Investor's wiki

Truncation

Truncation

What Is Truncation?

Truncation is the requirement ordered by the Federal Trade Commission (FTC) for merchants to abbreviate the personal account data imprinted on credit and debit card receipts.

Figuring out Truncation

Truncation requirements are determined 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 an emphasis on forestalling identity theft by protecting consumers' personal data and sensitive financial data.

Under FACTA, organizations that acknowledge credit or debit cards are denied from printing more than the last five digits of the card's number on their receipts. This requirement, which happened on Dec. 1, 2006, is intended to assist with protecting customers from credit card fraud and identity theft.

The requirement to shorten card numbers just applies to the receipts that are given to customers at the point of sale. It doesn't make a difference to digital transaction records retained by the merchant. Generally talking, merchants hold a separate copy of all receipts that contain the customer's full credit card data. Merchants are permitted to collect and store this data under FACTA, despite the fact that they must guarantee that the records are safely stored and that the privacy of their customers is regarded.

Under FACTA, merchants can be responsible for damages of up to $1,000 for every violation of the truncation requirement. These damages can be incurred whether or not the episode being referred to actually hurt the customer, a fact which prompted various individual and class action lawsuits against companies of all sizes for truncation violations in the years after the requirement came full circle. From that point forward, a few courts have decided that there must be proof of actual mischief coming about because of the violation for the merchant to be punished.

Illustration of Truncation

Tragically, theft of credit card data keeps on being a major problem, influencing a great many consumers every year. As per a report by the FTC, there were more than 1.3 million instances of identity theft in 2020, more than triple the number in 2018. Cheats can involve this taken data in various ways, for example, utilizing it to make online purchases, opening new credit accounts, or basically selling it on the black market.

Notwithstanding truncation, cheats could take the majority of the data they need for these crimes basically by taking or finding discarded customer receipts. Truncation makes it a lot harder for hoodlums to get this data. It is worth taking note of, in any case, that the truncation requirement doesn't have any significant bearing to manual imprinters or written by hand receipts, making it particularly important to store or discard these types of records safely.

Features

  • Under FACTA, merchants can be obligated for damages of up to $1,000 for every violation of the truncation requirement.
  • It is planned to make it more hard for criminals to access card data from taken transaction records.
  • Truncation is the practice of shortening the credit and debit card data imprinted on receipts.
  • This is a requirement commanded by the Federal Trade Commission (FTC) for all merchants.
  • Truncation doesn't matter to digital transaction records retained by the merchant.