Congress Tries To Slow 'Runaway Train' OfCards Fraud
WASHINGTON - (03/10/06) -- Lawmakers will try to collar thegrowing incidents of credit card fraud next week, which is reachingdeep into the coffers of credit unions and banks, with legislationthat would encourage new efforts at data security. Credit unioninsurer CUNA Mutual Group, which has seen its fraud-losses soaramong its credit union customers, is hoping a data security bill tobe voted by the House Financial Services Committee will include newinducements to tighter security by requiring merchants andthird-party processors to destroy all electronic transaction dataafter use. That is already required by Visa and MasterCard, but iswidely ignored, leaving financial data readily available to cleverhackers. 'This is a runaway train, and we must find a way to slowit down,' said Jeff Post, CEO of CUNA Mutual, of card-related fraudfor credit unions that soared to $100 million last year. Only halfof that, according to CUNA Mutual, was covered by insurance,leaving the affected credit unions to absorb the losses. A CUNAMutual official pointed out that since credit unions hold only 3%of the cards market, the dollar amount of card losses for banksmust be enormous, more than $3 billion. The Congressional panel isalso expected to debate a provision requiring merchants andfinancial institutions and other users of online financialinformation to report a breach in security to customersimmediately. The debate is expected to focus on a requirement thatnotification be when the security breach may cause the customer'substantial harm or inconvenience'. 'That's going to be thedebate,' Murray Chanow, senior lobbyist for NAFCU, told The CreditUnion Journal.