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Credit Data Firm Might Close
John M. Perry, center, chief executive of CardSystems Solutions Inc., speaks to reporters during a break in a House hearing yesterday. He said recent disclosures of a security breach could put his firm out of business.
(By Chris Kleponis -- Bloomberg News)
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Law enforcement agencies, including the FBI, are investigating the incident.
Subcommittee members, while condemning the data breaches that have exposed millions of consumers to possible fraud or identity theft in the past year, disagreed on what Congress should do about it.
"The CardSystems incident is a spectacular failure" of private industry to effectively secure personal data, Rep. Carolyn B. Maloney (D-N.Y.) said in urging greater regulation. "We need to provide the legal structure to fix it."
In response, Rep. Tom Price (R-Ga.), admonished members against "greater regulation and greater penalties, which is oftentimes the knee-jerk reaction" to problems.
With numerous House and Senate bills already introduced to address identity fraud and theft, and several more being prepared, both parties expect legislative action.
Most bills would require disclosure of breaches, though the industry supports limiting notification to cases in which there is significant risk that the data could be used for fraud or identity theft.
Representatives of the credit card companies yesterday also supported proposals to extend federal security requirements to payment processors, not just banks and financial institutions covered by current law.
Some proposals go further and are likely to be opposed by the financial industry.
A Senate Commerce Committee bill would allow consumers to "freeze" their credit, preventing anyone from getting loans or credit approval in their names without express permission.
Evan Hendricks, editor of Privacy Times, who testified yesterday as a privacy expert, said he supports giving consumers the right to sue when they are damaged by breaches caused by lax security.
"Some companies won't have adequate security unless they are forced to," he said.
