Were Retailers Blamed For A Bank Breach?

Written by Evan Schuman
November 29th, 2007

Earlier this week, National Retail Federation CIO Dave Hogan was featured on the popular American news magazine 60 Minutes and made some controversial charges against Visa, namely that the world’s largest credit card company preferred fining retailers to helping them fix their security.

Visa now happens to be in the middle of its $10 billion IPO, which places them in always-fun quiet period, which is making it almost impossible for them to defend against the charges.

Although one NRF official raised the question of whether Hogan’s quotes had been taken out of context, Hogan himself this week stood by his comments and said that they had not been taken out of context, although he would have rather the show aired more of his comments. "It was part of a much longer conversation," he said.

The revenue that Visa is making from the fines from non-compliant retailers "is part of the equation," he said, adding "If Visa was serious, there are that would be taken today" including encouraging retailers to store much less sensitive credit card data.

But Hogan did raise a very interesting question about another part of the 60 Minutes piece.

In the report, Shawn Henry, an FBI agent specializing in high-tech crimes, showed an undercover agent making a buy of some credit-card information.

Correspondent Lesley Stahl narrates what then happened, as the video shows the stolen data, with identifying details hidden: "What popped up were complete files on four Americans, one of them ‘Pam,’ along with her address, her Social Security, credit card and ATM PIN. Even the answer to that security question ‘What’s your mother’s maiden name?’ was there."

Given that the piece is focused on retail data security problems, it’s logical to infer that the data shown was grabbed from a retailer’s database. But no retailer retains that level of detail, meaning the information would have almost certainly come from a bank, not a retailer, Hogan said. "It was from an issuing bank. This was an inside job," he said.

From the perspective of a consumer trying to safeguard his data and prevent being the victim of identity theft, I suppose it doesn’t make much of a difference. But for retail IT execs, do they really need an unjustified dig? After all, retail IT today offers such a wide assortment of legitimate security screwups, one would one think it wouldn’t be necessary.


Comments are closed.


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.