Delamarter v. Supercuts, Inc.

Background

This putative class action alleges that Supercuts violated the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. § 1681 et seq. FACTA prohibits a merchant from printing more than the last five digits of a credit-card or debit-card number on a receipt given to a customer at the point of sale.

Delamarter alleged that he made a purchase at a Supercuts location in October 2018 and received a paper receipt showing the first four and last four digits of his credit-card number. He alleged that Supercuts routinely provided similar receipts to other customers. He did not allege that he had suffered identity theft, fraud, or other actual harm, but alleged an increased risk of those harms. He sought statutory and punitive damages, costs, and attorney’s fees.

The case was filed in state court and removed to federal court based on diversity jurisdiction. Supercuts then moved to dismiss the complaint for failure to state a claim.

FACTA violation

Supercuts argued that printing the first four digits did not violate FACTA because those digits did not increase the risk of identity theft or fraud, which Supercuts characterized as the harm the statute was designed to prevent. Delamarter argued that the statute’s plain language prohibited printing more than the last five digits, regardless of whether the additional digits increased the risk of fraud.

The court found the statutory language unambiguous. It held that FACTA does not require a plaintiff to show that the extra digits exposed the cardholder to a greater risk of identity theft or fraud. Because the receipt displayed eight digits—the first four and last four—the court concluded that Delamarter adequately alleged a FACTA violation.

Willfulness

Because Delamarter did not allege actual damages, he needed to plausibly allege a willful FACTA violation to seek statutory damages. The court explained that “willful” in this context means knowing or reckless conduct.

The court found the willfulness allegations sufficient at the motion-to-dismiss stage. Delamarter alleged that FACTA’s receipt requirement was widely known in the industry, that Supercuts received repeated reminders from credit-card issuers, point-of-sale providers, and trade associations, and that certain Supercuts executives had firsthand knowledge of the requirement. The court concluded that these allegations supported a plausible inference that Supercuts knew of the requirement and at least recklessly violated it. The court also stated that pleading some facts on information and belief did not undermine the claim at this stage because the allegations were specific and had sufficient indications of reliability.

Disposition

Judge David S. Doty ordered that Supercuts’ motion to dismiss, ECF No. 15, was denied. The order addressed whether the complaint adequately stated a FACTA claim; it did not decide final liability, damages, or class certification.