California Legislature Tackles Data Breaches

The head of the California Retailers Association testifies that the U.S. payment system needs a complete overhaul.

February 21, 2014

SACRAMENTO – That personal data gathered from credit and debit card consumers needs better protection is something nearly everyone agrees on, especially in light of the massive data breaches at Target, Neiman Marcus and Michaels recently, the Los Angeles Times reports. This week, the California Assembly held informational hearings on the subject.

The banking and judiciary committees are investigating what can be done to make payment systems more secure. A briefing paper showed the explosion of credit card fraud, which has soared 87% since 2010, with around $6 billion in losses.

Bill Dombrowski, president of the California Retailers Association, testified before the committees and pointed to a switch to chip-and-pin systems, such as has been in place in Europe, as a good way to prevent fraud. Such a system utilizes computer chips embedded in the credit cards instead of a magnetized strip on the back. Used with additional measures, such as a customer providing a personal identification number, the chip-and-pin cards would be more secure.

Dombrowski recommended that Congress act to reduce the threat of hacking, as the “state doesn’t have much authority in this area.” In 2002, California adopted the country’s inaugural notification law relating to data breaches. In the dozen years since, all states with the exception of four (South Dakota, Kentucky, New Mexico and Alabama) have enacted similar laws.

NACS has partnered with other groups to explore how to make transactions more secure. Meanwhile, Congress held hearings on data breaches earlier this month.
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