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How Do We Control Data Breaches?

by Donya Parrish, MCUN

It was about a year ago that holiday shoppers were busy using their debit and credit cards to purchase gifts. Little did they know, one of the largest data breaches ever would be announced a few weeks later, well after they had handed over their card or swiped it themselves. It was caused by a vulnerability that the merchant did not catch when their payment system was exposed.

Since the breach was at a major nationwide retailer -- and because so many cards were compromised -- credit unions and other financial institutions spent countless hours contacting members, re-issuing cards, and worse yet, hearing the frustration from their membership about not having a card when they most wanted it (since compromised cards were typically cancelled as soon as they showed up on reports, and a normal re-issue can take 7 to 10 days).

This was not the first, nor the last breach to happen and hit the credit union’s bottom line. The bigger question is -- how do you protect your credit union and membership from the next one?

CUNA President/CEO Jim Nussle said future breaches are only going to add to the costs already borne by credit unions. He was recently quoted as saying "On Cyber Monday -- the biggest online shopping day of the year -- credit unions and CUNA remain very concerned that most retailers are doing little or nothing to stop data breaches. Under today's standards for retailers, it's not a question of if retailers will be breached again -- whether online or at their brick-and-mortar stores -- it's only a matter of when."

CUNA launched an online initiative to urge federal lawmakers to require merchants to comply with stronger security requirements to protect the sensitive data they collect. The “Stop the Breaches” action asks Congress to require merchants to reimburse credit unions for the costs they incur as a result of breaches and to allow credit unions to tell their members the name of the merchant that has experienced a data breach.

While these two steps may seem small, they would be a significant gain in keeping credit unions and their members whole so cards can continue to be a payment method of choice. Use the link below to see the results of a survey to gauge the Target data breach fallout.

At your next board meeting, I recommend asking a few critical questions:

  1. What has been the cost to our credit union for data breaches?
  2. Are we taking advantage of all the protections offered to us on our cards by our processor? And
  3. Have we written a letter to Montana’s delegation yet?

Hopefully one day soon, Cyber Monday will invoke memories of the “olden days” when credit unions used to take all the risk and expense for merchant carelessness. I know that is what I am dreaming of this holiday season!

Donya Parrish is the VP-Dues Supported Services for the Montana Credit Union Network. She would welcome any questions or comments on this material. You can email Donya or call her at 800-745-5546, ext. 122..


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