Economy

60 Minutes Just Showed Us That Your Credit Card Data Is Probably Being Breached When Shopping...

December 3rd 2014

By:
ATTN: Staff

Over the last year, massive data breaches have resulted in the theft of more than 100 million credit card numbers. Most of them involved retailers like Target, which lost 40 million customer credit card numbers to hackers last year, and Home Depot, which lost 56 million.

This past Sunday, 60 Minutes reported on this phenomenon:

How much does this cost?

One cybersecurity CEO told 60 Minutes that "literally 97 percent of all companies are getting breached." 60 Minutes cites experts who estimate that these security holes led to as much as $11 billion in fraud last year in the U.S. Some say the cost is closer to $7 billion, but, even at that lower estimate, the U.S. is unique in its credit card fraud problem, accounting for 51% of worldwide credit card fraud.

It's true that your bank will generally cover the cost of a fraudulent charge that shows up on your monthly statement, but those costs eventually are passed along to customers, who pay higher fees as a result.

We have an outdated system

The U.S. is alone among its peer nations as having an increase in credit card fraud. There's a fairly obvious solution to this problem -- the U.S. relies on unsafe magnetic strips to transmit data as opposed to chip-and-PIN cards, which are more secure.

"The underlying problem is that we have cards that were designed for the 1960s, '70s and '80s," one expert told 60 Minutes. "But we now have hackers who are using 21st century tools to break in."

Cost is the reason for the delay in updating technology. Merchants will have to spend $8 billion changing from magnetic strip machines to machines that can handle chip-and-PIN. However, if the cost of fraud continues to rise, changing to chip-and-PIN suddenly looks like a good deal. Earlier this year, Target, which took some serious heat for the massive breach of its data last year, told Congress that it will spend $100 million updating its systems.

This technology is not science fiction. Worldwide, 76% of retail cashier terminals can handle chip-and-PIN. The question is whether retailers and credit card companies in the U.S. will make the investment.