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The Fair and Accurate Credit Transaction Act, known as “FACTA,” was passed by Congress and signed into law on December 4, 2003, and became fully effective on December 4, 2006. The purpose of FACTA is to reduce the amount of personal confidential financial information that is generated and thereby reduce the incidence of identity theft and credit card fraud. In keeping with this goal, 15 USC 1681c(g)(1) requires that merchants that issue receipts to individuals truncate all but the last four or five digits of the customer’s credit card account number and truncate the entire expiration date.
Even though FACTA was talked about quite a bit over the years, plenty of merchants have not followed these rules of FACTA, likely out of not knowing just what criminals can do with the expiration dates. They are mistaken on this. There is much a criminal can do with expiration dates. Consider the following:
• Expiration dates are one of the inputs needed to calculate the 3-digit security code (CVV2 or CVC 2) on the back of a credit card.
• Expiration dates are required for some, but not all, online purchases, as clearly demonstrated by my recent online test purchase at Wal-Mart, the world’s largest retailer.
• Expiration dates can also be used to make a criminal sound more credible if he or she calls while pretending to be a bank employee.
• Expiration dates are solicited by criminals in many e-mail phishing scams.
• Expiration dates make up some of the core secret informational items that identity theives traffic.
• Expiration dates are described by Visa as a “special security feature.”
• Expiration dates are one of the items contained in the magnetic stripe of a credit card, so it is useful to a criminal when creating a phony duplicate card.
• Expiration dates can easily be cut out of receipts and require almost no expense, even for a large chain sporting hundreds of shops and locations.
• Expiration dates are required to be excluded from printed receipts, according to Visa’s Rules for Merchants, which predates FACTA.
• Expiration dates are required to be excluded from printed receipts, according to MasterCard International’s Rules, which predates FACTA.
• Expiration dates must be excluded from receipts given to customers, according to laws passed in over thirty-four states.
• Expiration dates cannot be printed in receipts, in keeping with FACTA.
The expenses from a merchant implementing FACTA are tiny, but the amount a customer can lose from fraud and identity theft are enormous. It is hard to see how any merchant see how much risk they are putting their own customers in by not truncating expiration dates as required by FACTA and even Visa and MasterCard.
The author of this article is an experienced banking expert witness consultant who has worked on 337 cases nationwide and testified 91 times. He is a former banker and banking regulator, widely published, and often quoted in the media. He is available to consult on credit damages, fraud, business law, real estate, valuation, and related cases with lawyers. Find him and others like him through Consolidated Consultants, an expert witness referral service.