Combating data theft in retail – will banks step up?

By Bill Thorne, SVP, Communications and Public Affairs

When it comes to protecting customer data, there is more than one stakeholder. As NRF President and CEO Matthew Shay’s letter to Congress reiterated, retailers recognize the need to continue investing in new point-of-sale-technology and take other precautionary measures. But the financial industry also has a critical role to play in making sure their cards are secure.

The safest cards are encrypted with PIN and chip technology, which is widely used in Europe. Unlike signatures, PINs can be encrypted, so that even if the data is grabbed, as it was in the most recent case, the encrypted PIN serves as an additional layer of security to help protect consumers. But in America, most cards are issued with signatures and magnetic strips, making customer information vulnerable to criminals. Hackers are using 21st century technology to take advantage of 20th century cards. As long as cards are issued with signature and magnetic strips, theft will occur. According to Verizon’s 2013 Data Breach report, 37 percent of breaches affected financial institutions, up from the previous year’s report. Less than a quarter of data breaches occurred in retail environments and restaurants in the same period, a decline from 2012.

During Retail’s BIG Show, Shay and NRF Board Chairman Stephen Sadove addressed recent fraud committed against retailers and their customers on CNBC. They emphasized that retailers are prepared to put additional resources behind preventing data theft. Shay and Sadove aren’t alone. Costco co-founder Jim Senegal, HSNi CEO Mindy Grossman and Macy’s Chairman and CEO Terry Lundgren have all said that these incidents are a wake-up call to take further steps to prevent future cyber attacks – their customers and their businesses are at stake.

The question remains: is the financial industry ready to do the right thing by their customers as well?
 

*Published on the NRF Retail's BIG Blog