Tuesday, June 28, 2005

Are We the Culprits?

I have been reading with much interest the editorials about the recent security breach at CardSystems Solutions. One thing has become evident, consumers (or at least those who write into newspapers) really don’t like banks and credit card companies. I don’t want this blog to sound like I am trying to abscond my industry from any blame, however, I do have to take issue with the over-simplification and villianization that editorials and even reporters are resorting to.
I read an editorial last week that said that consumers would be amazed how many companies are involved in each credit card transaction. This is true. When I first started in this business and learned how many networks and companies have to be in sync to make one credit purchase happen, I couldn’t believe it (after about two weeks, my husband forced me to stop telling him about this every time we bought something). However, this editorial went on to say that the reason so many companies are involved in one credit card transaction is so that they can bilk the consumer out of as much money as possible. So not true! As a matter of fact, the opposite is true. The reason that there are so many companies involved in credit and debit transactions is so that you, the consumer, can get what you want fast and cheap.

Imagine this… imagine if you are a member of Verity Credit Union and you only wanted Verity Credit Union to “touch” your transactions. That means we would have to put one of those swiper machines in every place you do business, we would have to have our own credit reporting agency to monitor your account, we would have to have our own processors to process your VISA transaction. That would also mean that Bank of America, Key Bank, BECU, WA MU, they would all have their own swipers at the merchants, there would be hundreds of credit reporting agencies and there would be nothing like VISA, we would all have our own kind of credit card. You can quickly see how this would not work.

So we all rely on vendors for our credit and debit infrastructures. We set high standards for them, we monitor them, we do all that we can to keep information secure, that is our responsibility (and it simply makes good business sense).

When things like this security breach happen, we agonize over what to do (not, like the consumer groups have accused – do the cheapest thing). The question we are facing right now is, do we do a mass re-issue of the 2,500 cards we know were included in the info taken from CardSystems? We have decided not to go this route. The main reason, is we think it will be a major inconvenience for our members. We think the best route to is to let consumers chose what they want to do.

Do you want your credit card automatically closed for you and then you have to contact every place that currently has an automatic withdrawal coming from your account and change it so it doesn’t get rejected? If so, we will gladly close your account and get you a new plastic within a few days. However, if you are like me, you don’t want to go through that hassle, at least until there is evidence that your credit card might be at risk (the theory right now is that because of simple geography, cards in the northwest are not being touched).

I suspect we might come under fire for not doing a mass re-issue of these cards. Consumer groups may say that we are being stingy and don’t want to spend the money. I hope our members can understand that we want to give them a choice. I mean, it is the middle of summer. What if you are on vacation when we re-issue your card? You’d be away and your card would suddenly not work anymore. (that, after all, is how re-issues work. We send a new card and turn off the old card. It can’t work any other way if we are going to truly protect the card holder).

Alright, I have rambled on long enough about this dilemma. And… if you are reading this blog, know this…. The people who were on the list from CardSystems are getting a letter today (June 28). There was no hesitation in our minds that we must tell our members about this right away. If you did not get a letter, you’re lucky. I am getting a letter. I am not closing my account. I think the risk of something happening to my account is small (afterall, there are 40 million other consumers in the same boat.) And I know the hassle of contacting Hotmail, Dawgman, iTunes, Picassa and all the other places that automatically deduct from my account is great.

Oh, but one other thing… the title of the my blog. How is it that the crooks, thieves, burglars, robbers, bandits, whatever you want to call them, have gotten so little mention in all of this? How did it happen that we were robbed and then made to look like greedy, irresponsible, corporate despots? I think it says a lot about my industry. I don’t, however, think it is fair for my credit union.

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