yberdata breaches of businesses have become numbingly common over the past several years. How the tide should turn is the subject of a fierce debate between retailers and bankers.
Over the past decade, banks, credit unions and other lenders have been required to establish security breach programs and to notify their customers promptly when breaches occur.
Now some members of Congress want to apply the banks’ standards to retailers, and retailers are pushing back.
Among several proposed data breach bills on Capitol Hill, two — both titled the Data Security Act of 2015 — would expand bank standards to retailers.
Lawmakers may take up the legislation this summer.
The bills’ supporters, including the American Bankers Association and the Credit Union National Association, argue that since banking is only one type of business targeted by hackers, it makes sense to apply similar rules to other elements of transactions that get hacked.
They also say that their provisions are scalable to help accommodate small businesses.
“We should be trying to prevent these breaches from happening to begin with,” said Doug Johnson, ABA senior vice president of payments and cybersecurity policy.
Merchants Feel Burdened
Opponents, including the National Retail Federation (NRF), contend that broadly applying standards meant for the financial sector is like putting a square peg into a round hole and would burden small businesses with more regulatory costs and red tape.
“In our minds, these bills are probably not realistic,” said David French, the NRF’s senior vice president for government relations. “This is crushing for a small and medium-sized business, and it’s inappropriate for the risk these businesses pose.”
Congress has been inundated with data security bills and may be more urgently interested in the huge breaches that the federal government itself has suffered lately. President Obama spoke in favor of greater security in his State of the Union speech in January, when the White House submitted its own draft legislation. It languishes in committee.
Of course, commercial data security proposals have been subject to partisan sniping. Democrats worry that a weak federal standard would pre-empt tougher state regulations now in place. Republicans warn that stringent federal standards would result in overzealous regulators.
Cyberbeneficiaries
Regardless of the disharmony on Capitol Hill, cybersecurity companies stand to benefit.
Spending on cybersecurity shows no signs of stopping, according to a Deutsche Bank report. Among the cybersecurity enterprises that may benefit are Palo Alto Networks (NYSE:PANW), CyberArk (NASDAQ:CYBR), FireEye (NASDAQ:FEYE) and Check Point Software(NASDAQ:CHKP), which have seen their shares steadily rise over the past year.
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