NEW YORK (AP) - With less than a week until Christmas, a real-life
Grinch has stolen the credit and debit card information of about 40
million Target shoppers.
Target says anyone who made purchases by swiping 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 stolen information included Target store brand cards and major card brands such as Visa and MasterCard.
The data breach did not affect online purchases, the company said.
Here are some answers to the most common questions about the theft:
Q: I shopped at Target during that time. What should I do?
A: Check your credit card statements carefully. If you see suspicious
charges, report the activity to your credit card companies and call
Target at 866-852-8680. You can report cases of identity theft to law
enforcement or the Federal Trade Commission.
You can get more information about identity theft on the FTC's website at www.consumer.gov/idtheft, or by calling the FTC, at (877) IDTHEFT (438-4338).
Q: How did the breach occur?
A: Target isn't saying how it happened. Industry experts note that
companies such as Target spend millions of dollars each year on credit
card security, making a theft of this magnitude particularly alarming.
Avivah Litan, a security analyst with Gartner Research, says given
all the security, she believes the breach may have been an inside job.
Litan says Target's breach suggests that current security standards aren't working.
"It's really a wake-up call to the banking industry, but they never seem to wake up," she said.
James Lyne, global head of security research for the computer
security firm Sophos, says something clearly went wrong with Target's
"Forty million cards stolen really shows a substantial security failure," he says. "This shouldn't have happened."
Q: Who pays if there are fraudulent charges on my account?
A: The good news is in most cases consumers aren't on the hook for fraudulent charges.
Credit card companies are often able to flag the charges before they
go through and shutdown your card. If that doesn't happen, the card
issuer will generally strip charges you claim are fraudulent off your
And since the fraud has been tied to Target, it'll be the retailer
that ultimately compensates the banks and credit card companies.
Q: How much is this going to cost Target?
A: It's too soon to tell. In addition to the fraud-related losses,
banks may start charging Target a higher merchant discount rate, which
is the amount retailers pay banks for providing debit and credit card
services. While the percentage difference may be tiny, it could result
in steep costs given the volume of transactions Target does, Litan said.
Litan added that the company could also face class action lawsuits
from consumers, though most of them will be meritless, and fines from
federal agencies. When combined, the costs of the breach could be so
steep that they actually prompt Target to raise prices., she said.
"The real winner in this is Wal-Mart," she said.
Q: How can I protect myself?
A: Like they say, cash is king. You can only lose what you're
carrying, though admittedly many people may not feel safe walking around
with a wad of bills in their pocket.
As stated before, credit card companies don't hold consumers liable
for charges they don't make. Usually the worst thing consumers have to
deal with is the hassle of getting a new credit card.
And the paper trail generated through credit card transactions can
often make it easier do things such as return items you've purchased, or
keep track of work-related expenses.
It's worth noting that while debit cards offer many of the same perks
as credit cards, without the worry that you'll spend more than what's
in your bank account, they often don't come with the same kind fraud
As a result, those card holders may have a tougher time getting their money back if their number is stolen.
Q: How can future breaches be prevented?
A: Litan said an easy way to prevent fraud would be to eliminate the
use of easily cloned magnetic strip cards and upgrade to the kind of
microchip technology used in most other parts of the world.
But she said that banks have pushed back against the idea, because
the microchip cards costs significantly more than the magnetic strip
version and changing over all of the country's ATMs could drive the
total costs into the billions of dollars.
Lyne said it's unclear if the use of microchip cards would have
prevented the Target breach, since it's unclear how it happened, but
that it certainly wouldn't hurt.
Q: Why is the Secret Service investigating?
A: While it's most famous for protecting the president, the Secret
Service also is responsible for protecting the nation's financial
infrastructure and payment systems. As a result, it has broad
jurisdiction over a wide variety of financial crimes. It isn't uncommon
for the agency to investigate major thefts involving credit card
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