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Washington
Cheney editorial CUs need help in data theft dealings
WASHINGTON (5/5/11)—While credit unions stand ready to help their members deal with the aftereffects of data breaches and other security issues, they must also be able to afford the cost of helping their members, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a recent Huffington Post editorial. Cheney's editorial noted that credit unions are issuing new debit cards and working with their members following a recent security breach that compromised the credit card numbers and other personal information of 77 million users of Sony's online gaming platform PlayStation Network. However, Cheney said, “contrary to what some might think, the expense for taking this action is not and will not be reimbursed by Sony. “When all is said and done, credit unions and banks will have spent millions on what appears to be a major security failure caused by Sony's inability to protect its consumer data,” Cheney said. Credit unions and banks rely on interchange revenue to cover the cost of debit program administration, “including in these circumstances, reacting to a merchant data breach,” and Cheney said that fraud protection and other debit-related costs would not be covered by the 12 cent per transaction fee that has been proposed by the Federal Reserve’s interchange fee cap regulation. This gap is another reason why members of Congress should support Senate legislation that would delay the implementation of new interchange rules and require further study of the impact that those rules could have on consumers, financial institutions, and merchants. Cheney added that a proposed exemption for institutions with $10 billion or less in assets woud not work, and said that the Fed’s proposed rule would “affect all debit-card-issuing credit unions and other financial institutions. “Data breaches such as the one we learned about last week will only exacerbate the problem for credit unions because the proposal and the underlying legislation would not allow these costs to be taken into consideration in terms of our ability to collect interchange revenue,” he said. For the full op-ed, use the resource link.
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