Pub. 4 2014-2015 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S November • December 2014 5 Information Breaches: Banks and their Customers Pay the Price Target. Neiman Marcus. Hobby Lobby. Home Depot. Jimmy John’s. It seems every time we turn around these days, there is news about a new data breach at a retailer, affecting tens of thousands, if not millions of customers. Time and again, retailers assure their customers they’ve got nothing to worry about and they will be made whole. What they fail to mention, however, is that it is the banks who will be making those payouts. Worse, few banks ever see reimbursement from those payments without pursuing legal action which again costs time and money. What’s more, banks incur costs of replacing debit and credit cards of those affected customers. For example, a recent survey of 500 banks by the American Bankers Asso- ciation (ABA) found Target data breach last year was costly for banks of all sizes – particularly and disproportionately for community banks. More than 8 percent of debit cards and nearly 4 percent of credit cards were implicated in the breach, and banks reissued nearly every card implicated. That represents tens of millions of cards reissued in response to a single breach. Banks with less than $1 billion in assets spent just over $11 per debit card and $12.75 per credit card, including mailing, card production and staff time. Banks with more than $50 billion in assets spent less than $3 per card, the survey found. Although the survey did not specifically cover reimburse - ment for the Target breach, just a third of banks reported receiving any reimbursement for fraud loss and reissue costs in the previous five years. Of those that did receive reimbursement, 83 percent said they got less than 10 cents on the dollar – and 46 percent reported receiving not even a penny on the dollar. Meanwhile, our customers have been left to restore their good names and clean up the mess left by identity thieves. The average loss associated with each case of identity theft is approximately $3500 and the average amount of time each victim spends recovering from the consequences is 25 hours, according to www.identitytheft.info .  Information Breaches  continued on page 7