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Visa To Genesco: PCI Compliance? What PCI Compliance?

May 31st, 2013

PCI QSAs can disagree among themselves, and when a retailer changes QSA firms, different interpretations often materialize. Therefore, after a breach has happened, it’s easy to reinvestigate and to find something that could be interpreted differently. And then, presto, non-compliance.

Visa has proudly proclaimed—repeatedly—that no PCI-compliant retailer has ever been breached. That’s true, but it’s because every time a compliant retailer has been breached, Visa has them re-evaluated and suddenly finds that they hadn’t really been compliant after all. George Orwell would have been proud.

Back to Visa’s filing for dismissal. Visa gets precise about the pecking order: “Nor does Genesco allege that Visa’s contractual right to collect the assessments from the Acquiring Banks was contingent on Genesco agreeing to reimburse or indemnify the Acquiring Banks. In addition, Genesco does not allege that Visa directed, or even encouraged, the Acquiring Banks to seek reimbursement or indemnification from Genesco pursuant to the banks’ separate contracts with Genesco.” Yeah, I’m sure that those banks had to have their arms twisted to seek reimbursement from a retailer.

“Genesco’s allegation is simply that Genesco’s separately negotiated contracts with Acquiring Banks resulted in Genesco having an indemnity obligation to the Acquiring Banks for the banks’ contractual obligations to Visa. Genesco’s contract-based claims are factually and legally flawed, but they will be challenged at a later time and not on this motion.”

Visa also got into the issue of whether it had engaged in fraudulent conduct—given that it’s a card brand, the filing meant that it had engaged in more fraudulent conduct than usual.

“Genesco fails to allege that Visa made any statements or representations that were allegedly fraudulent. Its sole, conclusory assertion of fraudulent conduct is the allegation that ‘Visa misrepresented to the Acquiring Banks that [the disputed] amounts were due and owing to Visa under the VIOR and applicable law.’ This allegation is no more than a thinly veiled claim that Visa breached its contracts with the Acquiring Banks in making the assessments. Even if accepted as true for purposes of this motion, the allegation does not establish any likelihood of consumer or public deception. Nor does Genesco even allege that it relied on the alleged misrepresentation. For these additional reasons, Genesco’s Complaint fails to state a claim under the ‘fraudulent’ prong of the (California Unfair Competition Law). Genesco does not allege facts demonstrating that it was inequitable for Visa to apply the relevant contractual procedures for collecting money from the Acquiring Banks to partially reimburse issuing banks for losses they suffered as a result of account data-security deficiencies at Genesco.”


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