Massachusetts High Court Rules Against CUs In Landmark Cards Breach Case

BOSTON – The Massachusetts Supreme Court affirmed a lower court decision and dismissed the multi-million dollar lawsuit by CUMIS Insurance Society on behalf of 90 credit unions whose credit cards were breached in the 2005 hacking of BJ’s Wholesale Club.
 
The credit union insurer had sued BJ’s for breach of a third-party contract, based on BJ's agreement with Fifth Third Bank not to store customers' magnetic-stripe data. The lower court sided with BJ's, and the state high court affirmed, saying the contract was exclusively between BJ's and Fifth Third.
 
The credit union wanted BJ’s to pay compensation for the millions of dollars it cost to replace credit cards that were breached by the hackers.
 
Since then, a group of hackers has come forward and confessed to the BJ’s breach, as well as subsequent incidents at TJX Cos., Hanneford Bros. and several other retailers.