CUs in three states sue Heartland Payment Systems

WEST PALM BEACH, Fla. (4/2/09)--Four credit unions from Florida, Alabama and Louisiana have filed a $5 million class action lawsuit against Heartland Payment Systems Inc., seeking damages from what could be the nation's largest data breach.

The credit unions are PBC CU, West Palm Beach, Fla.; Gulf Winds FCU, Pensacola, Fla.; Alabama Rural Electric FCU, Montgomery, Ala.; and First Castle FCU, New Orleans.

The suit was filed on their behalf Thursday in U.S. District Court for the Southern District of Florida in West Palm Beach.

In the complaint, the credit unions allege that Princeton, N.J.-based Heartland, which publicly announced the breach on Jan. 20, was slow to notify its clients about the breach and that the delay caused additional damages. Heartland first learned of a possible breach in October of 2008.

"Not only has Heartland kept its merchants, consumers and credit card issuers in the dark publicly, but it also has not informed many of them in private," the complaint alleges.

Each credit union said it had to re-issue a substantial number of credit and debit cards to members whose accounts were compromised in the breach, which occurred sometime in 2008. The breach compromised credit and/or debit card numbers, expiration dates, internal bank codes, personal identifying information and/or confidential financial information of numerous consumers.

The complaint did not specify how many cards each credit union re-issued. The credit unionseek reimbursement of the costs associated with replacing the cards and notifying members of the breach, time spent by employees on the issue, harm to reputation and goodwill, and fraud and misuse of the compromised information.

The complain alleges that Heartland's actions constitute violations of the New Jersey Consumer Fraud Act; amount to a breach of implied contract or contracts to which the credit unions and other class members are intended third-party beneficiaries; and are negligent.

The lead attorneys in the case are Gregory Scott Weiss and Theodore Jon Leopold of Palm Beach Gardens, Fla.-based law firm Leopold Kuvin.

courtesy of cuna.org