Truncation

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 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. Generally speaking, merchants retain a separate copy of all receipts that contain the customer's full credit card information. Truncation is the practice of shortening the credit and debit card information printed on receipts. This requirement, which came into effect on Dec. 1, 2006, is designed to help protect customers from credit card fraud and identity theft.

Truncation is the practice of shortening the credit and debit card information printed on receipts.

What Is 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 is the practice of shortening the credit and debit card information printed on receipts.
This is a requirement mandated by the Federal Trade Commission (FTC) for all merchants.
It is intended to make it more difficult for thieves to access card information from stolen transaction records.
Truncation does not apply to digital transaction records retained by the merchant.
Under FACTA, merchants can be liable for damages of up to $1,000 for each violation of the truncation requirement.

Understanding Truncation

Under FACTA, businesses that accept credit or debit cards are prohibited from printing more than the last five digits of the card's number on their receipts. This requirement, which came into effect on Dec. 1, 2006, is designed to help protect customers from credit card fraud and identity theft.

The requirement to truncate card numbers only applies to the receipts that are handed to customers at the point of sale. It does not apply to digital transaction records retained by the merchant. Generally speaking, merchants retain a separate copy of all receipts that contain the customer's full credit card information. Merchants are permitted to collect and store this information under FACTA, although they must ensure that the records are securely stored and that the privacy of their customers is respected.

Under FACTA, merchants can be liable for damages of up to $1,000 for each violation of the truncation requirement. These damages can be incurred regardless of whether the incident in question actually harmed the customer, a fact which led to numerous individual and class action lawsuits against companies of all sizes for truncation violations in the years after the requirement went into effect. Since then, some courts have ruled that there must be proof of actual harm resulting from the violation in order for the merchant to be penalized.

Example of Truncation

Unfortunately, theft of credit card information continues to be a major problem, affecting millions of consumers each year. According to a report by the FTC, there were more than 1.3 million cases of identity theft in 2020, more than triple the number in 2018. Thieves can use this stolen information in a variety of ways, such as using it to make online purchases, opening new credit accounts, or simply selling it on the black market.

If not for truncation, thieves could steal most of the information they need for these crimes simply by stealing or finding discarded customer receipts. Truncation makes it much harder for criminals to obtain this information. It is worth noting, however, that the truncation requirement does not apply to manual imprinters or handwritten receipts, making it especially important to securely store or dispose of these types of records.

Related terms:

Black Market

A black market is an economic activity that takes place outside government-sanctioned channels. read more

Chargeback

A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account transactions report. read more

Class Action

A class action is a legal course in which a plaintiff brings forward a lawsuit on behalf of a group of people who've suffered a similar loss. read more

Credit Card Cloning

Credit card cloning is copying stolen card information using an electronic device and copying it to a new card. read more

Consumer Credit Protection Act of 1968 (CCPA)

The Consumer Credit Protection Act of 1968 (CCPA) is federal legislation outlining disclosure requirements for consumer lenders. read more

Contactless Payment

Contactless payment allows cardholders to tap payment cards against a terminal to complete a purchase rather than using a PIN. read more

Credit Card

Issued by a financial company giving the holder an option to borrow funds, credit cards charge interest and are primarily used for short-term financing.  read more

Fair and Accurate Credit Transactions Act (FACTA)

The Fair and Accurate Credit Transactions Act (FACTA) is a U.S. resolution passed in 2003 that was aimed at enhancing protection measures for identity theft. read more

Federal Trade Commission (FTC)

The FTC is an independent agency that aims to protect consumers and ensure a competitive market by enforcing consumer protection and antitrust laws. read more

PCI Compliance

PCI or payment card industry compliance are the standards businesses must follow to protect credit card holder data. Learn about PCI compliance requirements. read more