WASHINGTON (1/22/14)--Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million in costs as a result of the Target stores data security breach, a Credit Union National Association survey has shown.
And, CUNA President/CEO Bill Cheney said, the actual costs could exceed this estimate of $25 million to $30 million in the coming weeks if greater fraud losses are incurred or those that have reported already add additional costs to their reported totals.
The results of the CUNA survey show that, on average, the Target breach has cost credit unions about $5.10 per card affected by the security lapse. These costs most likely do not include any fraud losses, which are likely to occur later. Additionally, the cost/card figure is an average across all affected cards, not just cards that have been reissued.
"Contrary to what some may think, these expenses will not be reimbursed to credit unions and their members by Target or other retailers," Cheney said. "Rather, credit unions must solely cover these costs of card program administration, including in these circumstances of reacting to a merchant data breach. And, because of credit unions' cooperative structure, the costs of such breaches are ultimately borne entirely by credit union members," he added. (See related story: "CUs 'left holding the bag' in breaches, Adams writes Stabenow.")
"Credit unions responding to the survey report having almost 18 million debit cards outstanding, and just less than 1.5 million credit cards outstanding. These totals represent roughly a third of the estimated number of debit cards outstanding at all credit unions, and somewhat more than that of estimated outstanding credit cards," CUNA Chief Economist Bill Hampel noted.
The CUNA survey asked credit unions afffected by the Target data breach to outline the costs and burdens they have seen as a result. The breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals.
The data will help inform CUNA conversations with lawmakers, regulators, the media and others. There is no deadline for credit unions to respond to the survey, and credit unions that have not yet responded are encouraged to do so. Credit unions that have responded can also update their totals if new costs are incurred.