Lawsuit filed over CardSystems data breach

Class action suit says company was negligent in maintaining consumer credit data

SAN FRANCISCO - A class action lawsuit has been filed in California over the CardSystems Solutions security breach, which may have exposed as many as 40 million credit-card numbers to fraud.

The suit, filed in California state court in San Francisco late Monday, claims that Atlanta, Ga. payment processor CardSystems was negligent in the way it maintained consumer credit data, according to Ira Rothken, managing partner with The Rothken Law Firm, which filed the suit.

Other than legal fees, the suit does not seek monetary damages, Rothken said. "We're asking the court to order that the defendants give notice to consumers," he said. "There are millions of people whose data was compromised. If we're successful, every one will be informed if their data was compromised. And a subset of those people will hopefully be able to find out if there's any confirmed data theft."

CardSystems processes more than $15 billion in credit card and online transactions each year. Earlier this month MasterCard disclosed hackers had broken into CardSystems' Tucson, Arizona, operations center, gaining access to millions of credit card numbers.

MasterCard has said that it first became aware of the infiltration in May, but Rothken alleged that CardSystems actually knew of the breach six months earlier. "There's a lot more to this story than people know, including the notion that data was compromised going back all the way to November of 2004," he said. "They failed to inform consumers at that point."

After news of the break-in was made public, CardSystems disclosed that it should not have been keeping the records that were breached, saying that it had improperly retained them for "research purposes."

The class action lawsuit names CardSystems a defendant, as well as two credit card companies that used CardSystems' transaction processing service: Visa U.S.A. Inc. and MasterCard International Inc. It also names CardSystems customer Merrick Bank Corp. and Visa International Service Association as defendants.

Eric Parke, of Marin County, California, and Royal Sleep Clearance Center Inc., based in Carmichael, California, are named as plaintiffs in the suit.

CardSystems and MasterCard did not return calls seeking comment on this story.