United States: Third Circuit Joins Majority Of Circuits In Holding That Simply Receiving A Receipt That Shows Too Many Credit Card Digits Does Not Confer Article III Standing To Sue Under FACTA

Last Updated: July 2 2019
Article by Patrick T. Ryan

On March 8, 2019, the Third Circuit became the third federal court of appeals to hold that a shopper alleging he or she received a receipt displaying too many digits of a credit card number—in violation of the Fair and Accurate Credit Transactions Act's ban on printing "more than the last 5 digits"—has not alleged a concrete injury for Article III standing. The complaint failed to allege that the non-compliant receipt had been disclosed to a third person who might attempt to use it to commit identity theft or credit card fraud, or that disclosure of the first six digits—which reveal only the card company and issuing bank—would raise a material risk of real harm. The decision, Kamal v. J. Crew Group, Inc., 2019 WL 1087350 (3d Cir. Mar. 8, 2019), joins the Second and Ninth Circuits in so holding. Only the Eleventh Circuit has decided in favor of standing.

Kamal, a shopper, alleged that J. Crew gave him a receipt that showed the first six and the last four digits of his sixteen-digit credit card number after each of three purchases. The receipts also displayed the name of the card issuer, Discover. He did not allege, however, that anyone else (other than the cashier) saw the receipts. And he did not allege that his identity was stolen or that his credit card number was used to commit credit card fraud. See 2019 WL 1087350, at *2. The district court dismissed his amended complaint and a second amended complaint for failure to allege a sufficiently concrete injury to satisfy Article III's standing requirement. Id. at *2-3.

Since the Supreme Court's decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), reminded lower courts to separately address whether a claimed injury was "concrete," litigants seeking damages for violations of statutory requirements—like FACTA's prohibition on printing "more than the last 5 digits of the card number or the expiration date" on credit card receipts, 15 U.S.C. § 1681c(g)(1)—have battled over whether plaintiffs alleging such violations have Article III standing without alleging some injury other than being subjected to the violation. In other contexts, courts have identified the statutory violation itself as constituting a sufficiently concrete injury. See, e.g., Susinno v. Work Out World, Inc., 862 F.3d 346 (3d Cir. 2018) (finding standing to assert violation of Telephone Consumer Protection Act based on plaintiff's receipt of a single unsolicited call on her cell phone); In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625 (3d Cir. 2017) (finding standing to assert claims under Fair Credit Reporting Act based on alleged unauthorized disclosure of plaintiffs' personal health information). But in the FACTA context, both the Ninth and Second Circuits have concluded that simply being handed a receipt that displays more digits than FACTA allows is not, without more, a concrete injury. See Noble v. Nevada Checker Cab Corp., 726 F. App'x 582 (9th Cir. 2018); Katz v. Donna Karan Co., 872 F.3d 114 (2d Cir. 2017).

Only the Eleventh Circuit has disagreed. It held in Muransky v. Godiva Chocolatier, Inc., 905 F.3d 1200 (11th Cir. 2018), that, at least on a facial challenge to standing, the claimed FACTA violation itself was a concrete injury. A petition for rehearing or rehearing en banc is pending before the Eleventh Circuit in Muransky.

Kamal asserted two harms he alleged were "concrete"—(a) the printing of the prohibited information itself (i.e., the statutory violation) and (b) a claimed increased risk of identity theft—but the Third Circuit rejected both. The court held that the complaint alleged no more than a technical, procedural violation of FACTA that, lacking any allegation of disclosure to a third person, did not result in a sufficiently concrete harm to confer standing under Article III. 2019 WL 1087350, at *7-10. Nor did the receipt contain enough information to raise a material risk of a concrete injury—identity theft—even if it had fallen into a thief's hands. Id. at *9.

First, following the Supreme Court's instruction in Spokeo that courts "look both at the 'judgment of Congress' and at history" to assess whether a claimed intangible harm constitutes a concrete injury, see 136 S. Ct. at 1549, the Third Circuit concluded that, by passing the 2008 Credit and Debit Card Receipt Clarification Act (which provided a temporary safe harbor for merchants who printed a card's expiration date on receipts), Congress had expressed its "judgment that not all procedural violations of FACTA will amount to concrete harm." 2019 WL 1087350, at *7. Indeed, Kamal supports the argument that "Congress's action to limit FACTA liability to those claims implicating actual harm ..." (id.) reflects its judgment that a violation such as printing the first six digits leads to a concrete injury only if it materially risks actual harm.

Second, as to the historical inquiry, the Third Circuit concluded that, because the complaint did not allege the disclosure of Plaintiff's credit card information to any third party, the claimed harm of simply receiving the non-compliant receipt was not closely related to any analogous harm that the common law has traditionally protected—including the privacy torts and the breach-of-a-confidential-relationship tort that Plaintiff invoked as historical analogues. Id. at *7-8. That's because those historical analogues all required disclosure to a third person. Here, the Third Circuit expressly disagreed with the Eleventh Circuit's Muransky decision, which found the common law's breach of confidence action sufficiently analogous even though it required disclosure. Id. at *10.

Third, the Third Circuit evaluated whether the risk of identity theft was great enough to raise a "risk of real harm" that the Supreme Court has explained may "satisfy the requirement of concreteness." Id. at *8 (quoting Spokeo, 136 S. Ct. at 1549). It decided that Kamal's "conclusory allegations of risk [of identity theft] are insufficient." 2019 WL 1087350, at *9. The court explained:

"Instead, Kamal must plausibly aver how J. Crew's printing of the six digits presents a material risk of concrete, particularized harm.

"The closest the Second Amended Complaint comes to alleging material risk of harm is its allegation that "identity thieves ... obtain Card receipts that are lost or discarded, or through theft, and use the information on them to commit fraud and theft." App. 101, Sec. Am. Compl. ¶ 28. As the District Court explained, this threat consists of a "highly 'speculative chain of future events,'" Kamal, 2017 WL 2587617, at *5 (quoting Reilly, 664 F.3d at 46): "Kamal loses or throws away [the receipt], which is then discovered by a hypothetical third party, who then obtains the six remaining truncated digits along with any additional information required to use the card, such as the expiration date, security code or zip code." Id. Kamal has alleged neither third-party access of his information, nor that the receipt included enough information to likely enable identity theft. Our analysis would be different if, for example, Kamal had alleged that the receipt included all sixteen digits of his credit card number, making the potential for fraud significantly less conjectural. Here, however, we agree with the District Court that this speculative chain of events does not constitute a material risk of harm."

2019 WL 1087350, at *9.

The Kamal decision puts the Third Circuit firmly in the majority of circuits holding that, without additional factual allegations of harm or allegations that plausibly show a material risk of harm, a plaintiff alleging no more than being handed a receipt that displays more credit card digits than FACTA allows does not have standing to sue over the FACTA violation.

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