Target details data theft in front of Senate panel

  • Article by: JIM SPENCER , Star Tribune
  • Updated: February 4, 2014 - 10:39 PM

Company accelerates its plans to change to chip-enabled smart card

– A top Target Corp. executive said Tuesday that a desire to provide accurate information led the retailer to wait several days before telling the public about a data breach that affected up to 110 million customers.

Appearing on Capitol Hill to explain one of the biggest heists of computerized data in American history, chief financial officer John Mulligan described a hectic week between Dec. 12, when Target first heard that its computer system may have been hacked, and the time it told customers about the crime.

The Minneapolis-based company first took three days to confirm the presence of malware, then removed it from “virtually all registers in our U.S. stores,” Mulligan said. Then Target told payment processors and card networks about the trouble, fixed 25 more registers and prepared its employees for the onslaught of inquiries it expected when it let shoppers know of the breach.

Finally, on Dec. 19, seven days after hearing from the U.S. Justice Department about “suspicious activity involving payment cards,” Target announced the data breach publicly.

“Our view is there’s a need for a balance to be struck,” Mulligan told members of the Senate Judiciary Committee. Customers had to be told, Mulligan said, but they also deserved accurate information as they tried to protect themselves.

Some consumer advocates have suggested that Target could have moved faster to let customers know what happened.

Sen. Dianne Feinstein, D-Calif., stressed the need to reach customers individually in addition to making public announcements. “Public notification is vague,” Feinstein said.

Target initially said the breach potentially exposed card information from 40 million people who bought something in one of the company’s nearly 1,800 U.S. stores between Nov. 27 and Dec. 15. CEO Gregg Steinhafel told CNBC he learned of the breach on Dec. 15.

In early January, the company said personal information such as addresses and phone numbers for as many as 70 million customers may also have been compromised.

Mulligan’s testimony and the testimony of six others revealed a broad national vulnerability to cyberthieves that has to be addressed legislatively, said Minnesota Sens. Amy Klobuchar and Al Franken, both members of the Judiciary Committee.

“When we push cyberbills, we get push back [from industry and technology groups],” Klobuchar said. “We have learned from this data breach that we can no longer do nothing.”

Franken called cyberattacks “systemic” at a time when the federal government imposes no cybersecurity standards or cybertheft reporting requirements.

“We have to update our card technology,” Franken said.

Franken asked Mulligan about published reports that Target’s cybersecurity system was “astonishingly” weak.

Mulligan disagreed, telling Franken that the company has spent “hundreds of millions of dollars” on a multilayered consumer protection protocol.

Still, Target had no idea its computers had been hacked until the Justice Department called, Mulligan acknowledged. He promised an “end-to-end review” and “security enhancements.”

Chip technology coming

Among them is a plan to spend $100 million upgrading anti-theft technology used in the company’s proprietary credit and discount cards called Redcards.

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  • Taking the oath at the start of Tuesday’s Senate Judiciary Committee hearing are, from left, Target chief financial officer John Mulligan, Michael Kingston of Neiman Marcus, Delara Derakhshani from the Consumers Union and Symantec’s Fran Rosch.

  • FILE - In this Jan. 18, 2008 file photo, a customer signs his credit card receipt at a Target store in Tallahassee, Fla.

  • John J. Mulligan, executive Vice President and Chief Financial Office of the Target Corporation, listens on Capitol Hill in Washington, Tuesday, Feb. 4, 2014, while testifying before the Senate Judiciary Committee hearing on data breaches and combating cybercrime .

  • SECURITY MEASURES

    Since disclosing a large data breach late last year, Target says it has taken several steps to protect customers:

    • Free credit monitoring for a year

    • New, reissued Target credit or debit cards for anyone who asks

    • Zero liability for fraudulent charges arising from the breach

    • New card protection technology by early 2015

    From discovery

    to disclosure

    Nearly a week passed between the time Target learned of a large security breach and the time it revealed it to the public.

    Evening of Dec. 12: Target is notified by the U.S. Justice Department of suspicious activity involving payment cards used at its stores. Target begins internal investigation.

    Dec. 13: Target meets with the Justice Department and the Secret Service.

    Dec. 14: Target hires an independent team of experts to lead a forensic investigation.

    Dec. 15: Target confirms the attack and removes all known malware from registers in U.S. stores.

    Dec. 16-17: The company begins notifying payment processors and card networks.

    Dec. 18: Target discovers malware on about 25 additional registers and removes the malware immediately.

    Dec. 19: Target announces the breach publicly.

    Source: Target Corp.

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