DALLAS (2/14/14)--On Thursday, two more credit unions filed a class action complaint against Target relating to the data security breach that occurred late last year.
Employees CU, Dallas, $63 million in assets, and KC Police CU, Kansas City, Mo., $107 million in assets, were joined by American Bank of Commerce, Wolfforth, Texas, in filing suit in the U.S. District Court in Dallas, saying they "have incurred (and will continue to incur) damages to their businesses and/or property in the form of...expenses to cancel and reissue compromised payment cards, absorption of fraudulent charges made on the compromised payment cards, business destruction, lost profits and/or lost business opportunities."
"The Credit Union National Association has been working to bring together credit unions looking for legal representation and law firms looking for cases in the data security field, but so far it looks like credit unions are doing a pretty good job of making their own plans," CUNA General Counsel Eric Richard told News Now.
The suit is the first to name a third-party vendor--Fazio Mechanical Services, Pittsburgh--as the point of entry for the breach that compromised the debit, credit and personal information of about 110 million people between Black Friday and mid-December (Dallas News Feb. 13).
It also cites the Racketeer Influenced and Corrupt Organizations (RICO) Act, alleging the retail giant has known since 2007 that its point-of-sale network was vulnerable, thus engaging in what the suit calls "unlawful and intentional schemes to defraud and cheat plaintiffs" by means of false or fraudulent pretenses and/or fraudulent and intentional misrepresentation of its compliance with Payment Card Industry Data Security Standards.
Other suits against Target--including those by $211 million-asset Alabama State Employees CU and $38 million-asset First Choice FCU, New Castle, Pa.-- were filed in a variety of courts. They will likely be consolidated into a single legal action before a federal judge (CNN Money Feb. 11).
With updated projections on the cost of the Target stores data breach, CUNA estimates that credit unions have thus far incurred costs of $30.6 million and reissued around 4.6 million credit and debit cards (see Feb. 13 News Now: Updated CUNA projections show high CU cost of Target breach).
"This continues to be a top issue at CUNA. As our member CUs know, CUNA and the leagues are pursuing every avenue to urge that merchants are held responsible for reimbursing financial institutions when merchants' security lapses cause situations such as this," CUNA's Richard said. "In fact, CUNA was among the first to knock on Congress' door to demand hearings on this issue and on creating a better data security framework."