Dive Brief:
- A lawsuit filed by a credit union last week alleges that payments processor Fiserv deceived its clients about its security protocols.
- Self-Help Credit Union said in a complaint filed Thursday in a federal court in North Carolina that Fiserv “represented” it was using two-factor authentication when it, in fact, was not.
- There was “a gap between what Fiserv represented and billed for, and what Fiserv actually implemented,” Charles Nerko, an attorney representing the Durham, North Carolina-based credit union in the lawsuit, said in an email.
Dive Insight:
The payment processor disputed Self-Help’s assertions.
“Fiserv disagrees with the claims and will vigorously defend itself in the lawsuit,” a company spokesperson said in an emailed statement.
Despite an agreement with the credit union to use stringent security, the Milwaukee-based processor relied heavily on email passcodes to access systems that stored the financial institution's sensitive information, the complaint alleges.
Self-Help Credit Union is seeking restitution for unspecified fees that it says it paid for enhanced security.
The case is just the latest in a number of lawsuits filed against Fiserv in recent months.
Multiple shareholder lawsuits filed since June allege that the company failed to make proper disclosures about its performance and operations. Among other things, they alleged that Fiserv misled them regarding how it shifted merchants to Clover, its small business-focused point-of-sale system. The company has also denied those allegations.
Fiserv’s stock has taken a beating in recent months after its second quarter earnings — which were released on July 23 — fell short of Wall Street's expectations.
The company reshuffled its C-suite in October and executives have tried to defend the company’s performance and provide assurances the business is on the right track.
Fiserv CEO Mike Lyons rebuffed allegations that the company has surreptitiously moved clients to Clover in a question-and-answer session at the UBS Global Technology and AI conference in Scottsdale, Arizona on Dec. 1.
“As it relates to non-Clover (small businesses), we’re not going to force people to move away from non-Clover to Clover," he said.
