Log in
Lost password
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  News


Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 

With data vulnerable, retailers look for tougher security

01/13/2014 | 01:35am US/Eastern

A top retail trade group executive on Sunday called for tougher security standards that could mean more spending for the industry, its banks and business partners after a series of data breaches at major merchants.

Stores and card processing companies have reported a steady stream of security breaches for years without a major backlash from consumers, such as those disclosed by TJX Cos in 2007 and by Heartland Payment Systems Inc in 2009.

But the latest thefts - including attacks on Target Corp and Neiman Marcus - have involved a broad set of merchants and could mark a watershed moment for security standards as calls grow for changes in the protection of consumer information.

One sign of the change is a new enthusiasm for payment cards that store customer information on computer chips and require users to type in personal identification numbers.

Mallory Duncan, general counsel of the National Retail Federation that represents Target, Wal-Mart and other big stores, said in an interview on Sunday that the trade group encouraged its members to upgrade to the higher-security cards even though they cost more than old systems that store data on magnetic stripes.

The breaches are "unfortunate but we're not entirely surprised," Duncan said at his organization's annual convention now being held in New York.

"The technology that exists in cards out there is 20th-century technology and we've got 21st-century hackers," he said.

Duncan said the trade group had only made its backing for the higher-security cards public since the Target breach. Banks have quietly begun to offer the cards but mainly for customers to use while traveling. Big U.S. card networks led by Visa Inc will not require the higher security until next year at the earliest.

It is not clear the new "Chip-and-PIN" cards would have prevented the breaches at Target and elsewhere. At the very least they make stolen data harder to re-use, a reason the technology has caught on widely in Europe and Asia.

They have met with much less enthusiasm in the United States, in part because losses to fraud - just 5 cents for every $100 spent via plastic - have been manageable for merchants and their banks. But rising fraud rates, and the risk of identity theft, could change the calculation.

The new scrutiny began last month after Target of Minneapolis disclosed it suffered a massive data breach during the holiday shopping season. Target said on Friday the breach was worse than it initially thought and that hackers stole the personal information of at least 70 million customers, in addition to some 40 million payment card numbers.

Investigators believe that hackers used malware that captured data on customers from the magnetic stripes on their payment cards. Since Target's disclosure the more upscale store chain Neiman Marcus has said it also suffered an attack, and sources have told Reuters that at least three other well-known U.S. retailers have been breached but not come forward.

In his first interview since it disclosed the breach, Target Chairman and Chief Executive Gregg Steinhafel told CNBC the company moved quickly after it confirmed it had a security issue on December 15, though it did not disclose the problem until December 19. The time allowed Target to eliminate the malware that had compromised its systems and to prepare its stores and call centers for its announcement, he said.

Steinhafel did not offer many more details and noted an ongoing criminal investigation.

"Clearly we are accountable and we are responsible - but we are going to come out at the end of this a better company and we are going to make significant changes," he said, according to the article.

Duncan, the trade group official, said no other members had told the NRF they had been breached, and a series of other executives said in interviews since Saturday that they also were not aware of breaches at their companies. The executives included representatives of Sears Holdings Corp, JCPenney Co, Macy's Inc and Gap Inc.

Still, the breach was the talk of the massive conference with 29,000 industry attendees at New York's Jacob K. Javits Convention Center. Several speakers cited it during their remarks at the conference and some tried to distance their companies from vulnerabilities.

Dan Morrell, assistant treasurer of drugstore chain Walgreen Co, said the company was "spending a lot of time and the right investment dollars" to protect its data and its customers.

Stan Lippelman, vice president of marketing at Bass Pro Shops, a privately-held outdoor goods seller, said: "We feel very comfortable with where we are at. But ... the fact that it happens to Target means it can happen to anybody, right?"

(Additional reporting by Jim Finkle and Dhanya Skariachan in New York; Editing by Stephen Coates)

By Ross Kerber and Phil Wahba

React to this article
Latest news
Date Title
07:25p MOODY : Uganda's ability to pay debts drops to negative
07:24p Asian shares edge up, euro under pressure as ECB looms
07:22p Number of UK oil jobs falls at fastest rate in at least 11 years
07:21p WEIR : Timing right for Scottish engineering group Weir to expand in the UAE
07:21p ALTECH CHEMICALS : Optimises Kaolin Beneficiation Plant Location
07:21p TFS : Issues US $25m of Additional Notes to US Debt Market
07:20p Brookfield bid for Australian rail, port assets hits regulatory red light
07:18p TEXAS ROADHOUSE : PhilanthroFEED meal program grows
07:16p PYROGENESIS CANADA : Reports Q3, 2015 Financial Results - Excluding extraordinary items, year-to-date revenue up 19%, Order Backlog Confirmed at $16.0 million
07:14p RENAULT : BRIEF: Bank buys Renault Winery out of bankruptcy
Latest news
Hot News 
DEALERTRACK TECHNOLOGIES : Cox Automotive Announces Strategic Investment in Mahindra First Choice Wheels
PIRONET NDH : Have I got my IT budget right? – techconsult and Pironet NDH launch ITK-Budget-Benchmark for IT decision-makers
UBS : Consumption Indicator:sentiment brightens up
HARBOURVEST HVGPE : Press Release 31 October 2015 Interim Management Statement
REGENCY MINES : Disposal of Investment - Update
Most Read News
06:01p Samsung Starts Mass Producing Industry’s First 128-Gigabyte DDR4 Modules for Enterprise Servers
06:01p Heart Disease Patients Who Sit a Lot Have Worse Health Even if they Exercise
06:05p PROREIT Reports Strong Financial and Operating Gains for Third Quarter 2015
06:35p IDAHO PUBLIC UTILITIES COMMISSION : Avista plans to meet growth through energy efficiency, natural gas
06:01p PARTY CITY HOLDCO Wolf Haldenstein Adler Freeman & Herz LLP Announces That a Class Action Lawsuit Against Party City Holdco Inc. Has Been Filed in United States District Court for the Southern District of New York -- PRTY
Most recommended articles
07:22p Number of UK oil jobs falls at fastest rate in at least 11 years
07:20p Brookfield bid for Australian rail, port assets hits regulatory red light
07:08p Mud from Brazil dam burst is toxic, U.N. says
07:08pDJGRAIN HIGHLIGHTS : Top Stories of the Day
07:07p BTG Pactual scrambles to contain Esteves arrest fallout