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ACB Data Breach Survey Highlights Need for Action by Card Networks and Congress

ACB Data Breach Survey Highlights Need for Action by Card Networks and Congress

WASHINGTON, Feb. 7 /PRNewswire-USNewswire/ -- A just-completed survey by America's Community Bankers reveals that data security continues to be a significant issue for community banks and their customers, and that card network and congressional action is necessary to address this far-reaching problem.

"These survey results, released with the backdrop of the recent TJX data breach, underscore the need for immediate attention from Visa and MasterCard and Congressional action," said Michael T. Crowley, Jr., chairman of ACB's recently formed Debit Card Fraud Committee. Crowley is also chairman, president and CEO of Bank Mutual, Milwaukee, Wis.

"These data breaches are disturbing, disruptive and costly. Consumer financial data is being exposed due to lax security at the merchant level. The foundation of our business, customer trust, is being jeopardized because of lack of enforcement of payment card industry standards by the card associations and lack of adherence to those standards by the merchants," Crowley added. "Unfortunately, it is the local community banks that are bearing the operational and reputation costs of the merchants' inability to protect consumer financial information," stated Crowley.

The following are some of the highlights from the ACB member survey conducted between January 26 and February 5.

-- Of the 181 respondents, more than 96 percent said they issued debit cards, while 19 percent said they issued credit cards. -- In the past 24 months, 70 percent of respondents said their bank had to reissue cards due to data breaches three times or more and 39% said their bank had to reissue cards more than five times. -- Eighty-nine percent of the debit card issuers and 53 percent of the credit card issuers indicated that their customers had been affected by a data breach. -- Of those affected by a data breach, 92 percent had reissued cards to customers.

While not specifically asked in the survey, cumulative data reflect that the average cost for reissuing each debit card is approximately $10-20 per card. Therefore, a bank reissuing 10,000 cards three times at an average cost of $15 per card would incur a cost of $450,000.

This survey underscores that retailers are failing to provide an appropriate level of data security, exposing consumers to serious risk of identity theft, and imposing significant operational and reputational costs on community banks serving those customers.

In recent letters to VISA and MasterCard ACB recommended that both companies upgrade their merchant compliance program by increasing fines for violators; publish the names of merchants not in compliance; and remove merchants that are consistently out of compliance.

ACB is working with members of Congress to require timely public disclosure of essential information when a breach occurs, and require a reimbursement mechanism so that those responsible for the breach bear the cost of fixing it and protecting the public.

America's Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit http://www.americascommunitybankers.com/.

America's Community Bankers

CONTACT: Robert Schmermund of America's Community Bankers,
+1-202-857-3104, Home: +1-301-858-0922

Web site: http://www.americascommunitybankers.com/

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