Robert Siciliano discusses the Target breach that exposed 40 million credit and debit accounts. Target offered free credit monitoring and a 10% discount to affected customers. The U.S. lags behind other countries by relying on magnetic-stripe cards instead of chip-and-PIN technology.
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Target is trying to make amends over the security breach that may have affected tens of millions of customers. The company's CEO says Target will offer free credit monitoring for those people who shopped at the store between November 27th and December 15th. It will also give all customers a 10% discount on purchases this weekend. About 40 million credit and debit card accounts were compromised. The US leads all other countries in being number one in credit card card fraud. Raylin Johnson reports one reason for that is reliance on technology that dates back to the days of cassettes and 8-track tapes.
News that some 40 million Target shoppers are now vulnerable to identity theft would understandably make shoppers nervous. Target says it fixed the problem but still doesn't know how the breach happened. But these large-scale security failures are turning into regular occurrences. In 2007, TJ Maxx suffered a breach more than twice the size of Target's, and Barnes Noble's was hit just last year. But adding to all of this uneasiness is the fact that credit card fraud is more prevalent in the US than any other place in the world. One analyst says the low-tech card technology the US relies on results in an increase in high-tech fraud.
The magnetic stripe, uh, in the existing credit card based here in the US, is old school. It's antiquated. The, uh, data is in plain text, and it can be easily compromised.
This makes American shoppers extremely vulnerable. According to Nielsen, a company that tracks payment systems, the U.S. accounts for 47% of global credit card fraud. The U.S. primarily uses magnetic swipe technology on credit cards, while other countries have adopted a more sophisticated card technology.
So in Europe and Asia, also in Canada, Mexico, and Australia and other places, they're using what's called chip and PIN, which is an advanced form of credit card that requires a chip, meaning it's a small little chip like a smart chip, and it requires a PIN, and it's not easily read, and it has a lot more security and encryption.
Here's how it works. When you use a chip card, the transaction information is scrambled cryptographically. Dozens of pieces of information are being exchanged between the card and the bank. On a magnetic swipe card, the information is always there and can be easily copied with a cheap card reading device. Hackers pay a premium for stolen swipe data and use it to create counterfeit cards, and then they go on to purchase gift cards and convert the gift cards back to cash. Nilsson says the chip technology is the strongest defense against counterfeit cards. So why is chip technology used in less than 1% of cards? For one, it costs more to adopt the system, and some companies would rather wait for newer technology that relies on fingerprints. Raylan Johnson, Al Jazeera.
