United States: J. Crew Credit Card Digit Class Action Dismissed Again Because of Overly Speculative Identity Theft, Fraud Risks

Last Updated: June 12 2017
Article by Brian Willett

As courts continue to grapple with close calls on standing following the U.S. Supreme Court's seminal decision in Spokeo v. Robins, another court has given defendants a win for intangible injuries and risk of future harm.  On June 6, the District of New Jersey dismissed – for the second time – a putative class action lodged against J. Crew for a technical violation of the Fair and Accurate Credit Transactions Act ("FACTA") because the alleged damages were too speculative to establish Article III standing.  In Kamal v. J. Crew, et al., 2017 WL 2443062 (D.N.J. June 6, 2017), U.S. District Judge William Martini granted J. Crew's motion to dismiss plaintiff Ahmed Kamal's Second Amended Complaint alleging the retailer printed too many credit card digits on receipts because – pursuant to Spokeo and a 2017 Third Circuit decision applying Spokeo – plaintiff failed to allege a sufficiently concrete injury.

Plaintiff alleged that J. Crew wilfully violated FACTA by printing the first six and last four digits of plaintiff's credit card number on receipts, as FACTA directs that businesses shall not "print more than the last 5 digits of the card number." As described by Judge Martini, the Complaint's allegations boiled down to two distinct injuries: (1) disclosure of information considered "intrinsically private" by law; and (2) increased risk of future credit card fraud or identity theft.  Ultimately, though, neither injury was a "concrete" harm, and thus plaintiff failed to establish constitutional standing, leading to the dismissal.

Injury to Privacy Rights                                                                                  

Analyzing plaintiff's first theory, the court noted that "[t]here is no meaningful relationship between J. Crew's conduct and any privacy interest historically recognized at common law." Contrary to the situation leading to the In re Horizon Healthcare Servs. Data Breach Litig. ruling from the Third Circuit earlier this year, where information was disclosed to third parties or used to perpetuate credit-card or tax fraud, J. Crew did not disclose plaintiff's personal information.  Further, where no unauthorized access to personal information was alleged, the digit printing "does not implicate the historic 'right to be let alone,' particularly when the first six digits do not pertain to the customer's individual bank account," the court noted.

Turning to the "judgment of Congress" factor identified in Spokeo, Judge Martini observed that while Congress "undoubtedly hoped that FACTA would reduce identity theft," that didn't mean it contemplated "private actions by individuals who have not sustained any actual harm."  Rather, the legislative history indicated that the filing and appealing of such cases was a "significant burden" on the companies sued.  Thus, this factor indicated the injury was not sufficient to establish standing.

Material Risk of Future Harm

Next, the court concluded that the degree of potential risk for future identity theft was too low to constitute a concrete harm. Because the first six digits of a credit card number refer to the card issuer and the last 10 refer to the specific account, J. Crew's printing of the first six and last four digits didn't provide any more information to potential identity thieves than permitted by statute; in fact, the practice arguably provided less information than FACTA's last-five-digits limit.

While the Complaint noted risks from both "dumpster divers" and more sophisticated thieves, the court found the threat from the former to be based on an overly speculative chain of events because of the requirement that the third party would need to obtain the remaining digits as well as the expiration date, security code, and/or zip code to actually make purchases. Accordingly, that risk was insufficient to confer standing. The court found plaintiff's allegations as to sophisticated thieves to be vague and unsupported, with plaintiff's only exhibits allegedly supporting the theory concerning conditions in which the entire credit card number was already obtained.

Thus, based on Spokeo and Horizon, the intangible harms pleaded by plaintiff could not be elevated to the standard of concrete injuries, and the court dismissed the complaint for lack of standing.

Conclusion

As this latest example of post-Spokeo defense victories indicates, defendants overlooking potential standing arguments do so at their peril.  Where a Complaint alleges intangible injuries and bare statutory violations paired with potential risks of future harm, a motion to dismiss for lack of subject matter jurisdiction may be viable.  As shown in Judge Martini's analysis, defendants should look to Congressional intent, historical common-law, and practical wisdom in crafting dismissal arguments.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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