Newsmakers Nov. 28-Dec. 11: Credit cards hacked? Who pays ’em back?

As credit card breaches at some of the country’s major retailers continued to capture headlines in 2014, the battle between banks, credit unions and retailers over who is responsible for reimbursing consumers whose credit cards have been compromised heated up.

Big data breaches such as those at Heartland, Target, Staples and Home Depot have drawn attention to a problem that has been around for years, but is escalating because of more sophisticated hackers and the millions of consumers whose bank accounts and personal data have been pilfered.

Financial institutions are on the hook for reimbursing their customers for fraudulent charges whether they are responsible for the breach or not. But they want merchants to chip in to cover these costs and help pay for the costs of reissuing cards when data breaches occur through their point-of-sale systems.

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While banks are in the process of implementing more secure microchip credit cards, banks believe retailers that fail to make their point-of-sale systems compatible should pay the consequences.

“The cost should be paid by the party whose systems were at fault in a breach,” Shawn Osthoff, president of Bank of Colorado in Fort Collins, told BizWest in November.

Those in the retail industry, however, contend that merchants already pay financial institutions extra fees for data encryption and other services.

UPDATE

All of the bantering comes as a class-action suit filed by a group of banks against Target to recoup millions of dollars from the recent Target breach is playing out in court.

Meanwhile, Visa and MasterCard, along with other credit-card companies, have made clear that “any actor” without chip-based card technology in place by October of 2015 will be forced to bear the cost of fraud.

Reporter Josh Lindenstein contributed to this report.