Truncation

Truncation is the requirement mandated by the Federal Trade Commission (FTC) for merchants to shorten the personal account information printed on credit and debit card receipts.

Truncation requirements are specified in the Fair and Accurate Credit Transactions Act (FACTA) of 2003, a law that amended and expanded the Fair Credit Reporting Act of 1970. FACTA had a focus on preventing identity theft by protecting consumers’ personal data and sensitive financial information.

The FACTA law prohibit a business that accepts credit cards or debit cards from printing more than the last five digits of the card number or the card's expiry date upon any receipt provided to the cardholder at the point of sale or transaction. The truncation requirement, which came into effect for all businesses from December 1, 2006, is designed to prevent credit card fraud and identity theft.

Printing the full 16-digit personal account number (PAN) for a payment card and its expiration date on a receipt that is subsequently discarded or stolen would give credit card fraudsters all the information required to make a fake credit card. Truncation makes it much harder for criminals to obtain this information.

Truncation only applies to receipts that are electronically generated, regardless of whether such a receipt is a small cash register receipt or a full-page combination invoice and receipt. The truncation requirement does not apply to manual imprinters or for handwritten receipts.

Truncation also applies only to receipts that are handed to customers at point of sale, and not to transaction records retained by the merchant. Since merchants need full credit card details in the event of charge-backs etc. they usually generate two receipts, a truncated one for the customer and a complete one with full card details for their records. Merchants have an obligation to keep such card data safe.

As FACTA established statutory damages of up to $1,000 per violation of the truncation requirement, regardless of the occurrence of actual injury, numerous class action lawsuits were filed against companies of all sizes and types for truncation violations in the years after the requirement went into effect. In the time since then, various court decisions have taken differing stances in cases related to truncation violation claims. Some courts have ruled that there must be proof of actual damages or harm resulting from this violation, while other rulings have said that is not necessarily required in order for consumers to file a complaint.