Banks, Retailers Point Fingers Over Target Hack

The blame game over the massive breach has begun.

A Target parking lot is empty. (iStock)
Andrea K. Gingerich
Jan. 22, 2014, 12:22 p.m.

Lob­by­ing as­so­ci­ations rep­res­ent­ing the re­tail and bank­ing in­dus­tries are point­ing fin­gers over who’s to blame over the breach last month that ex­posed the cred­it card num­bers of as many as 110 mil­lion Tar­get cus­tom­ers.

The Na­tion­al Re­tail Fed­er­a­tion, which rep­res­ents Tar­get, sent a let­ter on Tues­day to mem­bers of Con­gress, claim­ing that banks have failed to up­grade to the most se­cure tech­no­logy for pro­cessing trans­ac­tions in the U.S.

“For years, banks have con­tin­ued to is­sue fraud-prone mag­net­ic stripe cards to U.S. cus­tom­ers, put­ting sens­it­ive fin­an­cial in­form­a­tion at risk while sim­ul­tan­eously tout­ing the se­cur­ity be­ne­fits of next gen­er­a­tion ‘PIN and Chip’ card tech­no­logy for cus­tom­ers in Europe and dozens of oth­er mar­kets,” Mat­thew Shaw, CEO of the Na­tion­al Re­tail Fed­er­a­tion, wrote in the let­ter.

But the bank­ing in­dustry isn’t let­ting that ac­cus­a­tion slide. The In­de­pend­ent Com­munity Bankers of Amer­ica fired back at the re­tail group with a state­ment on Wed­nes­day.

“The NRF should fo­cus its at­ten­tion on re­spond­ing to the harm that se­cur­ity breaches at sev­er­al re­tail­ers have done to con­sumers and their fin­an­cial in­sti­tu­tions rather than hurl­ing false al­leg­a­tions blam­ing the bank­ing in­dustry for these re­tail breaches,” Cam­den Fine, the CEO of the In­de­pend­ent Com­munity Bankers of Amer­ica, said.

“Re­tail­ers and their pro­cessors — not banks — are re­spons­ible for the sys­tems in their stores that pro­cess pay­ment cards.”

Fine said he hopes the massive breaches at Tar­get and Nei­man Mar­cus will spur re­tail­ers to ad­opt bet­ter se­cur­ity pro­ced­ures.

The Tar­get breach was likely the work of a soph­ist­ic­ated ring of hack­ers, pos­sibly based in Rus­sia, ac­cord­ing to a re­port re­leased last week by the cy­ber­se­cur­ity firm iSight, which worked with the Home­land Se­cur­ity De­part­ment. The hack­ers gained ac­cess to the cred­it card num­bers by in­ject­ing a vir­us in­to Tar­get’s card read­ers, the re­port found.

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