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Cornerstone Calls for Merchants to Take Responsibility for Data Breaches
Tuesday, September 30, 2014 6:45 AM

Today, the Cornerstone Credit Union League joined the Credit Union National Association and the presidents of five other leagues—Alabama, Florida, Massachusetts, New Hampshire, and Rhode Island—in calling for retailers to take responsibility for the costs of data breaches. 

In a letter to CUNA President Jim Nussle, Cornerstone's CEO Dick Ensweiler cited the recent high-profile breaches, such as Home Depot, Target, TJ Maxx, Neiman Marcus—and now a potential attack to SuperValu and Albertsons. Ensweiler requested that CUNA take the lead on the data security issue and work to make it a top priority with Congress, regulators, MasterCard/Visa, and all other parties to the payment card system to reduce or eliminate the loss of payment card data to hackers.

Financial institutions, including credit unions, are subject to high data protection standards by law while merchants are not subject to federal data protection standards. CUNA's survey results from all states led to an estimate that the total cost to credit unions is an estimated $30.6 million, including reissuing 4.6 million credit and debit cards, as a result of the Target breach alone.

"Each time this occurs," Ensweiler said, "credit unions have to reissue the compromised cards to protect against losses. The inconvenience to credit union members, including being forced to re-establish auto pay to the new card and the damage to the reputation of the credit union by frequently having to reissue cards due to the mass loss of card information by merchants is a serious problem that is only getting worse."

Ensweiler goes on to say, "Of particular concern is the reputation damage to the credit unions as they only recently reissued cards due to the Target breach and many of their members are upset and frustrated about again having to deal with a cancelled card. The members perceive the credit union is the reason their cards are being reissued, not due to a merchants failure to protect their data."

Cornerstone will also support CUNA's grassroots efforts in a new "Stop the Breaches" initiative similar to the "Don't Tax My Credit Union" campaign, which will focus on data security and provide a data breach toolkit, among other things. That microsite is currently in development stages.