The data security breach at Home Depot (HD) stores in September cost credit unions nearly $60 million to reissue cards, deal with fraud and cover other costs, according to the results of a new survey of credit unions conducted by the Credit Union National Association.
The CUNA survey, which asked credit unions to report the effects of the Home Depot breach, found that 7.2 million credit union debit and credit cards were affected by the breach.
The results further show that the cost of the violation per card issued by credit unions was $8.02, which included costs for reissuing new cards, fraud and all other costs – such as additional staffing, member notification, account monitoring and others.
“The cost to credit unions of data breaches – which seem to be occurring with increasing regularity – is rising, as the CUNA surveys clearly demonstrate,” said CUNA President and CEO Jim Nussle. “The bottom line is that credit union members end up paying the costs – despite the fact that the credit unions they own had nothing to do with causing the breach in the first place.”
Conducted from Oct. 1 to Oct. 24, the CUNA survey is the second this year by the nation’s largest trade group for credit unions to gauge the impact of data breaches on credit unions.
In January, CUNA conducted a similar survey in the wake of a data breach at Target stores in December. That survey found that the Target breach cost credit unions nearly $30 million. The Home Depot breach costs – at $57.4 million nearly twice as much as the Target breach – affected more credit union debit and credit cards and the cost per affected card was considerably higher in the case of the Home Depot breach.
The most recent CUNA survey found that – to date – credit unions have not been reimbursed for the costs they incurred as a result of the Target breach.
Nussle said that all participants in the payment process have a shared responsibility to protect consumer data.
“However, the law and the incentive structure today allow merchants to abdicate that responsibility, making consumers vulnerable,” Nussle said. “Congress has a role to play in addressing the issue of merchant data breaches by making sure all of the participants are playing by the same set of data security rules, and that merchants who hold consumer data and allow that data to be breached, are responsible for the costs incurred by others.
“Congress must act to protect consumers by taking steps to enhance data security standards for merchants,” the credit union leader said.
CUNA Chief Economist Bill Hampel, who conducted the survey, said the results show that more than four in every five (80.1%) of credit unions affected by the breach have reissued or will reissue all affected cards. Nearly one in five (18.5%) will reissue or have selectively reissued cards in response to member requests or other factors. The remainder – 1.4% -- do not plan to reissue any cards.
“Card reissuance is an expensive proposition, representing about a quarter of the total costs to credit unions of these breaches,” Hampel said. “But our latest survey found that fraud is the most expensive component of costs, amounting to $4.89 for each card, or 60% of the total costs.”
The 835 credit unions responding to the survey have issued a total of 20.1 million cards outstanding, which breaks down as 14.9 million debit cards and 5.2 million credit cards.
The total represents 28.2% of the 53.0 million debit cards issued by credit unions, 32.5% of the 16 million credit cards outstanding, and 29.2% of the total of 69 million cards outstanding.