Retail, Data Security, and Smart Cards

Speculation is plentiful throughout the tech sector following a report Friday night from Neiman Marcus. According to the retail giant, they’ve suffered a huge data breach that affects untold thousands of credit card customers. As of this writing, no definitive number has been provided by either Neiman Marcus representatives or credible news agencies, but with 79 stores nationwide, it’s not going to be a small number.

This news follows on the heels of Target’s revelation that their initial estimates on the number of Redcard shoppers that were compromised over the Christmas holiday were off. Way off. It’s been discovered by investigators that an additional 70 million accounts over and above the original 40 million were accessed during the intrusion, bringing the number of shoppers affected by the Target breach to over 100 million.

While nothing has yet been confirmed, both of these attacks appear similar in nature. Further, both groups of hackers used secondary credit card processing merchants to access customer information, which suggests that there is either a common weakness between the two companies that serve both Target and Neiman Marcus or a common intruder that infiltrated both retail chains.

To make matters worse, Target and Neiman Marcus weren’t the only retailers scraping hackers out of their credit card terminals over the last few weeks. According to multiple reports from Reuters, a number of smaller retail chains have reported similar intrusions leading up to and following the Christmas holiday.

We discussed a potential solution regarding credit card breaches in a previous DSW editorial several weeks ago, but in the wake of these developments it’s worth revisiting. The introduction of the smart card – a credit card that features a built-in microchip – would certainly curb and quite possibly prevent breaches of this magnitude in the future.

In fact, with these two high profile breaches occurring back to back, it’s almost a certainty that a multitude of lenders are already planning smart card rollouts. Too much money has been lost in the last few weeks for large retailers to take these breaches sitting down. You can bet that as you read this, retail executives are on the phone with lending institutions asking for smart cards.

What does that mean to you? As a consumer, probably very little. As a tech sector employee, a great deal more.

While the embedded microchips used to thwart unauthorized use may prevent hackers from being able to download databases full of customers and transform them into stolen identities, smart cards – like any technology – are not completely immune to intrusion. As smart cards gain popularity, vulnerabilities and exploits will undoubtedly emerge.

A tech worker with a desire to make themselves invaluable in the coming year might think about making a serious study of the technology and security protocols surrounding smart card use. Once smart cards arrive, such a person would be in an excellent position to step in and play a key role in the changeover.

If your company is at all connected to the retail sector, or if your company regularly interfaces with credit card processing vendors, this could be a golden opportunity to gain a step on the hackers. The old adage tells us to dig the well before we’re thirsty, and the retail sector is looking mighty parched.

– Jubal McMillan, Editor

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