Removing Barriers Blog

CUNA Files Amicus Brief in Support of Visa’s GCAR
Posted March 07, 2021 by CUNA Advocacy

Last week, CUNA filed a brief in the Court of Appeals for the Second Judicial District in Fort Worth Texas calling for the reversal of a state trial court’s decision on the validity of the Visa Global Compromised Account Recovery (GCAR) program. The trial court in Visa, Inc. v. Sally Beauty Holdings, Inc. held Visa’s assessment of damages through the GCAR against Sally Beauty Supply for a data breach constituted an unenforceable penalty, therefore invalidating the GCAR. The GCAR is the Visa program that allows Visa issuers to recover damages from merchants or acquiring banks for data breaches that result in fraud or loss from issuers like credit unions.

The GCAR applies to point-of-sale and ATM losses for Visa cards when a Visa merchant has violated, for example, certain data-security standards. It generally enables credit unions, as issuing financial institutions, to efficiently recover a portion of damages incurred from a data breach.  If an issuing financial institution is unable to recover losses from a breach through the GCAR, the only remedy available would be to directly sue merchants for data breach. Although this is an action that credit unions’ have taken, it is not always practical. Thus, CUNA argues in its amicus brief that invalidating the GCAR will place small financial institutions at risk of suffering losses without recompense. “The repercussions should the decision stand—which it should not as a matter of law and policy—will seriously impact the functioning of the payment cards system, with the greatest burden falling on small institutions, like credit unions,” the brief reads.  

Supporting the GCAR is important because it gives credit unions an efficient avenue to recover losses from merchant data breaches without litigation.