Proposal Would Require Reimbursements ForCards Replacements
WASHINGTON - (03/16/06) Credit union lobbyists wereworking Wednesday to get lawmakers to sponsor a provision in thedata security bill that would require entities responsible for adata breach to repay credit unions, banks and others for the coststo replace credit and debit cards and other related expenses.Lobbyists for NAFCU, which was spearheading the effort, told TheCredit Union Journal they were talking with key members of theHouse Financial Services Committee on their proposal, as the panelwas debating the bill. The effort comes as dozens of credit unionsare bearing the costs to replace tens of thousands of cards to as aprecaution in the latest series of data breaches. State EmployeesCU of North Carolina, for example, has paid more than $500,000 overthe last year to replace in excess of 100,000 cards, almost none ofits was reimbursable by insurance. The House panel began debateWednesday on the bill which focuses on a provision requiringfinancial institutions, retailers and third-party processors tonotify cardholders when a data breach may jeopardize their accountsor cause substantial harm or inconvenience. TheDemocrats on the committee have proposed a provision which wouldallow consumers to freeze their credit if theybelieve they are at risk of identity theft. But that measure, whichis opposed by the banks and credit unions, has little support amongthe Republican majority on the committee. Debate on the datasecurity bill is scheduled to continue Thursday.