CardTrak.com has been monitoring the now 70+ million customers the Target data breach has affected and what it will ultimately mean for them and the payments industry. The latest fraud numbers tells us that there doesn’t appear to be any large scale increases as of yet. In fact, CardTrak is seeing fraud reporting at the same rate as prior to the data breach. This does not mean however, that there won’t be any in the future.
So why has there been no large scale reports?
The value of stolen credit card and personal information is directly affected by its ability to be sold and used, hopefully undetected. However, with all the media coverage, Target’s swift admission of the theft, disclosure of information, monitoring of accounts by banks and finally people, this stolen data has lost some immediate value. All consumers, whether they shop at Target or not, should watch their credit and bank accounts always looking for even small fraudulent transactions. Keep in mind its easier to run 100,000 fraudulent transactions at $10 than running 100 at $1,000. Many banks are using the Target breach as a way to build customer loyalty and trust. Chase was limiting transaction size while Regions Bank sent out notices to those account holders who had used their cards at Target, informing them they were monitoring their accounts for questionable transactions. Some banks have even taken a step further in closing and reissuing cards that may have been compromised.
In recent years, banks have given customers more tools than ever to help monitor accounts. Many consumers monitor their transactions daily on their smart phones, even getting text alerts for transactions in almost real time. All these tools help manage and stop fraud before it gets to far out of control.
Fraud Breeds Fraud
Target is keeping everyone up to date on their findings and offering consumers free credit reports, monitoring and even identity insurance. Even with all the right steps, the eventual damages inflicted from this breach are going to be many times worse than will ever be reported. How is this so? In Target’s press release they stated “… where Target has an email address, the Company will attempt to contact affected guests. This communication will be informational, including tips to guard against consumer scams. Target will not ask those guests to provide any personal information as part of that communication. In addition, guests can find the tips on our website.”
Unfortunately, many people will fall victim to the next wave of scammers, and Target will not be able to do anything about it. Soon there will be emails, phone calls and letters that are inevitability going to follow, asking people and phishing for personal information so that they can be “helped to avoid fraudulent charges”. This secondary wave of scammers will, in many cases, cause substantial damage, more than we will be able to monitor. To find out more about the current scams and how to avoid them visit https://cardtrak.com/scam-alerts/
Why The Target Breach Will Change The Payments Industry
The magnetic stripe technology that is used for most payment cards is simply out dated. Criminals can steal your data and load this information back onto another magnetic strip card making in person fraudulent transactions possible. There are alternatives in securing your card and transactions including EMV or Europay, MasterCard and Visa chips. Adding this additional encryption on the chip makes it nearly impossible for criminals to duplicate the card. There are hurdles that seemed too great for the industry to overcome. First, the replacing of over 1.34 billion credit and debit cards in the market today, since less than 1% of U.S. cards are currently EMV-chipped. Second there are over 10.2 million credit card readers in retail stores that would need to be replaced not mentioning ATMs, and bank authorization systems. In the past it was always less expensive to absorb the fraud losses than invest in such a large scale change to the industry. Target may have just provided enough incentive for needed changes in the payments industry to finally take place.