[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
[ISN] Retailer Sues Visa Over $13 Million 'Fine' for Being Hacked
By Kim Zetter
A sports apparel retailer is fighting back against the arbitrary
multi-million-dollar penalties that credit card companies impose on banks and
merchants for data breaches by filing a first-of-its-kind $13 million lawsuit
The suit takes on the payment card industryâs powerful money-making system of
punishing merchants and their banks for breaches, even without evidence that
card data was stolen. It accuses Visa of levying legally unenforceable
penalties that masquerade as fines and unsupported damages and also accuses
Visa of breaching its own contracts with the banks, failing to follow its own
rules and procedures for levying penalties and engaging in unfair business
practices under California law, where Visa is based.
Itâs the first known case to challenge card companies over the self-regulated
PCI security standards â a system that requires businesses accepting credit and
debit card payments to implement a series of technological steps to secure card
data. The controversial system, imposed on merchants by credit card companies
like Visa and MasterCard, has been called a ânear scamâ by a spokesman for the
National Retail Federation and others who say itâs designed less to secure card
data than to profit credit card companies while giving them executive powers of
punishment through a mandated compliance system that has no oversight.
When a breach occurs, the card companies collect their fines from the
third-party banks that process the card transactions, instead of the merchants,
who have more incentive to fight the fines. Third-party banks then simply
collect the money from the customerâs account or sue them for uncollected
balances, using the indemnification clauses in their contracts to justify it.
The card companies collect their fines with no hassle and merchants, in the
meantime, are left fighting to dispute the fines and get their money back from
the card companies.
Attend #HITB2013AMS April 8th - 11th in Amsterdam.
Featuring over 42 international speakers and keynotes
by Bob Lord and Edward Schwartz http://conference.hitb.org