Question

n June 2013, Paul M. Stelmachers took a taxicab ride in Las Vegas, Nevada, and paid for the cab fare with his credit card. A VeriFone Systems, Inc., product was used to receive payment in the taxicab. Stelmachers noticed that the computer-generated receipt displayed more than the last five digits of his credit card. In November 2014, Stelmachers filed an instant class action suit against VeriFone, asserting that VeriFone had violated the Fair and Accurate Credit Transaction Act of 2003. VeriFone responded by filing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). In its motion, VeriFone stated three arguments: (1) FACTA does not prohibit merchants from printing the first digit of a credit card number; (2) Plaintiff cannot plausibly allege that VeriFone willfully violated FACTA, and thus cannot seek statutory damages; and (3) Plaintiff sued the wrong party because FACTA does not apply to point-of-sale system providers like VeriFone. What do you think of VeriFone’s argument? Which argument did the court deem most important and why? How did the court rule? Explain the court’s reasoning. [Stelmachers v. VeriFone Systems, Inc., 2015 U.S. Dist. LEXIS 16385.]

Answer 1

The three arguments stated by Verifone are as follows:

(1) “FACTA does not prohibit merchants from printing the first digit of a credit card number.”

(2) “Plaintiff cannot plausibly allege that VeriFone wilfully violated FACTA, and thus cannot seek statutory damages.”

(3) “Plaintiff sued the wrong party because FACTA does not apply to point-of-sale system providers like VeriFone.”

My thoughts on the three arguments stated by Verifone are as follows:

• Their rules do not require the merchant to conceal the first digits of the credit card number so legally they are within their rights and displaying the credit card number is not signify a theft or an intent to cheat.
• The violation is not deliberate by Verifone hence their intent to steal confidential data is not proved.
• The third point that he sued the wrong party as FACTA was not enacted to protect the private information of the consumers but was intended “to reduce the amount of potentially misappropriate able information produced in the credit and debit card receipts.”

The court ruled out any fraud as they felt that there was no intended fraud from the Verifone side. It is only a presupposition and assumption of potential fraud.

This is only speculation of a potential fraud. The plaintiff is only creating a scenario of a procedural violation of FACTA. It is not based on any concrete act or any harm which has been done. It’s a mere speculation of a potential harm and violation which may happen.

The court dismissed the case.

The court reasoning is fair and is in favor of Verifone who has no intent to harm the consumer. Their behavior is not a violation and it is only a thought in mind of the plaintiff that such a fraud can occur.