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California and the West

CardSystems Settles Charges

February 24, 2006|From Associated Press

WASHINGTON — A data breach that left 40 million customer accounts vulnerable to hackers will lead to tighter security measures to protect millions of credit and debit card users, Federal Trade Commission officials said Thursday.

CardSystems Solutions Inc. has settled charges that the company broke the law by failing to ensure adequate safeguards for sensitive customer information. The breach resulted in millions of dollars in fraudulent purchases, the commission said.

The settlement calls for better safeguards to protect consumer data.

The FTC could not seek civil penalties under the law it accused CardSystems of violating.

Atlanta-based CardSystems processed credit card and other payments for banks and merchants. Last summer, it was disclosed that tens of millions of mostly MasterCard and Visa accounts were exposed to possible fraud after a hacker broke into the company's computer system.

"CardSystems kept information it had no reason to keep and then stored it in a way that put consumers' financial information at risk," FTC Chairwoman Deborah Platt Majoras said.

CardSystems' assets have since been bought by San Francisco-based Pay by Touch. The settlement requires Pay by Touch to implement a comprehensive security program and obtain independent audits every other year for 20 years.

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