March 6, 2009
-
News: Cyber Heist Damages.
The cyber credit card breach at Heartland is crushing the efforts of the credit card issuing banks. So far, over 580 of them have been forced to deliver the bad news to their card holders. The Virginia Association of Community Banks is one such credit card issuer. Association president, Patricia Satterfield assess that "this could turn out to be the largest data breach of its kind." This association with it's dozen member banks are certainly not the only ones affected. A similar association, Union Bankshares Corp., has 85 members. Executive vice president/association chairman, John Neal said he wouldn't be surprised if all of their members were impacted. All over the world, banks are getting notification from credit card associations about affected accounts in batches.
It all began with 14 banks, mostly located in the Midwest. Early reports came in announcing maybe six compromised credit cards from a bank. A week later, that number may jump to 240. That's the trouble – not knowing. So, in order to err on the side of safety, bank associations like Union Bankshares have had to issue thousands of new debit and credit cards. Union Bankshares has had to issue 12,000 so far. It gets expensive and frustrating (about $2.50 each card --or about $30,000 total). Public perception takes its toll, also. How do you make all those people believe that their card was not used fraudulently and still insist that they activate their new card as soon as possible?
Part of the confidence can come from assurances that credit card holders won't be held responsible for counterfeit fraudulent charges on their cards, provided they are report in a timely fashion. Who then, does pay out the possible millions of dollars lost by these illicit charges? Largely, the banks. This is in addition to card replacement costs. As a result, several lawsuits have arisen over this issue. Banks, credit unions and cardholders alike are seeking compensation from Heartland for these costs and damages. The lesson we've learned after the retailer T.J. Maxx credit card breach in 2007 is how significant these related costs can run.