credit card payments Source: alice-photo/Shutterstock.

I would love to see federal law impose direct liability on merchants for the costs associated with data breaches that compromise credit and debit cards. After all, there is not only the direct cost of reissuing the cards but the reputational cost of being associated with a data breach for which you are not responsible.

But in the absence of my dream legislation, at least the card networks have the ability to indirectly shift costs to negligent merchants if they choose to do so. Now, however, the merchants are trying to get out of this obligation as well. Fortunately, in an extremely important ruling, [Paymentech v. Landry's, Docket No. 21-20447 (5th Cir. Aug 24, 2021), Court Docket] the Court of Appeals for the 5th Circuit ruled in a decision filed on Thursday that merchants can be made responsible for reimbursing financial institutions for costs related to data breaches.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

 

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2023 ALM Global, LLC. All Rights Reserved.