Home > 2014 > Identity Theft

5 Lessons From the Latest Data Breaches

Advertiser Disclosure Comments 0 Comments

Son of a breach, two more security incidents are making headlines: Coca-Cola and Michaels Stores.

That means we’re looking at four major data loss events in the past few weeks alone—three at national retailers, including Target and Neiman Marcus.

Companies can learn from how other organizations respond to a data breach, for better or worse. Here are key takeaways for businesses that want to protect themselves from similar disasters.

1.Get the Word Out, Pronto

Communicate the problem quickly and clearly. Don’t follow Target’s footsteps. Hackers stole confidential data of up to 110 million customers who shopped at stores from Nov. 27 to Dec. 15, 2013. But instead of proactively announcing the breach, Target got scooped by respected security blogger Brian Krebs, who broke the story on Dec. 18. On the same day, Target CEO Gregg Steinhafel issued the statement that “we are pleased with Target’s holiday performance.” The company confirmed the breach only after the U.S. Secret Service and American Express released their own investigations.

Michaels, on the other hand, is taking the opposite tack. Though an investigation is still underway, the arts-and-crafts retailer confirmed it was investigating a potential breach immediately after Krebs broke the news. Michaels said it wanted to notify customers “in light of the widely reported criminal efforts to penetrate the data systems of U.S. retailers.” The company may avoid PR waves by slipping this news in quickly while the Target and Neiman Marcus breaches are still being digested. “Michaels could be taking a page from the Heartland playbook,” said Eduard Goodman, chief privacy officer at IDentity Theft 911, referring to the payment systems company’s breach announcement on the day of President Obama’s 2009 inauguration.

2. Send Clear Messages

Consider communications to potential victims with great care. Target made yet another egregious error by notifying customers of the breach via poorly considered, suspicious-looking email communications. The email included a suspicious sender address: TargetNews@target.bfi0.com instead of @target.com. Plus, it directed users to click on a link for additional details on the monitoring. The bizarre “bfi0” in the subdomain suggested nothing official to differentiate it from phishing and malware-laden emails sent by scammers following such corporate data breaches; scammers often make subtle tweaks. Many people who received the email didn’t actually shop at Target during the compromised dates, which made the email appear even more like a scam. Because the notice was delivered via email and probably due to the fact that it originated from a suspicious email address the original message ended up in many junk mailboxes.

3. Have an Information Security Policy—and Use It

In Coca-Cola’s case, proper security controls clearly weren’t in place. A former employee responsible for maintaining and disposing of computer equipment kept the old computers that contained the personal information of more than 70,000 employees, as well as corporate data. A solid information security policy would cover the handling, sanitation and disposal of sensitive data. Implementation of proper policies and controls with IT governance oversight can minimize the risk of data leakage caused by the disposal of old computer hardware.

4. Invest in Network Defenses

Hackers are working to exploit weaknesses in retailers’ point-of-service systems and networks. For example, they’re targeting weak administrative passwords used to manage POS systems remotely and finding clever ways to install malware. Retailers would do well to strengthen those POS systems and networks by 1) using strong passwords or two-factor authentication for POS administrative access and accounts, 2) updating POS software applications using the latest security patches, 3) restricting outside access to POS systems from the Internet, and 4) if it isn’t required, disallowing remote access.

5. Carefully Consider Free Credit Monitoring

When a breach involves payment card information and no Social Security numbers, companies like Target often make the mistake of offering free credit monitoring. They’re trying to reassure consumers but instead may give them a false sense of security. Credit monitoring looks at changes to a credit file that have been reported to Experian, Equifax or TransUnion. Credit monitoring does not monitor existing credit accounts. So, if a Target customer enrolls in the credit monitoring solution provided by Target, that customer would not be alerted if an existing account—in this case credit cards and payment cards—was used fraudulently. The only way for Target customers to find out if an existing credit or payment card is misused is by monitoring their payment card accounts for suspicious activity.

Finally, data breach victims should take steps to monitor their identity and  credit, and check with their providers. An insurance company, credit union or employer is probably already offering this benefit free or at a very low cost. Check with them to activate the service.

If you want a free way to monitor your credit, the Credit Report Card will update two of your credit scores for free every month.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its affiliates.

More on Identity Theft:

Image: iStock

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.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

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.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

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