Target data breach

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Impact of Data Breach for Target

An estimated 1.1M customers have had their personal and financial information compromised, thanks to the security breach via the malware now known as BlackPOS at Target, Neiman Marcus, Michael’s, and potentially other retailers.  That number could climb as additional retailers come forward.

The impact could be long-reaching for consumers, merchants, and financial institutions.  Target may be on the hook for fines anywhere from $400M-1B, not to mention potential lost revenue as consumer confidence wanes and usage of the Target labeled cards decreases.  The consumer confidence issue is something that could impact other retailers, too.  As fears of privacy mount, consumers are less likely to make purchases in stores, online, and via mobile devices.  Financial institutions are already bearing a brunt of the cost as they are reissuing cards, to the tune of $10 per card reissued.  So far, about 15.1M cards have been reissued for a cost of $150M.  They also stand to lose some revenue as consumers revert to cash for more purchases and save their credit cards for higher ticket items only.

Every player has skin in the game here, but one solution that is being touted by the card associations as providing much more security for brick and mortar stores could actually open up online and CNP merchants to additional fraud.  EMV (Europay,MasterCard, and Visa) chip technology (also called chip and PIN) has been in use in Europe and other industrialized nations for more than 20 years.  While it has proven effective at reducing fraud at the point of sale, CNP fraud has increased with the adoption of EMV.  Fraudsters are more able to get fraudulent transactions through in a card not present space with chip cards than they are in person, thereby driving […]

By | 2014-02-03T18:44:59+00:00 February 3rd, 2014|Categories: Blog Post|Tags: , , , |0 Comments

More Fallout from the Target and Neiman Marcus Data Breaches

As the numbers of people and retailers hit by the data breach at Target, Neiman Marcus, and likely other retailers who have not yet come forward are increasing, credit card issuers are tightening the reins to help mitigate the risk of fraud.  JP Morgan Chase recently issued a statement to their customers informing them of lower daily limits for charges on certain cards.  If a card reaches the daily limit, the decline code will come back as a  Do Not Honor decline code.  Recycling strategies for these codes during this time could change.  Since the limit will reset the next day, that account will likely be approved the following morning.

Tracking decline recycling and recovery success is going to be increasingly important in coming months.  Flexibility to change the rules will also be key for recurring billing CNP merchants.  As the investigation into the Target data breach continues, and the affected population increases, it is very likely other banks will also implement temporary credit limits or other fraud filters that could impact your recurring business.

Stay tuned for updates on best practices as the landscape shifts.

 

By | 2014-01-20T20:44:13+00:00 January 20th, 2014|Categories: Blog Post|Tags: , , |0 Comments