000, something that can mean life or death for one of America's small businesses.

This bill on the floor today is very important. It may not seem like much, but H.R. 4008, The Credit and Debit Card Receipt Clarification Act, closes that loophole. It liberates American businesses, usually small businesses, from frivolous lawsuits.

They still have to update their receipts. They still have to comply with FACTA, but they can't be dragged through years of lawsuits because they printed a credit card expiration date.

If they print enough information to give thieves a toe-hold, they still can be sued. If they print over five digits of the card number, they still can be sued. If they do anything that puts customers' accounts in real jeopardy, they can be sued. They cannot be sued for this remote congressional technicality. That's only right.

With H.R. 4008, consumers will be protected on both ends of the transaction. After all, who will pay the real price for this? Businesses across America will have to offset the cost of these lawsuits by raising their prices, if they can, and American consumers will be left holding the short end of the stick, or the business will suffer.

At a time when Americans are already squeezed by the rising cost of living, by outrageous prices of gasoline at the pump, this is the last thing we need right now in our American economy. I am so happy that we are working together hand-in-hand across the aisle to show the American people that Congress is actually listening to them today, listening to their concerns and acting wisely on their behalf.

The Credit and Debit Card Receipt Clarification Act is pretty simple, it's no nonsense, it's fair, it's necessary, and it's bipartisan. That is good for businesses, it's good for consumers, and I thank and urge all of my colleagues in the House and ask them to join both Congressman Mahoney and myself in supporting this wonderful bill.

Mr. Speaker, I rise in strong support for H.R. 4008, the Credit and Debit Card Receipt Clarification Act. This is common sense legislation that will free hundreds of businesses, from large corporations to ``mom & pop'' operations from legal damages that could total hundreds of millions or even billions of dollars for their harmless failure to redact expiration dates from their credit and debit card receipts.

This bill only provides relief to companies that otherwise complied with the Fair and Accurate Credit Transaction Act, also known as FACTA, it preserves the right for a customer to sue if real harm or fraud has occurred and it does not eliminate a business's obligation to properly truncate the account number or to redact the expiration date from its receipts.

I think it is important to point out that we are talking about businesses that did everything they thought they were required to do to comply with the new standards set forth by FACTA. These are businesses that purchased new machines, installed new hardware and incurred the expense of producing what they thought or were told was a compliant credit or debit card receipt. These are businesses that when they were told that they had to truncate the account numbers of credit and debit cards, they did so.

One of my constituents, Steven Hanson, is such a business owner. He is the founder and President of B.R. Guest Restaurants. After FACTA was enacted into law, Steve tells me that he and his company spent more than $300,000 switching out credit card terminals in his restaurant to comply with the new law, only to find out that each and every new receipt he processed could result in a $100 to $1,000 fine. Steve tells me that B.R. Guest has a pending lawsuit against his company that could result in a $100 million liability. This is not a liability that B.R. Guest or many businesses could absorb. Without this relief, B.R. Guest and hundreds of other businesses could be forced to close up shop.

In addition to B.R. Guest Restaurants, Zabars, Fairway Markets, Scholastic Books, Barneys/Jones Apparel Group, Estee Lauder, The Knot.com, Bally's North America, Buy Buy Baby and Ross Stores are among the New York Businesses named in similar lawsuits.

It is also important to note that while the lawsuits filed against these companies are seeking damages totaling in the hundreds of millions, if not billions of dollars, none of the 500 lawsuits that have been filed, make any allegation of consumer harm. Identity theft prevention experts have testified that the truncation of the credit card numbers accomplishes the intent of the statute because a potential fraudster would not be able to perpetrate account fraud without having the entire correct credit card number. The real harm to the consumer would come if Congress does not act. Consumers will be forced to pay higher prices to help these businesses absorb the cost of these lawsuits or will be faced with fewer options as businesses are forced out of business because they can not afford their cost.

This legislation enjoys wide bipartisan support and has been endorsed by The U.S. Chamber of Commerce, the National Restaurant Association, Retail Industry Leaders Association, The National Association of Theater Owners, The International Franchise Association, The National Council of Chain Restaurants and the Food Marketing Institute.

Mr. Speaker, as I said, this is common sense legislation and I urge its adoption.

I thank the gentleman for yielding.

Mr. Speaker, I rise in strong support of H.R. 4008, The Credit and Debit Card Receipt Clarification Act, which makes a technical correction to The Fair and Accurate Transactions Act, FACTA.

As a strong advocate for increased security of individuals' personal financial data, I support the provisions to fight ID theft included in FACTA, which was signed into law in 2003. The bill sought to protect the privacy of the information and the consumers' credit report, assist victims of identity theft and prevent fraudulent credit transactions.

In particular, section 133 of FACTA, which went into effect in December of 2006, prohibits merchants from printing more than the last five digits of a consumer's credit and debit card numbers

or the expiration date on printed receipts. Some interpreted this to mean don't print either/or, others said print neither.

While I support the general intent of this section, it is noted by many identity theft experts that individuals who commit fraud by stealing consumers' credit and debit card numbers cannot do so without having the entire correct account number.

Section 113 eliminates one avenue for these criminals to steal account numbers by prohibiting the printing of full account numbers on paper receipts. Due to the vagueness of section 113 and lack of guidance from the FTC, the agency responsible for enacting the section, many businesses only truncated a consumer's credit or debit card number, and now hundreds of businesses across the country are facing lawsuits for failing to redact the expiration date from an otherwise FACTA compliant receipt.

In my home State of Illinois, over 20 businesses, large and small, are facing millions of dollars of unnecessary lawsuits that could put them out of business.

Since the lawsuits have been filed, most businesses have updated their cash registers to ensure they are in full compliance with either interpretation of FACTA. Unfortunately, they still face pending lawsuits that will exacerbate the economic pressures these businesses are already facing in today's market.

I met a local restaurateur who was so adamant about fighting these predatory class action lawsuits that he is also paying the legal fees for a small coffee shop owner who could not possibly afford the legal bills.

To ensure that our small businesses are not unjustly targeted, I was proud to cosponsor this bill and join my colleague from Florida, Tim Mahoney, in introducing H.R. 4008. This bill provides a technical correction to make businesses compliant with section 113 of FACTA if they had properly truncated a consumer's credit or debit card number but failed to redact the expiration date up to the point of enactment of this bill.

It does not protect businesses who failed to truncate a customer's account number. While H.R. 4008 preserves a consumer's right to sue in the event of actual harm or account fraud, it is important to note that of the over 500 lawsuits already filed, none have made any allegation of consumer harm.

This bill is a commonsense solution to a significant problem many of our local businesses are facing, particularly in these challenging economic conditions. I urge my colleagues to support H.R. 4008.