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ARLINGTON, Va. – Credit unions around the country have embarked on the long and often complicated process of evaluating the card accounts that Visa and MasterCard have identified as being potentially at risk of fraud because of the most recent card data security breach as the topic has drawn the ire of at least one League president. CardSystems Solutions, the Atlanta-based card processor, said that some 40 million credit card accounts had been compromised in the security failure. Ann Davidson, a product expert with the CUNA Mutual Group said it was too early to know how extensive the damage had been but added that the insurer had heard from hundreds of credit unions around the country which had been contacted by Visa and MasterCard about compromised card numbers. The credit unions that have experienced damage have varied widely, Davidson reported, ranging from over $96,000 in one case involving 42 compromised accounts to hardly any damage at all in the case of credit unions which had many credit card accounts at risk but which had little to no actual card damage. The story came close to as some members of the $376 million National Institutes of Health FCU, including a reporter from Credit Union Times, began receiving notices that their credit and debit cards have been blocked and reissued because of the breach. Jim Norris, vice president of delivery systems for NIH said that roughly 2,000 accounts had been compromised in the breach but that no fraud had been experienced. The credit union had taken the steps, however, to close many of the accounts and re-issue the cards and expected that it would work with CUNA Mutual to find a way of recapturing some of the funds. Davidson explained that the credit unions face a complex process of evaluating their accounts to decide which cards accounts could be monitored and which needed to be blocked and which needed to be closed and plastic reissued. “Every credit union’s situation is a little different since not everyone will have the same fraud protections in place,” she said. The difference is key because CUNA Mutual’s coverage, and that of Visa and MasterCard, cover actual fraud losses and not the cost of closing a compromised account and reissuing plastics. Unlike another major card breach that drew legal action, that of B.J.s Wholesale Warehouse, the two major card brands have lengthened the time credit unions have to claim recompense for fraud losses and streamlined their processes for claiming the money. Neither Visa nor MasterCard would comment on their procedures for recompensing credit unions for losses from the card breach, but Davidson said a number of credit unions that she knew of have already begun submitting losses to Visa in an effort to recoup some losses. Meanwhile John Annaloro, CEO of the Washington Credit Union League charged Visa and MasterCard with stonewalling credit unions about the breach. Annaloro believes the stonewalling put cardholders and card issuers needlessly at risk, and penned a letter to Visa and Mastercard to that effect. “Stone-walling exposed 40 million consumers to greater financial risks,” said Annaloro. “There was no ability for card issuing credit unions to help with fraud prevention in the publics’ behalf. Millions of consumers have been exposed to potential problems far longer than necessary.” The league president also complained that information was provided to the press and the public before financial institutions. In many cases credit unions learned of the problem through calls from members. “Our rough count so far is that over 100,000 cards from our credit unions may have been swept up in this thing,” said Annaloro. “That’s 100,000 members who are going to need to be notified as well as 100,000 card accounts which may need to closed and reissued or at least monitored.” Annaloro also wrote a letter to CUNA Mutual, asking the insurer to take the lead in putting together any legal action on behalf of credit unions damaged by the breach. CUNA Mutual didn’t reply to the letter but indicated that one of its executives would meet with Annaloro soon. -

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