Federal Law Preempts NJ Fair Credit Report Act and TCCWNA Claims, New Jersey Court Says

Claims based on a retailer’s improper inclusion of too many credit card digits or a credit card expiration date on a sales receipt may not be brought under either the New Jersey Fair Credit Report Act (“NJFCRA”) or New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”), according to a recent ruling by the New Jersey Law Division.

Judge Robert C. Wilson of Bergen County held in an unpublished opinion in Kim v. Paris Baguette America, Inc., that the federal Fair Credit Reporting Act (“FCRA”), as amended by the Fair and Accurate Credit Card Transactions Act (“FACTA”), expressly preempts both NJFCRA and TCCWNA claims predicated on a failure to omit credit card information. Nevertheless, a plaintiff may bring claims under FCRA for the same conduct in New Jersey state courts.

In Kim, the plaintiff brought claims under NJFCRA and the TCCWNA for herself and a putative class against the bakery chain Paris Baguette. Plaintiff alleged that Paris Baguette improperly printed the expiration date of her credit card on receipts issued at Paris Baguette’s locations in Fort Lee, Palisades Park, and Manhattan. Defendants moved to dismiss on preemption grounds, and the Court agreed that Plaintiff’s claims were preempted by FCRA.

The Court found that “[t]he plain and unequivocal language of the FCRA” provides that “Congress intended to expressly preempt legislation regarding the truncation of credit card expiration dates printed on sales receipts.” The Court delved into the language of FCRA, first noting that the statute generally does not preempt state law, but nevertheless, provided specific exceptions to the general rule. In particular, the Court said, FCRA dictates that “[n]o requirement or prohibition may be imposed under the laws of any State … with respect to the conduct required” by FACTA’s provision relating to the truncation of credit and debit card numbers.

The Court found that FCRA’s preemptive language could not be more plain. It noted that just because NJFCRA regulates the same conduct as FACTA and requires the same behavior does not negate Congress’s prohibition of state regulation. Indeed, the Court rejected Plaintiff’s argument that NJFCRA does not conflict with FACTA, finding that no conflict is required for preemption under FCRA.

The Court also rejected Plaintiff’s citation to the 23 state laws that purport to regulate the truncation of credit and debit card numbers, noting that under the Supremacy Clause, preemption depends only on Congress’s intent. Here, the Court said, Congress’s intent is clear, and what state legislatures have done is irrelevant. Moreover, while the Court recognized the sentiment expressed in the recent Daniels v. Hollister decision in favor of providing access to the courthouse (which you can read about here), it opined that “such sentiment does not permit this Court to ignore the clear dictates of federal law.”

While the Kim decision means that retailers are not subject to liability under NJFCRA or the TCCWNA for improperly including credit card information on receipts, because FCRA provides for concurrent jurisdiction, a plaintiff may bring claims under it in New Jersey state court. Notably, the penalties for violations of FCRA and NJFCRA are identical. Nevertheless, because plaintiffs may only bring federal claims, every suit filed in New Jersey state court will be subject to removal.

Jason R. Halpin is an Associate in the Gibbons Business & Commercial Litigation Department.
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