Proposals now before Congress would require notification. But there are differences in what information the notification would provide, the threshold for notifying regulators and law enforcement, and the proposed enforcement. Some bills seek criminal penalties for deliberately concealing a breach; others do not.
Consumer groups fear that any national standard could turn out to be weaker than the strongest state laws, such as one in California that requires a business or state agency to notify any state resident whose data was improperly obtained. Other state laws are more lenient, requiring notice only in cases where a risk analysis determines that the breach is likely to have actually harmed consumers.
"From industry's perspective, whether you're a bank or a merchant, you don't want to have to notify consumers," said Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. "They want to pre-empt, or override, the best state laws."
(Read more: Hotel data breach went undiscovered for nine months)
Retailers say they do support a federal notification standard but one that would be triggered when sensitive material has been exposed—as opposed to, say, customers' shoe sizes—and when there's a risk that it will be used for theft or fraud.
"There are different kinds of data. There's data that can lead to an identity theft (or) financial fraud, and there's data that probably doesn't have much utility to the criminals," said David French, senior vice president for government relations at the National Retail Federation. "If you get 20 notices a month, at some point you just turn it off."
Meanwhile, retailers remain at odds with financial institutions over how best to protect consumer data. Retailers say banks need to upgrade security technology on the credit cards they issue. Banks say retailers need to do more to enhance their own security.
"There's no agreement in the private sector among the major players about what their responsibilities are, and that makes it more difficult for us in the Congress to end up on the same page," said Sen. Tom Carper, D-Del., chairman of the Senate Homeland Security and Governmental Affairs committee, in an interview.
He is sponsoring legislation that provides for notification in cases where there is "substantial risk" of identity theft or account fraud.
Carper said he's hoping for a solution, because the "alternative is a patchwork quilt that is a nightmare."
—By The Associated Press