California credit card holders and merchants have filed a class action lawsuit against Cardsystems. The suit claims the company was negligent by failing to adequately secure credit card data which led to a security breach exposing over 40 million credit card holders to potential fraud. Cardsystems allegedly broke Visa and MasterCard "Data Security Standards" which prohibits storing confidential consumer information. The lawsuit claims Cardsystems, Merrick Bank, Visa, and MasterCard have violated their duty to properly inform consumers of the nature and degree of a security breach. The suit claims that these violations constitute unfair, unlawful and deceptive business practices under California's Unfair Competition Law.
Plaintiffs' filed a First Amended Complaint ("FAC") in the case against Cardsystems and others. The FAC alleges that defendants were negligent in the security of consumer credit card data which led to the data being hacked and compromised. It is alleged in the First Amended Complaint that, on information and belief, defendants knew or should have known that Cardsystems failed multiple security audits and did not comply with credit card data security standards during the past year and defendants continued to allow them to process consumer credit card transactions. The plaintiffs are now seeking money damages.
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