Bank Info Security dot com and Finextra are both reporting this morning that the Heartland Payment Systems settlement with Visa has resulted in a class action lawsuit against Heartland Bank and Key Bank. Apparently enough financial institutions feel they were let off the hook...
Five financial institutions have filed a class action suit alleging that two acquiring banks, Heartland Bank and Key Bank, should be included as defendants and share responsibility for damages caused by the Heartland Payment Systems data breach.Continue Reading at BankInfoSecurity.com
Lone Star National Bank, PBC Credit Union, O Bee Credit Union, Seaboard Federal Credit Union and Pennsylvania State Employees Credit Union filed the class action complaint in the U.S. Southern District Court in Houston, TX on Tuesday. Heartland Bank is based in St. Louis, MO, and Key Bank is based in Cleveland, OH.
The case was brought after a proposed $60 million Visa/Heartland data breach settlement, which would result in banks and credit unions accepting the offer receiving only "pennies on the dollar," according to one of the lawyers representing the financial institutions.
Visa estimates the losses because of the breach total $140 million, according to its Account Data Compromise Recovery (ACDR) formula, says Richard Coffman, co-lead counsel for the financial institutions in the class action suit. "That number is mythical and has nothing to do with reality," Coffman says, suggesting that the real losses aren't known by Visa. Coffman advises that affected institutions should review carefully the proposed settlement between Heartland and Visa. He says the proposed settlement has several weak points; namely it:
- Offers little money to the banks affected in the breach;
- Gives them little time to decide whether to take part in the settlement;
- Releases Heartland and other parties that may be liable.
.
Here is more on the subject from Evan Schuman's Storefront Backtalk:
Some Banks Try Again For Class-Action Heartland Lawsuit
Written by Evan SchumanJanuary 21st, 2010
Shortly after Heartland tried to sweep away most of the lawsuits against with a series of recent negotiated settlements, a group of banks is trying to persuade other banks to reject the settlement offer and support a class-action lawsuit against Heartland.
The lawsuit, filed Tuesday (Jan. 19), hit Heartland hard for “Heartland’s lack of Payment Card processing system security, its desire to use a ‘lowest bidder’ system of selecting its outsourced IT ‘auditors,’ its reliance on a ’snapshot’ telling it that, at one identifiable point in time its system supposedly complied with the bare minimum industry standards, its startlingly poor IT oversight in general, and (Heartland’s) complete and utter disregard of the oversight responsibilities they had to their fellow members of the Associations that allowed the intruders to make trip after trip in and out of the Heartland Payment Card processing system.”
Continue Reading at StorefrontBacktalk.com
