SAN FRANCISCO - (09/26/05) A state judge ruled Friday thatVisa USA and MasterCard International dont have to sendindividual warnings to hundreds of thousands of cardholders whosepersonal information was stolen from a third-party processorearlier this year. The ruling represents a setback for consumerswho are suing the two card giants over last years securitybreach at CardSystems Solutions, during which data from anestimated 40 million consumers was stolen. As many as 264,000accounts have been breached because of the situation. Both Visa andMasterCard argued they shouldnt have to notify cardholdersbecause they dont have direct relationships with thecardholders, whose cards are issued by thousands of credit unionsand banks. Both card associations insisted there is littlefinancial risk to cardholders because of their zeroliability policies that reverse all fraudulent charges.Meantime, CardSystems, which has been left on the bring ofinsolvency after Visa and MasterCard threatened to fire them forthe breach, said it has agreed to sell its assets to CyberSourceCorp., of Mountain View, Calif.
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The Jackson, Mississippi, company will use proceeds from the sale of its Fisher Brown Bottrell Insurance unit to restructure its investment portfolio, moving $1.6 billion of low-yield securities off the balance sheet.
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The store-branded card issuer is raising annual percentage rates and adding fees for paper statements to compensate for lost revenue. The Consumer Financial Protection Bureau's new regulation is scheduled to take effect on May 14.
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At the banks' annual meetings, shareholders at both companies struck down proposals that would have split the board chair and CEO roles. Two other proposals also failed to win shareholder support, one concerning energy financing and another on pay gap analysis.
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Congressional Review Act resolutions are ramping up ahead of the 2024 election cycle. Experts say that, although none are likely to become law, the resolutions are still powerful messaging and political tools.
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The ABA is testing an information-exchange network to allow banks to share their fraud data with each other. Companies including Baselayer are also building solutions.
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Republicans on the House and Senate Small Business committees are accusing the SBA of being irresponsible in granting Funding Circle permission to participate in its flagship loan-guarantee program.
April 24