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As Congress continues data breach scrutiny, CUNA, partners correct merchant distortions

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WASHINGTON (2/6/14)--Saying "it's time to stop the blame game and be part of the solution," the Credit Union National Association and partner financial services associations corrected some distortions circulated by merchants in a Wednesday communication to members of the U.S. Congress.

The memo was sent to Capitol Hill as the House Energy and Commerce manufacturing and trade subcommittee held a hearing titled "Protecting Consumer Information: Can Data Breaches Be Prevented?"

The hearing is one of three this week on data security.

While Target and Neiman Marcus have recently accepted their share of responsibility for recent breaches, and have pledged to work with law enforcement and Congress to improve the situation, other merchants have not followed suit. Some in the retail industry have made, and continue to make, several misleading and counterproductive statements about the breaches and the position of credit unions and banks across the country, CUNA and its partners wrote.
 
The letter cited Identity Theft Resource Center research which found that 77% of breaches in 2013 occurred at healthcare facilities and businesses, including retailers. "That's compared to just 4% at financial institutions," the letter noted.
 
The joint trade group letter also noted:
  • The recent breaches all involve intrusions into the computer networks of various companies. These compromises have nothing to do with card technology (e.g., "chip and PIN") and everything to do with holes in internal firewalls at these companies that criminals are exploiting; and
  • It is the nation's banks and credit unions that initially make consumers whole, often receiving minimal reimbursement for their efforts.
"Certain retail groups cannot be allowed to divert attention and duck their responsibility for protecting the sensitive personal information of consumers by always claiming that 'it's someone else's fault,'" the letter said. "In fact, it is all of our responsibility to fight an elusive criminal element."

The letter, which was cosigned by the American Bankers Association, Consumer Bankers Association, The Financial Services Roundtable, Independent Community Bankers Association and the National Association of Federal Credit Unions, received coverage in Politico.

The joint letter is one of many ways CUNA and others have advocated for financial services and consumer interests amid a slew of data security and cybersecurity hearings.

Several other data security hearings have been scheduled for this week, including a Wednesday House Energy and Commerce manufacturing and trade subcommittee hearing titled "Protecting Consumer Information: Can Data Breaches Be Prevented?"

A Senate Banking Committee hearing titled "Oversight of Financial Stability and Data Security" is also on the schedule today. Several federal banking regulators will testify, but the National Credit Union Administration is not on the list of regulators invited to testify.

CUNA in a letter submitted for the record of today's hearing noted that Congress should take a broad look at how consumer data is secured and the improvements that are necessary to prevent future breaches from taking place. Similar sentiments have been expressed in letters sent to Monday and Tuesday congressional hearings on data security issues.

Cheney in HuffPo enlists backers in 'patent troll' fight

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WASHINGTON (2/6/14)--"Patent trolls" may sound like fictional phantasms, but they present a dangerous reality to credit unions and their members, adding to the costs of providing financial services--and shouldn't be taken lightly, Credit Union National Association President/CEO Bill Cheney writes in a Huffington Post piece.

The so-called "trolls" use low-quality patents to try to extract settlements from credit unions and others and are an abuse of the patent system, CUNA has said. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.

"The more I heard about what patent trolls do, and how they bedevil small financial institutions--including credit unions--the more I became convinced that something had to be done to stop them, and right away," Cheney wrote.

The CUNA CEO noted that efforts to address this issue are under way in the U.S. Congress. "And the faster the action to stop or slow down the trolls, the better--to ensure that consumers, including credit union members, don't lose access to convenient services, or even their favorite small financial institutions," he said.

CUNA backs legislation that would curb abusive patent litigation by removing some of the financial incentives sought by firms that assert low-quality patents.
"If you are a member of a credit union, a customer at another small financial institution, or an owner of a small business, I hope you will contact your senator and let them know you are behind efforts to combat the tactics of the trolls," he wrote.

"When these reforms are successfully adopted--and, with your help, they will be--perhaps the next time any of us hear mention of 'trolls,' it will be about the latest character in the 'Hobbit' film, and not a character attempting to extort money from your local credit union or other small financial institutions," Cheney wrote.

For the full Huffington Post piece, use the resource link.

Cybersecurity bill moves on to House: CUNA, others urge privacy/protection balance

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WASHINGTON (2/6/14)--Congress must ensure that the National Cybersecurity and Critical Infrastructure Protection Act (H.R. 3696) "provides the appropriate balance to protect privacy, while allowing financial institutions to evaluate information for cybersecurity threats," the Credit Union National Association said in a letter sent to the House Committee on Homeland Security this week.

The letter was sent ahead of a Wednesday markup session on H.R. 3696. The bill was passed unanimously by the committee on Wednesday, and now moves on to the full U.S. House.

H.R. 3696 would:
  • Strengthen existing mechanisms such as the Financial Services Sector Coordinating Council and the Financial Services Information Sharing and Analysis Center that help identify threats, respond to cyber incidents and coordinate with government partners;
  • Improve the provisioning of security clearances for those involved in cybersecurity information sharing; and
  • Expand the existing Support Anti-Terrorism by Fostering Effective Technologies (SAFETY) Act to provide important legal liability protections for providers and users of certified cybersecurity technology in the event of a qualified cybersecurity incident.
The bill "recognizes the necessary partnership between the private and public sectors required to better protect our Nation's cybersecurity infrastructure," CUNA and cosigners said in the letter.

They recommended targeting Section 205 of the bill to ensure financial institutions can continue to perform the necessary efforts to protect consumers and the nation from cybersecurity threats.

The letter noted that the financial services industry has taken major steps to address cybersecurity threats, continues to invest in infrastructure, has improved coordination among institutions of all sizes, and is continually enhancing government partnerships.

The letter was cosigned by the American Bankers Association, The Clearing House, Financial Services-Information Sharing and Analysis Center, Financial Services Roundtable, Independent Community Bankers Association, Investment Company Institute, NACHA-The Electronic Payments Association, National Association of Federal Credit Unions and Securities Industry and Financial Markets Association.

Baucus confirmation for ambassador to China expected today

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WASHINGTON (2/6/14)--President Barack Obama's nominee to serve as the next U.S. ambassador to China, Sen. Max Baucus (D-Mont.), is expected to be confirmed today by the U.S. Senate.
 
Baucus is chairman of the tax-writing Senate Finance Committee.  He has held his Senate seat since 1978 and was scheduled to retire after the 2014 mid-term elections.
 
"Chairman Baucus has been central to recent tax reform efforts, but, as I have noted before, tax reform isn't about one person," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan reminds credit unions. "The circumstances that have made tax reform necessary continue to exist, and we expect Congress to continue to try to make progress on tax reform."
 
Donovan added that Baucus' departure from the national tax debate will have no diminishing effect on bank attacks on the credit union tax status. "To the contrary, the banks will be winding up to pitch even harder to new players."
 
"Credit unions must make sure that lawmakers on all levels truly understand that a new tax on credit unions would be a tax on their 97 million members," Donovan said. CUNA continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union."
 
See the resource link.