A class-action lawsuit has been filed in California on behalf of credit-card holders and merchants against CardSystems Solutions, Visa, and MasterCard after a security breach that exposed 40 million credit cards to potential fraud.
The suit alleges that the defendants violated California law by failing to provide adequate security for credit-card data and by failing to provide timely notice to affected consumers and other entities.
Earlier this month, MasterCard said 40 million credit cards of all brands were exposed to potential fraud after an intruder broke into the network of payment card processor CardSystems Solutions.
The lawsuit was filed on behalf of Eric Parke, a Marin County resident who has several Visa and MasterCard credit cards, and all California residents with Visa or MasterCard accounts in the time that CardSystems was compromised.
The suit also represents Royal Sleep Clearance Center, a retail store in Carmichael, and all California merchants that accept Visa or MasterCard charges and that may be subject to chargeback fees or penalties by the card companies as a result of the breach.
In a statement, Visa rejected the lawsuit's allegations. The company said it has invested billions in anti-fraud technologies to protect cardholders and merchants and has a policy that ensures cardholders pay nothing in the event of fraud.
Visa also said it immediately investigated the breach and collected necessary information to quickly inform its member financial institutions. Additionally, the company said CardSystems Solutions violated its standards for protecting cardholder data.
Earlier this month, SC Magazine reported on experts linking the credit-card breach to organized crime.