Data Security Debate Shaped by Credit Union Losses

WASHINGTON – Legislation to reign in data security breaches and identity theft will starting to take shape in Congress will have key provisions shaped by credit unions requiring the source of a data breach to pay all costs to customers related to the breach, key lawmakers said yesterday. Congressman Barney Frank, chairman of the House Financial Services Committee, said he was influenced by the rising costs of the growing number of data breaches for HarborOne CU, a Brockton, Mass., credit union in Frank’s congressional district. The $1.4 billion credit union has paid hundreds of thousands of dollars in uninsured costs to reissue cards 12 times in 2004, 35 times in 2005, and 44 times again in 2006, and has already reissued more than 100,000 cards to protect against the latest data breach at TJ Maxx. Frank told some 3,000 attendees to CUNA’s Governmental Affairs Conference any bill passed by the Financial Services Committee will have a provision requiring the party responsible for the breach to pay costs, such as cards reissuing, for the affected parties. Frank’s bill will be one of as many has half a dozen bills that would address data security, which will make it hard to reconcile all the different bills and congressional committees.