A wave of class action lawsuits against businesses printing more than five digits of consumer credit cards on receipts is starting to affect Nashville businesses.
The Sportsgrille, a restaurant in the Nashville downtown Hilton, as well as the Opry Mills location of the Sun & Ski chain of stores were recently sued for not complying with federal and state regulations created to protect consumers from identity theft and credit and debit card fraud.
The Fair and Accurate Transaction Act (FACTA), enacted in 2003, and the Tennessee Consumer Protection Act (TCPA), enacted in 2005, both require that any entity accepting credit or debit cards in business transactions print no more than the last five digits of consumer card numbers on receipts, including both customer and merchant receipts. Both acts also prohibit printing card expiration dates.
Businesses across the country were required to comply with FACTA by Dec. 4, 2006, and Tennessee companies were given until Jan. 1, 2007, to conform to the TCPA.
But there are apparently still plenty of companies printing more than five digits, or expiration dates, on receipts — and private attorneys and organizations of plaintiffs have been quick to respond with class action lawsuits against businesses.
John Golwen, a Memphis-based partner in Bass Berry and Sims litigation, described the suits as a “trend” making its way across the country. Plaintiffs’ firms based in cities including New York and San Diego are filing class action suits against businesses — primarily restaurants — that are not in compliance with FACTA and corresponding state acts.
“They’re suing a lot of restaurant chains around the country, and some of these suits have just been showing up in Tennessee in the last few weeks,” Golwen said.
The most recent suit was filed against Hilton Hotels Corp., doing business as The Sportsgrille. Sue Ellen Barnard of Williamson County is the plaintiff named in the class action.
A suit against Sun & Ski Sports, also known as Retail Concepts Inc., was filed on behalf of plaintiff Teresa J. Todd of Dickson County. The chain of stores has a shop on Opry Mills Drive, where the claims in the suit allegedly took place, but the complaint applies to all Sun & Ski Sports locations.
The local attorney involved in both the Hilton and the Sun & Ski Sports cases is Charles Barrett of Barrett & Associates in Nashville. Barrett did not return calls for comment Wednesday.
Other Tennessee businesses named in suits include Back Yard Burgers Inc., Abuelo’s Mexican Food Embassy, a Verizon store in Jackson, a Lenny’s Sub Shop location and Gould’s Salon Inc., according to court records.
Maggie Throckmorton, public information officer for the Department of Commerce and Insurance, said the state has currently received complaints about 22 businesses that are allegedly in violation of FACTA and the TCPA. Those entities have been sent certified letters from the department’s Division of Consumer Affairs. Consumer specialists will be dispatched to businesses if the problem isn’t corrected within a certain amount of time.
“Most of the entities that we’ve contacted have responded,” Throckmorton said.
To date, Tennessee legal actions involving FACTA and the TCPA have come from private attorneys rather than the state government. Sharon Flair, spokesperson for the Tennessee Attorney General’s office, said Wednesday the state has yet to file suit against businesses out of compliance with the act.
Most businesses in Tennessee should already be aware of the changes, Throckmorton said, as the Division of Consumer Affairs has also addressed the issue with a February press release and a mass mailing to state businesses, Throckmorton said.
Ronnie Hart, president and chief executive officer of the Tennessee Restaurant Association, a chapter of the National Restaurant Association, said organizations like his — as well as the companies handling credit card processing — have also worked to keep businesses in the loop.
“We’ve been keeping our membership informed of this for some time. Hopefully all of our folks have had the change completed, or are in the process of having the change completed,” Hart said.
Hart’s organization includes 2,300 member properties across the state, one-third of which are in Middle Tennessee.
But according to Hart, there are still some businesses who may not have heard about the changes, or who may find it too expensive to update their credit card processing equipment. Updates can cost up to several thousand dollars for a single restaurant, Hart estimated, and possibly more for large and complex systems used by chains.
“I have to admit, we had time to work on it,” Hart said. “I think most people are trying to get this fixed. It’s not a cheap thing to do.”
Hart said restaurants may be the most common targets of the suits because of the volume of customers served. Larger restaurants, whether corporate or independent, can get 70 to 80 percent of their business from credit cards.
“It’s unfortunate that we have people in this country who are looking for things like this to sue somebody over,” Hart said. “Nobody’s out any money on this, unless they can prove that fraud has taken place.”
In Tennessee, the viability of such cases could change significantly, depending on the outcome of a case currently pending before the Tennessee Supreme Court. The case, Walker vs. Sunrise Pontiac, concerns whether the violations should be considered individual causes of action, rather than class actions.
Throckmorton said consumers who encounter businesses that printed more than five digits of credit card numbers on receipts may call the Department of Commerce. The number to call is 741-4737.