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Data Breach, PCI Standards, and the $6.2 million Contract Clause

6/25/2019

by John Lande
Dickinson Law

Payment card system breaches can cause millions of dollars in damages. Consumer losses are generally minimal, because Regulation E obliges card issuing banks to generally reimburse consumers for fraud. There are nevertheless millions of dollars of damages associated with responding to payment card breaches in the form of fraud reimbursements and card re-issuance costs. These damages are apportioned among the various banks and card networks involved in processing credit and debit card payments. That was the environment the case of Spec’s Family Partners v. First Data Merchant Services arose in, a case decided by the United States Court of Appeals for the Sixth Circuit.

The case involved a credit card breach at dozens of liquor stores in Texas owned by Spec’s Family Partners (“Spec’s”). The breach occurred because of the chain’s failure to comply with and implement the Payment Card Industry Data Security Standard (“PCI DSS”). As a result, fraudsters were able to install malware that harvested the credit and debit card data of Spec’s customers. The damages were created when banks that issued customer credit and debit cards learned of the breach. The issuing banks had to reimburse customers for fraud losses, and incur the costs of reissuing cards to customers.

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June Rural Mainstreet Index Climbs Above Growth Neutral: Farm Woes Raise Loan Defaults for One-Fourth of Bankers

6/21/2019

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June Survey Results at a Glance:

For the sixth time in the past seven months the Rural Mainstreet Index climbed above growth neutral.
More than one in four bank CEOs reported rising loan defaults due to farmer financial woes.
Almost half of bankers reported that due to crisis level farm income, farmers in their area have responded by selling the farm, or otherwise leaving the farm.
Almost seven of 10 bank CEOs support continuing or raising current tariff levels.

OMAHA, Neb. (June 19, 2019) – The Creighton University Rural Mainstreet Index (RMI) for June rose above growth neutral for the month. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the RMI for June indicated positive growth for the region.

Overall: The overall index climbed to 53.2 from 48.5 in May. This is the sixth time in the past seven months that the index has risen above growth neutral. The index ranges between 0 and 100 with 50.0 representing growth neutral, and an RMI below the growth neutral threshold. 50.0, indicating negative growth for the month.

“Higher agriculture commodity prices and rebuilding from recent floods boosted the Rural Mainstreet Index (RMI) for the month. Furthermore, despite the negatives from the trade war, 69.4 percent of bankers support either raising, or continuing current tariffs,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Jeff Bonnett, president of Havana National Bank in Havana, Illinois, said it has been estimated that anywhere from 15 to 20 million acres were not planted in corn.

According to Bonnett, “Based upon this information, corn prices should be in the $5.75 to $6 (or more) a bushel range. What are we missing? Will the true corn acres planted be revealed after the required certification through FSA due by July 15th?”

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Guest Article: Minimizing Risk in Agricultural Loans During Times of Uncertainty

6/4/2019

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by Emily Staudacher
Dickinson Law

Trade wars and wet conditions as farmers attempt to plant their 2019 crop have generated a great deal of uncertainty in the agricultural industry. As the uncertainty surrounding trade and weather grows, it is important to conduct file reviews and ensure best practices are being utilized to secure a lender’s collateral position in government farm program payments and crop insurance proceeds.

FARM PROGRAM PAYMENTS
Courts across the country are divided when a security interest attaches to a government farm program payment, and even if they can attach at all. Due to these uncertainties, best practices dictate using all methods available to a lender in securing collateral.

First, execute a security agreement and file a UCC Financing Statement with the Secretary of State. Once again, courts are divided on which description of collateral is appropriate for farm program payments. In order to avoid any questions whether farm program payments are included in a collateral description on a security agreement, ensure that it includes both farm product and their proceeds, and general intangibles. A blanket financing statement should then be filed with the Secretary of State.

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Data Breach, PCI Standards, and the $6.2 million Contract Clause

June Rural Mainstreet Index Climbs Above Growth Neutral: Farm Woes Raise Loan Defaults for One-Fourth of Bankers

Guest Article: Minimizing Risk in Agricultural Loans During Times of Uncertainty

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