40 Million Card Accounts Compromised In Target Security Breach
The Secret Service says it is investigating a credit- and debit-card data theft at Target stores.
The alleged theft could impact millions of Target customers, including people living in Columbus and central Ohio area.
Secret Service spokesman Brian Leary confirms the agency is investigating, but declined to provide further details.
Minneapolis-based Target Corp. confirms it is aware of unauthorized access to payment card data that may have impacted certain guests making credit and debit card purchases in its U.S. stores. Target said it is working closely with law enforcement and financial institutions, and has identified and resolved the issue.
"Target's first priority is preserving the trust of our guests and we have moved swiftly to address this issue, so guests can shop with confidence. We regret any inconvenience this may cause," said Gregg Steinhafel, chairman, president and chief executive officer, Target. "We take this matter very seriously and are working with law enforcement to bring those responsible to justice."
Approximately 40 million credit and debit card accounts may have been impacted between Nov. 27 and Dec. 15, 2013.
Professor William McGeveran, an information law expert, says he believes the actual payment software was hacked with a piece of malware or some other kind of security breach in the actual credit card processing itself.
At least one credit card company is taking action. American Express says the company is aware of the incident and is putting fraud controls in place. Visa and Mastercard declined to comment to CBS.
The online report states the security breach only affected customers who shopped in stores, not online.
10TV talked to a local woman who may have been a victim of the data theft.
Cassandra Christensen's Christmas story this year is about how a real-life Grinch stole some of her money.
"I had a call from my bank, Huntington last week and they told me there was some suspicious activity on my card,” she said.
A few bucks here a few bucks there, all spent online. She cancelled the card.
She woke up to the news that 40 million credit and debit card accounts may have been stolen during a data breach at Target and it clicked.
"I think since Black Friday, we've visited the store twice,” she said.
Experts suggest Target shoppers check their bank statements daily.
Susan Oliver works in the payments industry - and is a frequent Target shopper.
"And I did use my card, it was my Target card and I know several other people that have, so it's scary because a lot of people don't understand what happens with their data when that happens,” said Oliver.
The Secret Service is investigating because the agency handles financial crimes.
Target has 1,797 stores in the U.S. and nine in the Columbus area.
Here are some answers to the most common questions about the theft
Q: I shopped at Target during that time. What should I do?
A: Check your credit card statements carefully. If you see suspicious charges, report the activity to your credit card companies and call Target at 866-852-8680. You can report cases of identity theft to law enforcement or the Federal Trade Commission.
You can get more information about identity theft on the FTC's website at www.consumer.gov/idtheft, or by calling the FTC, at (877) IDTHEFT (438-4338).
Q: How did the breach occur?
A: Target isn't saying how it happened. Industry experts note that companies such as Target spend millions of dollars each year on credit card security, making a theft of this magnitude particularly alarming.
Avivah Litan, a security analyst with Gartner Research, says given all the security, she believes the breach may have been an inside job.
Litan says Target's breach suggests that current security standards aren't working.
"It's really a wake-up call to the banking industry, but they never seem to wake up," she said.
James Lyne, global head of security research for the computer security firm Sophos, says something clearly went wrong with Target's security measures.
"Forty million cards stolen really shows a substantial security failure," he says. "This shouldn't have happened."
Q: Who pays if there are fraudulent charges on my account?
A: The good news is in most cases consumers aren't on the hook for fraudulent charges.
Credit card companies are often able to flag the charges before they go through and shutdown your card. If that doesn't happen, the card issuer will generally strip charges you claim are fraudulent off your card immediately.
And since the fraud has been tied to Target, it'll be the retailer that ultimately compensates the banks and credit card companies.
Q: How much is this going to cost Target?
A: It's too soon to tell. In addition to the fraud-related losses, banks may start charging Target a higher merchant discount rate, which is the amount retailers pay banks for providing debit and credit card services. While the percentage difference may be tiny, it could result in steep costs given the volume of transactions Target does, Litan said.
Litan added that the company could also face class action lawsuits from consumers, though most of them will be meritless, and fines from federal agencies. When combined, the costs of the breach could be so steep that they actually prompt Target to raise prices., she said.
"The real winner in this is Wal-Mart," she said.
Q: How can I protect myself?
A: Like they say, cash is king. You can only lose what you're carrying, though admittedly many people may not feel safe walking around with a wad of bills in their pocket.
As stated before, credit card companies don't hold consumers liable for charges they don't make. Usually the worst thing consumers have to deal with is the hassle of getting a new credit card.
And the paper trail generated through credit card transactions can often make it easier do things such as return items you've purchased, or keep track of work-related expenses.
It's worth noting that while debit cards offer many of the same perks as credit cards, without the worry that you'll spend more than what's in your bank account, they often don't come with the same kind fraud protections.
As a result, those card holders may have a tougher time getting their money back if their number is stolen.
Q: How can future breaches be prevented?
A: Litan said an easy way to prevent fraud would be to eliminate the use of easily cloned magnetic strip cards and upgrade to the kind of microchip technology used in most other parts of the world.
But she said that banks have pushed back against the idea, because the microchip cards costs significantly more than the magnetic strip version and changing over all of the country's ATMs could drive the total costs into the billions of dollars.
Lyne said it's unclear if the use of microchip cards would have prevented the Target breach, since it's unclear how it happened, but that it certainly wouldn't hurt.
Q: Why is the Secret Service investigating?
A: While it's most famous for protecting the president, the Secret Service also is responsible for protecting the nation's financial infrastructure and payment systems. As a result, it has broad jurisdiction over a wide variety of financial crimes. It isn't uncommon for the agency to investigate major thefts involving credit card information.