Evan Schuman's StorefrontBacktalk

With all of the PCI shell games around, it’s nice to find one vendor offering what seems to be a legitimate PCI insurance program: Use its package and get breached, and the vendor will reimburse some of your out-of-pocket breach costs, with a $100,000 cap. The program, from a company called BHI SecureConnect (soon to be called just SecureConnect), is designed for the smallest of retail chains. But if the vendor can make this insurance concept work, it has definite potential.

To qualify for the money, a merchant doesn’t have to be PCI compliant (although that’s always nice). Indeed, it doesn’t even have to experience a real breach, said SecureConnect Director of Marketing Kristyan Mjolsnes. For example, if the chain’s bank or a card brand suspects a breach and insists the chain pay for a forensic probe, that would be covered, she said. If the chain gets nervous and wants to triple-check on its own, however, that would not be covered, Mjolsnes added, reasonably enough.

Let’s be realistic. The number of retailers—especially among the smallest chains and particularly one-location shops—that are going to get breached is a small minority. That’s true in the same way that most houses—even in the worst neighborhoods—won’t be burglarized. If 45 percent of those houses were attacked during a particular year, it would feel like an extremely intense crimewave (and it would be). But it would also be true that most of the homes were not attacked.

Of the small retailers out there, how many will get breached? Of that number, how many will sign up for this program with this vendor? The odds are certainly in the vendor’s favor that it will make a lot more in new sales than it will ever have to pay out. From an insurance business-model perspective, the program is a very good gamble.

And yet, SecureConnect certainly has the sound of a vendor that is truly confident in its services. Statistics being what they are, even the weakest security vendor would likely fare well being dealt this hand.

The SecureConnect folk, though, couldn’t resist making a popular data breach reach. (A breach reach?). On its site: “No SecureConnect customer has ever experienced a data breach.” The only problem with the claim is that there is no way to know if it’s true. Had SecureConnect at least limited its statement to something like, “No SecureConnect customer—while using SecureConnect products—has ever been breached, to the best of our knowledge,” it might have been true. But SecureConnect extended its claim to the complete history of every company that has retained its services. Now think about it, is a new customer really going to volunteer that their employer was breached 20 years ago, when a greedy accountant sold customer data to a rival?

Perhaps that thought is a nitpick. But this isn’t: Many breached retailers don’t know about their breach for months and sometimes years. Chains often aren’t aware of a breach until one of the card brands or a bank or a Secret Service agent brings it to their attention. Quite a few retailers—especially smaller ones that are not particularly anal about log analysis—will never learn they have been breached. Clearly, if retailers don’t even know, their vendors certainly couldn’t possible know. In short, to state that no customer has ever experienced a data breach is absurd.

The Breach Protection Program also pledges to pay “up to $100,000 in coverage for a data breach and the costs associated with it.” With that phrase, SecureConnect is indicating that the payment covers the costs of the breach in addition to paying for the breach itself. Presumably, the vendor meant to say “as much as $100,000 to cover the costs associated with a data breach.”