The U.S. Court of Appeals for the Ninth Circuit joined a growing number of circuit courts of appeal to hold that alleged procedural violations of the Fair and Accurate Credit Transactions Act, such as the inclusion of a credit card’s full expiration date on a receipt, were, on their own, insufficient to satisfy the concrete injury requirement necessary for Article III standing. The Feb. 21 ruling in Bassett v. ABM Parking Services is the latest since Spokeo v. Robins to call for actual harm to advance a FACTA damages claim. So far, every circuit court to have confronted similar factual allegations in FACTA cases has found that they fail to establish standing.
The Fair and Accurate Credit Transactions Act
The FACTA was a 2003 amendment to the Fair Credit Reporting Act and provides 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.” Willful noncompliance with FACTA entitles consumers to “any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000.” (See 15 U.S.C. 1681c(g)(1) and 15 U.S.C. 1681n(a)(1)(A))
In 2016, plaintiff Steven Bassett paid for parking at an ABM garage and received a receipt with his full credit card expiration date. Bassett filed a putative class alleging willful violations of the FRCA (specifically, the FACTA) against ABM Parking Services and its various affiliated companies (collectively ABM). He claimed that “the risk of harm created in printing the expiration date on the receipt” was a “sufficiently concrete” injury because it exposed him to “identity theft and credit/debit fraud.” He did not allege that his receipt was actually lost or stolen, or that he was a victim of identity theft.
The district court dismissed the complaint with prejudice, concluding that Bassett had alleged nothing more than a “possible risk of [identity] theft,” and “[s]omething more is necessary” to establish a concrete injury sufficient to establish standing.
Ninth Circuit Decision
The Ninth Circuit affirmed the district court’s dismissal, finding that Bassett had failed to allege facts demonstrating a concrete injury in Bassett v. ABM Parking Services (February 21, 2018).
Citing Spokeo v. Robins (2016), the Ninth Circuit explained that Article III standing required that a plaintiff allege a “concrete and particularized” injury, which may be intangible, in the context of a statutory violation and not simply a “bare procedural violation, divorced from any concrete harm.” To establish standing, the plaintiff must show the statutory violation presented an “appreciable risk of harm” to the underlying concrete interest that Congress sought to protect by enacting the statute.
The Ninth Circuit noted that the Second and Seventh Circuits had applied Spokeo to find that identical allegations were insufficient to establish a concrete injury. In Meyers v. Nicolet Restaurant of De Pere, the Seventh Circuit observed that plaintiff’s allegations “without a showing of injury apart from the statutory violation” were insufficient to confer Article III standing as Congress had “specifically declared that failure to truncate a card’s expiration date, without more, does not heighten the risk of identity theft.” Similarly, in Crupar-Weinmann v. Paris Baguette America, the Second Circuit held that the inclusion of the expiration date on a receipt did not “present a material risk of harm to the interest Congress sought to protect in passing FACTA-preventing identity theft and credit card fraud.” See our prior analysis in “Second Circuit Holds Procedural FACTA Violation Insufficient to Establish Standing.”
The Ninth Circuit also distinguished the present case from its prior decisions in Van Patten v. Vertical Fitness Group, and Syed v. M-I. In Van Patten, the Ninth Circuit held that the plaintiff’s allegation that he had received unsolicited text messages in violation of the Telephone Consumer Protection Act constituted a concrete injury sufficient to confer Article III standing because “unrestricted telemarketing can be an intrusive invasion of privacy and [is] a nuisance.” In Syed, the Ninth Circuit held that an employee had alleged a concrete injury where a prospective employer had obtained a consumer report about him without his consent in violation of his “right to information” and “right to privacy” under FCRA. The court found that, in contrast to receipts that had never been disclosed to anyone other than the cardholder, unauthorized text messages and consumer reports divulged without consent “necessarily infringe privacy interests and present harm.”
Turning to Bassett’s arguments that the FCRA either creates substantive rights, the violation of which is an injury that confers standing, or establishes a procedural right, the violation of which creates a material risk of harm sufficient to confer standing, the Ninth Circuit rejected both arguments. The court held that “[t]o the extent that the FCRA arguably creates a ‘substantive right,’ it rests on nondisclosure of a consumer’s private financial information to identity thieves,” and this right was not violated in the present case because “Bassett’s private information was not disclosed to anyone but himself.” Moreover, even if the FCRA created a procedural right, the court held that it considers whether the violation of that procedural right actually harms, or presents a material risk of harm, to Bassett’s interests and “it is difficult to see how issuing a receipt to only the card owner and with only the expiration date, ‘without more, could work any concrete harm.’”
Bassett further reinforces the limitations on Article III standing imposed by Spokeo in statutory violation cases and gives defendants in FACTA cases additional ammunition to challenge complaints that are premised solely on a procedural violation of the statute without allegations of actual injury. Joining with the Second and Seventh Circuits, Bassett narrows standing to bring cases based solely upon technical violations of the FACTA. Unless they can allege “potential real-world harm” caused by a procedural FACTA violation, plaintiffs in the Second, Seventh and Ninth Circuits will find it much more difficult to survive a motion to dismiss based on lack of standing.