Heartland Wants To Be The H&R Block Of Processors

Written by Evan Schuman
July 8th, 2009

As Heartland inches along to officially rolling out its version of end-to-end encryption, the processor is stealing a marketing page from tax return firm H&R Block. It’s preparing to guarantee retailers that if they’re breached while using Heartland’s service, Heartland will cover the costs of any fines and penalties.

Whether or not the risky approach will work is an interesting issue, but you’ve got to love the psychological dynamic at play here. Heartland is a data breach victim and—if and when Heartland is ultimately forced to reveal the volume of data impacted by their breach—might even be one of the largest data breach victims ever. But they’re acting like a reformed smoker who suddenly finds the whiff of a lit cigarette repulsive and disgusting. Then again, a more apt analogy would be a reformed smoker who decides he can make a ton of money opening a Quit Smoking School.

The marketing reality is that almost every processor and security vendor today is hawking some version of something they’re calling end-to-end encryption, forcing Heartland to do something flamboyant to get some attention. It’s easy to nitpick the offer as not going far enough—to truly make the investment riskfree, why not offer to cover legal fees, court costs and the inevitable investigative and forensic costs?—but the more germane point is that it’s farther than anyone else in the space has yet gone.

There will also undoubtedly be wording that the breach’s cause must relate to the Heartland product, which certainly sounds reasonable. But cyberthieves—like all professional criminals—tend to be excellent at sniffing out the weakest link. If a homeowner installed a $9,000 top-of-the-line steel door with five Maxwell Smart-style drill-proof deadbolts, it’s not that the home wouldn’t get burglarized. It will simply push the burglar to come in through the window or sledgehammer through a wall.

But in the end-to-end encryption case, the data could still be accessed, but it would likely remove the retailer from being held responsible.

We should also stress that the offer is not yet finalized, but is merely one that Heartland officials are now telling people they plan to offer later this year.


3 Comments | Read Heartland Wants To Be The H&R Block Of Processors

  1. Phan Tum Says:

    It is amusing that a company that cannot guarantee its own security can claim to protect and guarantee the lack of a breach for others.

  2. Jack Griffin Says:

    Are these the same upfront and honest folks that announced their breach to the country on January 20, 2009, during the presidential inauguration ? Oh and their Chairman just happened to sell roughly 15 million dollars worth of Heartland stock while all this was going on. Must all just be a giant coincidence. I however would rather not do business with any company like Heartland Payment Systems.

  3. The Merchant Maven Says:

    Indeed, Phan and Jack who commented previously on the folly of Heartland’s attempts are correct in their viewpoints. It it utterly amusing, ironic and borderline shameful that a company who has suffered arguably the worst data breach in the history of commerce is deciding to protect and guarantee a breach of any kind. “Dear Mr. Heartland. This is ridicules.”


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.