What can retailers do after the Home Depot hack?

Dan Gorenstein Sep 9, 2014
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What can retailers do after the Home Depot hack?

Dan Gorenstein Sep 9, 2014
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Retailers are increasingly seen as vulnerable to hackers. The cyberattack on Home Depot may be the largest data breach in history, and attacks have been made on Neiman Marcus, Target and Goodwill stores, just to name a few.

Remember back in the day when online shopping gave people the jitters? Those days, says Matthew Prince of CloudFlare, are over.

“I feel more safe in putting my credit card into an online form than I do handing it to a waiter at a restaurant,” he says.

Many of us don’t understand, Prince says, that the cash register is more than a point-of-sale device where we swipe our credit card. It is actually a computer.

In this Home Depot attack, and other similar ones, hackers are breaking in to that software system and stealing our credit and debit card information.

Lillian Ablon, a researcher with Rand, says, right now, the attackers are at least one step in front of the merchants.

“We’re in the golden age of cyber where there are still a lot of holes, still a lot of gaps,” she says.

One of the gaping gaps? Our sale information.

Forrester Research analyst John Kindervag says it’s too easy to grab that information when it enters the store computers. There’s a simple fix, though — encryption.

“That technology actually exists off the shelf. It just has to be purchased,” he says.

Of course, the magic word is “purchased.”

“Retail is a low-margin, cheap business. So any time they have to spend money, they don’t want to do it,” says Kindervag.

In many cases, stores would need to upgrade hardware and software; for the largest companies, we are talking millions of dollars in equipment investments. 

Kindervag says the other issue is encrypting this data could stifle other lines of business for retailers.

“It will potentially mean they have to do business intelligence and marketing intelligence in totally different ways, and that will be a disruption of their decades-old business model,” he says.

Kindervag predicts retailers would shape up if consumers started shopping with competitors who take data breaches seriously.

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