As we approach the one-year anniversary of Target’s 2013 Black Friday data breach that compromised 40 million credit card users, it doesn’t appear that shoppers are shying away from shopping via credit or debit cards to avoid a similar predicament this year. In fact, a new study by Deloitte found that 56 percent of consumers will shop at retailers that have experienced a data breach this past year, including Target, Home Depot, Kmart and Michaels, even though 42 percent said they are concerned about their personal data.
These are similar numbers to an earlier report done by CreditCards.com that found more than half of major credit and debit card holders would “probably” or “definitely” shop at a store where hackers had accessed shoppers’ personal information.
Consumers Desensitized to Breaches and Still Vulnerable
These numbers suggest that consumers are desensitized to data breaches. Unfortunately, only a third of breaches are ever made public, so consumers may not fully realize the extent of the threat. Credit card companies and retailers have made very little progress in the last year to protect consumers from a data breach, and still rely heavily on the magnetic strips and technology from more than 40 years ago that is quite vulnerable to attack. Other countries adopted chip card technology, so-called smart cards, when counterfeit cards began to flood the system in the 1990s.
U.S. to Adopt Chip Cards
It is expected that the U.S. will finally transition to chip cards by this time next year, but the switch has been stalled by a classic chicken-and-egg scenario. Chip technology requires that retailers have readers. Retailers didn’t want to purchase readers if banks weren’t issuing chip cards, but banks didn’t want to issue chip cards if the retailers didn’t have the readers to support them. Experts predict that the chip cards will only reduce 60 percent of fraud, so the technology is far from a silver bullet, and makes merchants even more reluctant to invest in it.
Retailers would like to shift to a system called tokenization, which uses technology Google Wallet and Apple Pay already employ, to replace a card number with a one-time-only, randomly generated number. They view this as a much more secure solution than the partially secure chip card. Regrettably, consumers will suffer the delay as retailers and banks battle the new chicken-and-egg conundrum: Will banks or retailers be the first to invest in the technology?
How to Use This Information
It’s clear that consumers’ personal data is still at risk of being exposed this holiday season. As with any crisis or emergency situation, it’s important to ensure that you have the tools and systems in place to communicate to those who might be impacted. Please call 877-833-7763 or contact us online so that we assess your company’s readiness.
What systems do you have in place to protect your customers from a data breach?