Home Depot filed a lawsuit this week against Visa and MasterCard over the use of chip cards, which it says does not go far enough to prevent fraud. In the lawsuit, according to the Atlanta Journal-Constitution, Home Depot accused the card companies of trying to block the use of PINs in favor of less-secure methods.
The lawsuit claims that by blocking the use of PINs, Visa and MasterCard are pushing merchants toward less-secure transactions that generate higher fees.
“Credit unions and banks have shouldered millions in costs from Home Depot’s data breach in 2014,” said Lance Noggle, senior director of advocacy at CUNA. “Home Depot should be concerned about the cost to consumers of their lax data security practices that have harmed many consumers by allowing criminals access their customers’ personal information instead of worrying about fraud costs from debit cards, which credit unions and banks are responsible for paying.”
Despite Home Depot’s claims, Visa’s data shows a 40% decline in counterfeit rates at merchants who have enabled chip card transactions.
Chip-enabled credit cards encrypt the cardholder’s account data with a new code for each transaction, reducing the risk that the information can be stolen and used fraudulently. Liability for card-present fraud losses was transferred starting Oct. 1, 2015 to the entity that is the least compliant with the chip card protocol.
CUNA is among more than 60 named plaintiffs in a class action lawsuit against Home Depot, stemming from losses sustained by financial institutions during a September 2014 data breach at the retailer. The breach compromised more than 56 million credit and debit cards, and CUNA’s research found that the breach cost credit unions nearly $60 million.
Home Depot filed a motion to dismiss the suit, which was denied by U.S. District Judge Thomas Thrash Jr. last month.