Small banks spent $90 million to reissue 7.5 million credit and debit cards in the wake of a payment-card data breach at The Home Depot Inc., says the Independent Community Bankers of America association, which has more than 6,500 member banks.
First publicly known in September the Home Depot breach involved 56 million cards, and has cost the Atlanta-based retailer $27 million in expenses. After it collects from a $100 million data-breach insurance policy, Home Depot expects its net cost to be about $6 million.
Retailers’ expenses from data breaches include claims by the payment card networks to cover fraud and card-reissuance bills incurred by credit and debit card issuers, computer-system remediation, legal and other professional services, and credit-monitoring services for customers.
The ICBA says more than 4% of community banks it surveyed reported fraud on accounts from the April through September breach.
“Community banks continue to absorb exorbitant costs due to data breaches, and they do so upfront because their primary concern is to protect their customers. However, this is money—more than $90 million—that could be used for lending in local communities to homeowners, small business owners and budding entrepreneurs to spur local economic growth and stability,” John Buhrmaster, ICBA chairman and president and CEO of 1st National Bank of Scotia, N.Y., said in a press release.
“For this reason, we continue to advocate that the costs associated with data breaches be borne by the party that experiences the breach. Communities and customers should not suffer for the faults of retailers,” he continued.
In addition to assigning the cost of data breaches to the breached party, the ICBA also wants to see a national data-security breach and notification standard that replaces the more the two-score state laws.
Office-supplies retailer Staples Inc. announced that approximately 1.16 million payment cards were affected by a breach from malware that accessed the point-of-sale systems of 113 stores from August 10 through Sept. 16, and at two stores from July 20 through Sept. 16. Staples has more than 1,400 U.S. stores.