HOUSTON – Pennsylvania State Employees CU, roiled by the numerous data breaches forcing it to reissue cards, filed suit here Friday against Heartland Payment Systems claiming the company’s massive data breach violated payment card industry standards.
Citing breach of contract and negligence, the suit alleges that Heartland’s failure to properly secure magnetic stripe information in Visa and MasterCard credit and debit cards resulted in over 105,000 Visa cards issued by the $3.4 billion credit union to its members being compromised, cancelled, and reissued.
The suit also notes that Heartland failed to comply with card industry’s own PCI standards, Visa operating regulations and MasterCard rules and "blatantly disregarded" its obligations as a payment card processor to store and safeguard private credit card information.
Earlier this year, three credit unions, Matadors Community CU, GECU, and MidFlorida FCU.
and two banks became the first financial institutions to seek recompense through the courts against Heartland.
Pennsylvania SECU has been one of the most aggressive credit unions in the pursuit of recompense for data breaches. It sued Fifth Third Bancorp, the merchant acquirer for BJ Wholesale Club in that company’s 2004 data breach but that suit was dismissed. In that case, the credit union spent almost $100,000 to reissue 20,000 Visa cards and to take other security measures.
Heartland Payment, which is the merchant acquirer for more than 250,000 businesses, said as many as 100 million consumer accounts may have been compromised in the data breach, making it one of the biggest cards breaches ever.
