Home > News > Congress Looks for Answers on Big Data Breaches

Comments 0 Comments

Americans worried about their credit card security heard for the first time Tuesday from executives at hacked retailers, and their message was two-fold. First, they’re sorry. And second, the attacks on computers at Target, Neiman Marcus, and many other retailers are different than any other they’ve faced.

Target Chief Financial Officer John Mulligan and Neiman Marcus Chief Information Officer Michael Kingston testified before the Senate Judiciary Committee in front of a packed hearing room — some frustrated would-be observers were left out in the hallway.  The hearing was the second of three to be held by Congress this week that will examine the ongoing massive credit card heists.  On Monday, the payments industry spoke before the Senate Banking Committee; on Tuesday, retailers had their turn.

Target’s Mulligan began by saying his firm was “deeply sorry…we know this breach has shaken (consumers’) confidence.” He offered a brief accounting of the attack, but provided no new details.

Kingston didn’t offer many insights into the still-burning questions around the hacks — who did it, and how. But he did try to cast the retailers as victims of an attack that few, if any, companies could have withstood.

“No system — no matter how sophisticated — is completely immune from cyber attack,” Kingston told the committee. The malware used “had a zero percent anti-virus detection rate.”

A Safer System?

Much of the hearing was spent discussing the pros and cons — mostly, the pros — of switching to smarter credit cards with embedded security chips, essentially copying the so-called EMV system used in Europe. Target said it planned to spend $100 million to upgrade its systems and make them chip-ready.

There is a billion-dollar chicken-and-egg question surrounding the upgrade, however. Chip-enabled card readers at stores are useless unless banks issue new cards with embedded chips; and those cards are useless to fight fraud unless retailers have the chip card readers.

“To prevent this from happening again, none of us can go it alone. We need to work together,” Mulligan said.

It’s unclear whether retailers and banks will have an easy time with that, however. Banks had earlier gone on the offensive, with one industry group publicly saying that retailers often don’t even comply with today’s less arduous standards.

“Nearly every retailer security breach in recent memory has revealed some violation of industry security agreements,” the Independent Community Bankers association said last month, according to the Associated Press. “In some cases, retailers haven’t even had technology in place to alert them to the breach intrusion, and third parties like banks have had to notify the retailers that their information has been compromised.”

Talk of Tougher Laws

While speaking to banking officials on Monday, Senate banking committee members wondered out loud about what kind of federal legislation they could pass that would impact cybersecurity and credit cards. Sen. Elizabeth Warren (D-Mass.) said she favored giving new powers to the Federal Trade Commission so it could issue fines or take other punitive measures against firms that fail to protect consumer data.

“This is a real problem that the FTC’s enforcement authority in this area is so limited,” Warren said Monday, according to Bloomberg. “Data-security problems aren’t going away on their own so Congress really needs to consider whether to strengthen the FTC’s hand.”

The most likely action Congress can take will be passage of a federal law requiring firms that lose data to tell consumers. Currently, only state laws and certain industry-specific rules — such as health care  — have such requirements.  Congress has been considering such legislation for years. With consumers actually shying away from Target and potentially other retailers because of the attacks, doing something to restore trust is essential, said Senator Patrick Leahy (D-Vt.), chair of the committee.

“Public confidence is crucial to our economy. If consumers lose faith in business’ ability to protect their personal information, our economic recovery will falter,” he said.

Kingston and Mulligan are scheduled to testify again on Wednesday in front of the House Commerce Committee.

More on Identity Theft:

Image: Alexey Arkhipov

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team