Banks, Merchants Spar In War Against Data Breaches

A group of retailers is fighting back against recent claims by the Independent Community Bankers of America that banks absorb the heaviest burden following security breaches of payment card data.

The Retail Industry Leaders Association and six other merchant groups have sent a letter to the ICBA, rebutting the bankers’ association’s allegations that a security breach of Home Depot customer data led community banks to reissue more than 75 million credit and debit cards, costing the financial institutions more than $90 million.

The ICBA added in its press release, printed earlier this month, that the instance of reported fraud following the Home Depot breach would have been worse “had community banks not reissued cards as quickly as they did.”

The claims echoed the ICBA’s comments made earlier this year, calling on merchants to take responsibility for data breaches and fraudulent purchases instead of forcing banks to pick up the tab.

But in a rebuttal addressed to ICBA president and CEO Camden R. Fine, the merchant groups argued that retailers – not banks – must absorb more of the costs of data breaches.

At the heart of the dispute is the banks’ proposal that all players in the payments system, including merchants, should be subject to rules similar to those found in the Gramm-Leach-Bliley Act regarding data security. But while the retail groups said they agreed that the current data protection system found within varying state laws is “unsustainable,” “the Gramm-Leach-Bliley Act standards…is not the ideal template for future legislation.”

Instead, the retailers argue that increased information sharing between law enforcement, banks, retailers and other institutions within the payments market would prove more efficient at combating financial cybercrime.

And while the ICBA argued in its press release that debit and credit card chip technology cannot combat data breaches alone, merchants say “ignoring PIN technology leaves us all more vulnerable.”

The merchants’ letter was signed by the heads of the RILA as well as the National Retail Federation, National Grocers Association, Merchant Advisory Group, National Association of Convenience Stores, Food Marketing Institute and the National Restaurant Association.