Nashville retailer sues Visa over controversial fines

A 2010 data breach has led to an ongoing court battle between a Nashville retailer and Visa, according to a USA Today article.

The news source reported that Genesco, Inc., a footwear, headwear and sports apparel retailer, is challenging the credit card company's ability to fine businesses in the event of a data breach. Currently, merchants must abide by the Payment Card Industry Data Security Standards (PCI DSS), which is supposed to protect against credit card data theft. If they do not and suffer a breach as a result, credit card companies will issue heavy fines.

In the case of Genesco, both Visa and MasterCard levied $15.5 million worth of fines on the two banks that handled the retailer's transactions after a major computer breach. The banks in turn took the money from Genesco's accounts.

The credit card companies allege that the breach occurred because the retailer failed to follow proper PCI DSS procedures. However, Genesco, which operates 2,500 stores, argues the opposite. It also challenged the $13.3 million fine levied by Visa, saying that there is no evidence of any actual card data theft.

Retailers have long complained about such fines. 

"This is one of the first cases making it into the public where the merchant is saying, 'I'm sick and tired of being put into a position where I basically have no choices and I'm sick and tired of being a slave of the system,'" Torsten George, vice president for risk-management firm Agiliance, told eWEEK. "Merchants want to try to get more objective treatment from the credit-card companies."

Some observers say that a Genesco victory could lead to major changes in how credit card companies interact with retailers. Until then, local businesses that find themselves having legal issues with their card companies should consult with a Phoenix small business attorney.

Categorised in: Litigation

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