Target is a Target

The name and bullseye logo of the retail chain Target seemed befitting last week when the company announced it had suffered a major hit by data thieves. Criminals stole credit and debit card information from approximately 40 thousand customers who had shopped at Target within the previous three weeks. The thieves may have gained access to Target's network of credit card readers by infiltrating the system with malware. The incident appears very similar to a hacking event that occurred at T.J. Maxx in 2007.

Target probably has cyber liability insurance, which should cover some of the costs the company will incur as it attempts to recover from the theft. Still, the event will damage Target's reputation. Customers whose data was stolen are angry that their data wasn't better protected. Now they have to worry about fraudulent charges. Some banks are canceling and reissuing the victims' credit or debit cards.

I have not experienced a theft of credit card information but I was the target of a bank scam a few years ago. Nothing was stolen but my husband and I had to close our bank accounts and open new ones. This was a hassle, particularly since the bank no longer offered the type of checking account we had prior to the scam.

One aspect of the Target data theft that is particularly troubling is that Target did not discover the theft itself. According to Yahoo, Target was alerted to the  problem by credit card processors. The processors noticed an unusually large number of fraudulent transactions involving credit cards that had been used at Target. If the processors hadn't been so vigilant, the data theft might have continued for some time.

Because data thefts from large companies like Target are major news events, one might get the idea that data thieves don't target small businesses. Nothing could be further from the truth. Small businesses are generally more vulnerable to hackers than large ones because small firms tend to have fewer protections against cyber risks. The National Federation of Independent Businesses (NFIB) suggests three basic steps for protecting your business against data breaches:

1. Establish secure policies;
2. Stay current with technology; and
3. Get smart about hiring

The Target incident may have a golden lining. It may convince U.S. banks and retailers that it's time to switch from old credit card technology using magnetic strips to current technology based on computer chips. Credit and debit cards with computer chips are widely used in Europe and Canada. They are harder to tamper with than magnetic strips. Some retailers worry that computer chips won't be enough and that credit cards should have PIN numbers as well. While nothing will prevent theft completely, it's clear that the magnetic strips aren't doing an adequate job.