NEW YORK– A New York credit union has filed a lawsuit against Fiserv alleging security issues that put their members at risk.
The US Court House SDNY Federal Credit Union, which serves the federal judiciary and court personnel of Manhattan’s federal court, filed the lawsuit in the same court that represents its FOM, the United States District Court for the Southern District Court of New York.
It has also filed the suit on behalf of The Finest FCU, which serves New York City police officers and with which it is in the process of merging. The credit unions are being represented by Barclay Damon, LLP.
The complaint alleges that Fiserv had a weak authentication process on its Virtual Branch online banking system that placed members at risk of hacking, and Fiserv failed to provide audit records substantiating that its security controls were effective.
According to the complaint, Fiserv has sought “punitive early termination and deconversion fees” in excess of $200,000 for the credit union’s exit from the Fiserv system. The credit union is seeking damages from Fiserv for the security issues, and a declaration from the court that the credit union does not owe early termination fees to Fiserv.
Court Personnel Affected
“Our first priority is protecting the judges, court employees, federal law enforcement officials, and others who use the court’s credit union,” USCHSDNYFCU said in a statement provided by Barclay Damon. “Hackers targeting these individuals seek to undermine the fair administration of justice. We are honored to represent the court’s credit union and will take all appropriate actions to protect its members.”
The credit union said the “information Fiserv jeopardized, like judges’ home addresses and the locations where their debit cards are used—is highly prized by those seeking to stalk, harass, intimidate and harm judicial personnel.”
The suit further alleges that after being terminated by US Court House SDNY Federal Credit Union, Fiserv has “refused to participate in information security audits required by its agreement and federal regulations that would allow SDNY Court FCU to identify which of its members were victimized by identity theft.”
Additional Allegations
Alleging other credit unions have experienced similar security issues, the lawsuit states that “Fiserv’s misconduct is part of a pattern of victimizing small financial institutions and the consumers they serve.”
The $3.6-million US Courthouse SDNY FCU has approximately 121 members.
Charles J. Nerko is lead counsel to the credit union, and co-leader of the cybersecurity team at Barclay Damon LLP.
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