Western Independent Banker - May/June 2009 - (Page 31)

By Anne K. Scully, President, WIB Service Corporation Protect Your Bank From the Heartland Heartburn with Bank Card Protector SM Insurance – Offered by WIB-Endorsed VIP Independent Bankers Insurance Services “This is like déjà vu all over again.” FLASH BACK TO June 2005: CardSystems Solutions, an Atlanta, Ga.-based payments processor that processed card transactions for MasterCard and Visa, discovered it was hacked, leaving more than 40 million card accounts – one of every seven credit cards – exposed to potential fraud. Flash for ward to Ja nuar y 20 09: Heartland, the sixth-largest payments processor in the U.S., announced that its processing systems were breached in 2008. At once, it became the largest data breach to date, potentially exposing over 100 million cardholders to potential fraud. As of March 1, 2009, the aftershocks from this data breach continue, with more than 500 financial institutions reporting impacts. While it didn’t happen on their watch or to their own systems, banks end up absorbing the cost of responding to these data theft incursions. On average, it costs a bank between $12 and $20 per card to reissue new cards due to a retailer’s data breach, a figure which includes the actual cost of the new cards and perhaps, costs associated with staff time. That can add up to a significant expense depending on the number of cards involved. While MasterCard and Visa have implemented processes for banks to make claims for the cost of reissuing cards, banks are usually able to only recoup a small portion of the overall cost. More importantly, banks bear the cost of any accrued fraud associated with cardholders’ accounts, even if the retailer is responsible for a major violation of the card association rules resulting in the fraud. What that figure does not include are the costs associated with: • The negative reputational impact on the bank. According to a recent survey, regardless of where the breach occurred or the type of information that has been Western Independent Banker May/June 2009 Yogi Berra debit or credit card number without the authority of a cardholder. It also protects banks by covering the cost of reissuing cards that have been compromised by the data breach of a merchant or processor. Who Is Eligible To Obtain Coverage? Any community banks that issues ATM, debit or credit cards and that accepts liability for fraudulent card transactions is eligible to purchase the Bank Card Protector Policy. This also includes credit card processors that accept merchant Visa and Master-Card deposits and accept liability for fraudulent charges. Coverage is subject to the level of fraud controls in place. Coverage Highlights Bank Card Protector Policy protects your bank against: • Losses from the unauthorized or fraudulent use of a lost, altered, stolen or counterfeit bank card. continued on page 33 exposed, 45% of victims lose confidence in the safety of their financial accounts as a result of a data breach incident. • The lost revenue for the time the banks’ cards are out of play. Banks lose interchange when their customers’ accounts are blocked. Unfortunately, most banks believe data breach losses are covered by their fidelity bonds. That is not the case. Most bonds have a high per occurrence deductible minimum, or annual loss minimum before coverage. Others tend to combine limits and reduce overall coverage, limit geographical coverage (e.g., U.S. and Canada), or impose exclusions such as forgery, on-line only and more. The Bank Card Protector® Policy: A Simple, Low-Cost Solution Offered by WIB-endorsed VIP Partner, Independent Bankers Insurance Services (IBIS), the Bank Card Protector Policy covers community banks against losses generated from the unauthorized use of an ATM, WIB-endorsed VIPs • ATM Network and Driving/ Debit Card Processing • Bank Operations Profitability Consulting • Board Portal • Check Overdraft Privilege • Check Printing • Commercial Equipment Leasing • Competitive Market Intelligence • Credit Risk Management and Stress Testing • Identity Theft Protection • Insurance for Community Banks • Insured Deposits/Funding for Community Banks • Internet and Network Security Services • Loan Portfolio Tracking/ Insurance for Lenders and Customers • New Account Screening • On-and Off-Balance Sheet Sweep Account • Online Account Opening Platform • Online Branch & E-Marketing • Remote Deposit Capture Scanner Purchase Program • Reward Checking • Surcharge-free ATM Network • Visa® Gift Card 31

Table of Contents Feed for the Digital Edition of Western Independent Banker - May/June 2009

Western Independent Banker - May/June 2009 Contents A Message from the Chairman How to Keep Employees Happy … On a Shoestring Budget Keeping Good Employees in Today’s Marketplace Asset Appreciation: Front Line Employees Hold the Secret to Balancing Customer Loyalty and Profitability Great Places to Work – WIB Member Banks Why Real, Live Bankers Still Matter Getting the Best Results from an Executive Search Best Practices in Lender Incentive Programs The Enlightened Control Freak: How to Lead So Your Team Will Love, Follow and Work Like Crazy for You Even in These Wild and Tough Economic Times The Frightened Leader Don’t Train – Educate! WIB Service Corporation Report WIB Calendar New Members Advertiser.com Index of Advertisers

Western Independent Banker - May/June 2009

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