mr. pawlenty? >> initially somebody has to give the cash back if it's a debit transaction or value. >> again, i'm -- >> it's the issue -- >> the credit transaction. >> it's the issuing bank and they sort it out afterwards as to who pays what. in terms of who eats most of it initially in our view over the long term of the discussion, it's the banks. >> here's why i ask the question, guys. and -- i have my banker friends come in and tell you, look, we have to do something because we eat all of this loss. last week, i had some convenience store people come and say, look, we have to do something because we eat all of this loss. are both of them eating a little bit of the loss? is that what comes down to? i see some nodding their head, usually a good sign. >> i included in my testimony a schedule of repayment that shows the fees and structure of the contracts that obligate merchants to repay in the wake of a breach. those are re-issuance costs, costs to re-issue cards, and fraud, fraud associated with t

mr. pawlenty. i know and i believe from reading your testimony you noted that the emv chip cards have proven very effective. i've got a number of cards to switch out on, make sure you have the chip. one of the questions -- this happens with my daughters, et cetera, they're doing more and more shopping online. people not going to the store as much. they're going shopping online. and it seems as though that there are more frauds taking place when people are doing this shopping online. can you stay with us ways in which firms are innovating to prevent customers, consumers who rely more on online shopping so we can prevent fraud in that regard. and, again, like i asked mr. oxman, ways that congress can ensure greater data breach protection as we move away from in-store purchases. it seems as the new generation is online -- my daughters won't go to stores anymore. everything's online. what we can do in that regards. >> congressman, great question. as was mentioned earlier, the chip wards will go a long

mr. pawlenty and mr. dodge. let's say mr.apuano steals my credit card which is possible because the fact kind of guy even though it's not here yet. he goes to my local gas station or his local gas station, slides it in there and maybe he knows my zip code and buys the gasoline with my stolen credit card. i catch it when my statement comes in the next week or maybe it e-mail notification which is a service. i call my bank and say someone stole my credit card and a buy gas in massachusetts. louise loss? is it the retailer? the bank that issued my card who deep outlaws for the gasoline bow with a stolen credit card? >> first i was safe if it first i would say the tables required the fraud would've never occurred. secondly, there's a difference between data breach and fraud repayment. so they are the contracts the retailer signed. there would be an evaluation of where the leak weakest link in the system. if there was a stolen card that was three years i don't know the answer to that question. >> in many cases and almost all cases

mr. chairman, i realize my time has expired. i want to ask governor pawlenty, are the vikings going to be as bad as they were last season? >> did you say the packers? [ laughter ] >> the vikings? >> i think the big question is how do we get some of that custard. [ laughter ] >> the vikings are going to be better this year. >> the gentleman from florida now, mr. ross, is recognized for five minutes. >> thank you, mr. chairman, and thank you, panelist. i can only preface my remarks by thinking back to the early 1980s when i was installing computer systems, 16-bit processors in pharmacies across the eastern united states. we would use a dial-up modem to update drug prices and process data. at thattime "war games" came out starring matthew broderick showing how we can hack into the intelligence computer that started an international war game. and we've evolved today to where you go to walt disney world and get a magic band that has all your data, shows disney exactly where you are, what you're doing, what ride you want to be on, all your billing information. the e

mr. sherman. >> governor pawlenty, i do weird things that cause my credit card company to get very concerned. like i buy gasoline in los angeles and a day later i buy gasoline in washington. so of course their computers flip out. you'd think they would send me an e-mail, but they don't. they either call me, usually at the worst possible time, or if they're too latzy to do that they freeze the account and force me to call them. is this entirely because they're not handling it right, or is there something in our statutes that we could do to facilitate or prod credit card companies to check with their cardholders by e-mail rather than by telephone? >> congressman, great question. i've had some interesting experience with cards myself personally, so -- >> you engage in similar unusual activity? >> well, i'm not admitting to unusual activities, sir. anyhow, as to the contact -- >> another guy going to iowa. >> i think the concern you raise is a good one but it is being addressed in real time by technology. the controls you can now set on many cards and it's advancing by the day and month, are get

mr. pawlenty. i know and everything are just when you noted that emv chip card to proven very effective, and after a number of my costs switch out on them to make sure you have the chip. but one of the questions, and this happens with my daughter, et cetera, now, that they're doing more and more shopping online. people not going to the store as much ended in shopping online and it seems as though that you are more frauds now taking place when people are doing just shopping online. can you discuss ways in which firms are innovating to prevent customers, consumers who rely more on online shopping so we can prevent fraud in that case? and again like i asked mr. oxman, ways that congress can do to ensure greater data breach protection as we move away from in store purchases. it seemed this new generation is online. my daughter will go to the store anymore. everything is online. what we can do in that regard. >> great question. as was mentioned earlier chip card took a long way toward eliminating or gre

pawlenty. what exactly is broke? what needs fixing here? where does graham leach bliely work and where doesn't it work. >> mr. chairman if you just step back from how individuals might characterize it and ask them these questions how is the current system working? half of the american -- adult american population has their personal data he can pose nd one year, it is not a stretch of the imagination among somebody could get into the electrical grid and shut it down in a big part of the country not for a day but months and months on end, you do that and lose electricity in your district, pressure for pipelines, points of sale goes down you can't transact anything electronically you are r. you've got a very dramatic impact on the country. so it requires i think a sense of urgency and a sense of understanding regarding the magnitude of the threat. as to graham leach bliely it works, it's flexible, makes accommodations for the size of the business, but it says begin the importance of this infrastructure to the country, if the payment system doesn't work, it's stalled or people lose confidence in it you're going t

pawlenty. what exactly is broke? what needs fixing here? does it work or doesn't it work? >> mr. chairman. thank you. it's a great question. if you step back from how individuals might characterize it and ask them these questions how is the current system working? half of the adult american population has their personal data exposed in one year. it is not a stretch of the imagination to think somebody could get into the electrical grid and shut it down in a big part of the country for months on end. you do that you lose electricity in your district lose pressure of national gas pipelines, points of sales go down, you got a very -- not -- you've got a very dramatic impact on the country. it requires a sense of urgency and understanding regarding the magnitude of the threat. as to the act, it works. it's flexible. it makes accommodations for the size of the business, but it says given the importance of this infrastructure to the country, if the payment system doesn't work, it's stalled, people lose confidence in it you are going to have a big piece of economy grind to a halt. there's trillions of payme