Consumer Finance Insights
October 2, 2017

Out of the Fryer: Burger King Beats FACTA Suit

On September 27, 2017, the Southern District of Florida dismissed a Fair and Accurate Credit Transactions Act (FACTA) suit against Burger King on standing grounds. In Gesten v. Burger King Corp., Case No. 1:17-cv-22541 (S.D. Fla), the Court joined numerous other courts finding that, where a FACTA plaintiff’s only alleged harm is the printing of too many digits of a credit card number on a consumer-transaction receipt, Article III standing is lacking.  In doing so, however, Judge Scola broke with other judges in the Eleventh Circuit.  The decision is noteworthy both because it clearly articulates why such allegations are insufficient and because it continues a trend of dismissals of similar allegations.

FACTA prohibits, among other things, the printing of more than five digits of a credit card number on any receipt.  In Gesten, plaintiff alleged that a Burger King restaurant violated FACTA by printing a receipt that included ten digits—the first six and the last four.  To clear the standing hurdle, Plaintiff claimed that Burger King’s alleged violation injured him because it increased his risk of identity theft.  Burger King moved to dismiss for lack of standing, asserting that Plaintiff’s alleged injury was procedural and did not satisfy the Article III test (injury in fact, a causal connection between the injury and alleged conduct, and redressability).

The Court first noted that several courts (including the Second and Seventh circuits) have dismissed FACTA claims on standing grounds.  It explained these courts concluded that plaintiffs whose only alleged harm was a heightened risk of identity theft as a result of including more than five credit-card digits on a receipt lacked standing.  The Court acknowledged that other district courts in the Eleventh Circuit have reached the opposite conclusion, but refused to follow those decisions for two reasons.  First, the Court found these decisions unpersuasive because they were based on pre-Spokeo decisions.  Second, the Court rejected the underlying principle of these decisions explaining, “[t]he conclusion of district courts in this circuit that the violation of a substantive right created by Congress is sufficient on its own to confer standing on a plaintiff is contrary to the holding of Spokeo.”

In departing from the decisions of other district courts in the Eleventh Circuit, the Court focused on FACTA’s legislative history.  Examining that legislative history, he concluded that the statute does not create a private right of action for every violation, but only where a violation makes identity theft “certainly impending.”  The Court also rejected plaintiff’s argument that exposure of private information is a long-recognized harm, finding that plaintiff failed to show that any disclosure of his private information actually occurred.  Supporting this finding, the Court noted that there could be no heightened risk of identity theft because plaintiff took the receipt after the transaction and any alleged disclosure of his credit card number to Burger King employees was the same exposure caused by tendering his credit card for payment.  Finally, the Court explained (just as the Kamal court did) that that additional credit card numbers exposed only identified the card issuer, and therefore did not involve private information.

Defendants faced with FACTA suits should take note of the Gesten analysis for several reasons.  First, Gesten continues a trend in FACTA extra-digit litigation of finding no standing.  Second, the ruling takes on Spokeo’s challenge to consider Congress’s purpose in determining whether an alleged violation is procedural or not.  Third, Gesten addressed head on contrary rulings in the Eleventh Circuit, which may lead to appellate review, allowing the Eleventh Circuit to consider this question for the first time.

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