WASHINGTON (1/15/14)--Credit Union National Association President/CEO Bill Cheney is calling on Target and other merchants responsible for breaches in the security of the personal financial information of their customers to step up and do the right thing.
"We think Target's concern for consumers is commendable," Cheney said of Target's recent admission of responsibility in the massive breach that has hit as many at 70 million of its customers' transactions. "However, conspicuously missing from their statement is any commitment to avoid leaving card issuers holding the bag for what went wrong in their own systems."
Cheney emphasized: "Their admission should mean that the retailer, not credit unions and other financial institutions, should pay for the costs associated with making consumers whole, including reissuing payment cards."
Target's admission of responsibility comes just days before oral arguments will be heard in a debit card interchange case known as NACS, et al. v. Board of Governors of the Federal Reserve System. In that case, a merchants' coalition has challenged the Federal Reserve's implementation of a Dodd-Frank Act-imposed debit interchange cap as too high. CUNA and its partner maintain that the cap, in fact, is too restrictive.
The current cap limits fees for issuers with assets of $10 billion or more to 21 cents. It allows only an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards.
On Friday, CUNA and its partner members of The Clearing House coalition will be in court to present 10 minutes of oral arguments in the case, along with the Fed and the merchants group. The Fed is assigned 15 minutes for oral arguments and the merchants have 25 minutes.