Lawsuits Pile on for Target and their PCI after Data Breach

Apr 04, 2014

Trustwave Holdings Inc., the leading provider of Payment Card Industry data-security standard (PCI) services to merchants, has become the target of a lawsuit arising from the massive data breach at Target. The suit, filed in U.S. District Court in Chicago by two banks, claims negligence on the part of Target and Trustwave for their alleged failure to prevent customer data from being stolen. While Target faces nearly 100 lawsuits from financial institutions and consumers, the new suit, however, reportedly is the first that connects Trustwave to the breach. Merchants typically do not identify their PCI service providers, and providers rarely name their clients.

The data breach, which occurred in December 2013, compromised 40 million payment card numbers and non-card data on 70 million consumers. While breaches are common on the small scale, this breach put a hold on many consumers’ holiday shopping trips. The plaintiffs of this suit are Trustmark Bank and Green Bank N.A. Both banks issue MasterCard-branded credit and debit cards that were compromised in the breach. They are seeking unspecified damages of at least $5 million for their breach-related costs, including the issuance of cards and fraudulent losses. The banks also want class-action status for their suit on behalf of other financial institutions whose cards were compromised in the breach. The suit alleges Target failed to comply with PCI’s rules for protecting its computers and point-of-sale network from hackers. The No. 2 general retailer also allegedly failed to meet requirements spelled out in the federal Fair and Accurate Transactions Act (FACTA) intended to prevent identity theft.

While it was only a matter of time before a lawsuit, or class-action lawsuit, was filed due to the Target data breach, it can seem odd to some that it is the banks filing before consumers. However, the vast majority of consumers were reimbursed by their banks, which could limit their lawsuit damages. By banks stepping up and holding Target and Trustwave Holdings Inc. accountable, it can ease fears consumers may have about their banks. Consumer trust in banks has been low since the 2008 recession, but hopefully, this is a step in the right direction for consumer trust.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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