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House Committee Votes for Stricter Merchant Data Security Standards
Thursday, December 10, 2015 6:50 AM

The House Financial Services Committee on Wednesday passed the CUNA-supported Data Security Act of 2015 (H.R. 2205) in a 46-9 vote.

“The House Financial Services Committee voted today to protect consumers by strengthening our country’s data security laws," said CUNA President/CEO Jim Nussle. "The CUNA-backed Data Security Act will prevent breaches by providing a higher standard for all who accept payments, better notification procedures and a federal law that will replace the cumbersome patchwork of state laws.”

“Until retailers adhere to the same standards that financial institutions are beholden to, millions of consumers will remain at risk,” Nussle added.

The House bill, introduced by Reps. Randy Neugebauer (R-TX) and John Carney (D-DE), would create a single data security standard for all entities that handle sensitive consumer information. The federal standard would be scalable to an entity’s size and would supersede the current regulatory patchwork of state standards.

Also very important to credit unions, the bill would allow card issuers to disclose and identify to members or customers the details of a data breach, which would deflect reputational risk to financial institutions for breaches that occur through retailers’ systems.

H.R. 2205 also provides federal regulators the authority to enforce the provisions of the bill, if enacted into law.

The bill also recognizes that credit unions and other financial institutions already have strict data security standards set forth under the Gramm-Leach-Bliley Act, and thus does not impose any additional standards on them.

The Data Security Act of 2015 has a Senate equivalent bill, S. 961, introduced by Sens. Tom Carper (D-DE) and Roy Blunt (R-MO).