[Clips] AmEx next to give CardSystems the ax

[R.A. Hettinga]

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 Delivered-To: clips at philodox.com
 Date: Wed, 20 Jul 2005 18:50:04 -0400
 To: Philodox Clips List <clips at philodox.com>
 From: "R.A. Hettinga" <rah at shipwright.com>
 Subject: [Clips] AmEx next to give CardSystems the ax
 Reply-To: rah at philodox.com
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 <http://money.cnn.com/2005/07/19/news/fortune500/digital_security_americanexpress.reut/>

 CNN


 AmEx next to give CardSystems the ax
 Credit-card company says it will stop using payment processor at center of
 data breach controversy.
 July 19, 2005: 6:59 PM EDT


  CHICAGO (Reuters) - American Express Co., one of the three biggest U.S.
 credit-card companies, said Tuesday that it would no longer use payment
 processor CardSystems Solutions Inc., which is at the center of a
 controversy over a massive data breach.

  Details of up to 40 million payments cards, including names, account
 numbers and expiration dates, are believed to have been taken out of a
 database system run by CardSystems -- the biggest such privacy violation
 ever reported.

  Some fraud tied to the breach has been detected.

  Judy Tanzer, a spokeswoman at American Express (Research), said the
 company would end its relationship with CardSystems beginning in October.
 She declined to comment further.

  American Express is the second big credit-card company to end its business
 relationship with Tuscon-based CardSystems.

  On Monday, Visa USA sent a letter to 11 banks that issue Visa-branded
 cards and use CardSystems to process payments informing them it was
 "terminating its approval of CardSystems Solutions, Inc. as a Visa
 processor and third-party agent."

  Visa USA gave the 11 banks until October to find a new company to handle
 the transactions.

  A spokeswoman at MasterCard International, the second biggest credit card
 group behind Visa, said it was giving CardSystems until Aug. 31 to bring
 itself into compliance with its security rules.

  MasterCard spokeswoman Sharon Gamsin read a statement saying: "We are not
 aware of any deficiencies in its system that are incapable of being
 remediated."

  She said MasterCard was monitoring the process closely and, so far,
 CardSystems appeared to be on track. But she said that, if the company
 failed to meet the deadline for full compliance, its relationship with
 MasterCard was "at risk."

  In June, CardSystems Solutions, which processes credit cards for 115,000
 U.S. merchants, revealed it had mishandled customer data by storing data on
 customers -- in violation of Visa and MasterCard's security standards.

  It also said it had "identified a potential security incident" serious
 enough to prompt it to contact the Federal Bureau of Investigation (FBI).

  CardSystems Solutions, which has been in business for about 15 years, is
 not publicly traded. Its owners include Camden Partners, a Baltimore-based
 private equity firm, which invested $9.3 million in the Tucson company last
 year.

  According to CardSystems' Web site, it processes more than $15 billion
 annually in transaction made online and with credit card issuers Visa,
 MasterCard, American Express and Discover, which is owned by investment
 bank Morgan Stanley (Research).


 --
 -----------------
 R. A. Hettinga <mailto: rah at ibuc.com>
 The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
 44 Farquhar Street, Boston, MA 02131 USA
 "... however it may deserve respect for its usefulness and antiquity,
 [predicting the end of the world] has not been found agreeable to
 experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
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-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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