Orchestrated
Target: 40M card accounts may be breached
Thursday - 12/19/2013, 1:10pm ET
ANNE D'INNOCENZIO
AP Business Writers
Target says about 40 million
credit and debit card accounts may be affected by a data breach that occurred
just as the holiday shopping season shifted into high gear.
The chain said customers who made
purchases by swiping their cards at terminals in its U.S. stores between Nov. 27 and
Dec. 15 may have had their accounts exposed. The stolen data includes customer
names, credit and debit card numbers, card expiration dates and the three-digit
security codes located on the backs of cards.
The data breach did not affect
online purchases, the company said.
The stolen information included Target store brand cards and major card
brands such as Visa and MasterCard.
"Target's first priority is
preserving the trust of our guests and we have moved swiftly to address this
issue, so guests can shop with confidence. We regret any inconvenience this may
cause," Chairman, President and CEO Gregg Steinhafel said in a statement
Thursday.
The Minneapolis company said it immediately told
authorities and financial institutions once it became aware of the breach and
that it is teaming with a third-party forensics firm to investigate and prevent
future breaches. The company said it is putting all "appropriate
resources" toward the issue.
Target Corp. advised customers to
check their statements carefully. Those who see suspicious charges on the cards
should report it to their credit card companies and call Target at
866-852-8680. Cases of identity theft can also be reported to law enforcement
or the Federal Trade Commission.
Even if Target shoppers haven't
noticed suspicious activity on their credit card accounts, a Target spokeswoman
said, "we encourage everyone to be vigilant."
Target hasn't disclosed exactly
how the data breach occurred, but said it has fixed the problem and credit card
holders can continue shopping at its stores.
The company has 1,797 U.S. stores and 124 in Canada.
"The fact this breach can
happen with all of their security in place is really alarming," said
Avivah Litan, a security analyst with Gartner Research.
Litan noted that companies like
Target spend millions of dollars each year on credit card security measures.
Given the company's heavy security, Litan said she believes the theft may have
been an inside job.
Target's breach comes at the
height of the holiday shopping season and threatens to scare away shoppers
worried about the safety of their personal data. The November and December
period accounts for 20 percent, on average, of total retail industry sales.
In Wednesday morning's trading,
Target's stock dipped $1.15, or 1.8 percent, to $62.40.
The incident is particularly
troublesome for Target because it has used its branded credit and debit cards
as a marketing tool to lure shoppers with a 5 percent discount.
The company said during its
earnings call in November that as of October some 20 percent of store customers
have the Target branded cards. This holiday season, Target added other
incentives to use its cards. Two days before Thanksgiving, Target.com ran a
special review sale with 25 exclusive offers, from electronics to housewares
for those who used the branded card.
As a result of these incentives,
households that activate a Target-branded card have increased their spending at
the store by about 50 percent on average, the company said.
"This is how Target is
getting more customers in the stores," said Brian Sozzi, CEO and Chief
Equities Strategist. "It's telling people to use the card. It's been a big
win. If they lose that trust, that person goes to Wal-Mart."
Target is just the latest retailer
to be hit with a data breach. TJX Cos., which runs stores such as T.J. Maxx and
Marshall's, had a breach that began in July 2005 that exposed at least 45.7
million credit and debit cards to possible fraud. The breach wasn't detected
until December 2006. In June 2009 TJX agreed to pay $9.75 million in a
settlement with multiple states related to the massive data theft but stressed
at the time that it firmly believed it did not violate any consumer protection
or data security laws.
At TJX, for at least 17 months,
one or more intruders had free rein inside TJX's computers. Without anyone
noticing, one or more intruders installed code on the discount retailer's
systems to methodically unearth, collect and transmit account data from the
millions of credit card and debit cards.
An even larger hack hit Sony in
2011. It had to rebuild trust among PlayStation Network gamers after hackers
compromised personal information including credit card data on more than 100
million user accounts.
Greg Melich, an analyst at ISI International Strategy & Investment
Group, wrote in a note published Thursday that Target's most important goal
should be to maintain "customer trust and therefore longer-term
loyalty."
Litan said she doubts the breach
will have much of an effect on Target's sales, noting that TJX launched sales
promotions immediately following the news of its breach. The promotions
increased sales.
"People care more about
discounts than security," Litan said.
International Strategy & Investment
Group (ISI)
Thomas D.
Gallagher was a senior managing director for the International Strategy & Investment Group (ISI), and is a principal
at the Scowcroft Group.
Note: Daniel B. Poneman
was a principal at the Scowcroft Group,
and is the deputy secretary at the U.S.
Department of Energy for the Barack
Obama administration.
Brent
Scowcroft is the president & founder for the Scowcroft Group, and the chair, international advisory board for
the Atlantic Council of the United States
(think tank).
Eric D.K. Melby
is a founding member of the Scowcroft
Group, and a director at the Atlantic
Council of the United States
(think tank).
Franklin C.
Miller is a principal at the Scowcroft
Group, and a director at the Atlantic
Council of the United States
(think tank).
Virginia A.
Mulberger is a founding principal for the Scowcroft Group, and a director at the Atlantic Council of the United
States (think tank).
Arnold
Kanter was a founding principal for the Scowcroft Group, and a director at the Atlantic Council of the United
States (think tank).
Open
Society Foundations was a funder for the Atlantic Council of the United
States (think tank).
George
Soros is the founder & chairman for the Open Society Foundations, the founder for Soros Fund Management, the chairman for the Foundation to Promote Open Society, and Mark Schwartz was his senior adviser.
Foundation
to Promote Open Society was a funder for the Brookings Institution (think tank), and the Aspen Institute (think tank).
Mark
Schwartz was George Soros’s senior
adviser, the president & CEO for Soros
Fund Management, and is a director at MasterCard
Incorporated.
Silver
Lake Kraftwerk Fund is a partner with Soros
Fund Management, and a fund for Silver Lake.
John
A. Swainson was a senior adviser at Silver Lake,
and is a director at Visa Inc.
Suzanne Nora
Johnson is a director at Visa Inc.,
and a trustee at the Brookings
Institution (think tank).
Thomas J.
Campbell was a director at Visa Inc.,
and is the dean for the Haas School of
Business.
Richard
C. Blum is a board member for the Haas
School of Business, married to Senator Dianne
Feinstein, and an honorary trustee at the Brookings Institution (think tank).
Mayer
Brown was the lobby firm for Visa
Inc.
William M. Daley
Professional career
Daley returned to the practice of
law, as a partner with the firm Mayer Brown (then Mayer, Brown & Platt)
from 1993 to 1997.
William
M. Daley was a partner at Mayer
Brown, the chief of staff for the Barack
Obama administration, and is a member of the Commercial Club of Chicago.
Commercial Club of Chicago,
Members Directory A-Z (Past Research)
Tuesday, December 17, 2013
Robert
A. Helman is a member of the Commercial
Club of Chicago, a partner at Mayer
Brown, and was an honorary trustee at the Brookings Institution (think tank).
Cyrus F.
Freidheim Jr. is a member of the Commercial
Club of Chicago, and an honorary trustee at the Brookings Institution (think tank).
James A. Johnson is an honorary trustee
at the Brookings Institution (think tank), a director at the Target Corporation, a member of the
American Friends of Bilderberg (think tank) and a 2008 Bilderberg conference
participant (think tank).
Solomon D.
Trujillo is a director at the Target
Corporation, and was a lifetime trustee at the Aspen Institute (think tank).
James S.
Crown is a trustee at the Aspen Institute (think tank), and a member
of the Commercial Club of Chicago.
Lester Crown
is a member of the Commercial Club of Chicago, and was a lifetime
trustee at the Aspen Institute (think tank).
Henry A. Kissinger was a lifetime
trustee at the Aspen Institute (think tank), is a director at the Atlantic
Council of the United States (think tank), a director at the American
Friends of Bilderberg (think tank), a friend of Brent Scowcroft, and a 2008 Bilderberg conference
participant (think tank).
Brent
Scowcroft is a friend of Henry A.
Kissinger, the chair, international advisory board for the Atlantic Council of the United States
(think tank), and the president & founder for the Scowcroft Group.
Thomas D.
Gallagher is a principal at the Scowcroft
Group, and was a senior managing director for the International Strategy & Investment Group (ISI).
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