BJ's Suit Could Change Credit CardIndustry

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DALLA - (04/11/05) -- The credit card industry is keepinga close watch on the lawsuit filed by CUNA Mutual Group againstBJ's Wholesale Club and Fifth Third Bank. At issue is BJ's policyof capturing and storing the full magnetic stripe data of creditcards used by customers at point of service-a policy in directviolation of card association rules and which led to thousands ofcardholder data being compromised. "This is a very importantlawsuit," said Glen Lee of TNB Card Services while on hand at theTexas Credit Union League's annual meeting. "Everyone has taken ahit on this. We are definitely watching this suit." Representativesof other credit card-related vendors, including InfiCorp agreed,noting they will also be monitoring the progress of the suit. Whilethe card issuers and processors hope that the suit will effectmeaningful changes to merchant behavior, a number expressed theirskepticism about the suit's ability to make that happen. "Let'sjust say we're hopeful, but we're not optimistic," said one vendor."Everyone's taking it on the chin on this. We had some fraudexposure. But will we see action? I'm not counting on it." Part ofthe problem, Lee suggested, is the sheer size, scope andbureaucracy of the card associations. "It's hard to get somethingthat big to change direction." And getting the cardassociations-who have the ability to impose fines and penalties onmerchants like BJs, but have rarely done so-on board to help effectthese changes, is no small feat.

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