Credit and Debit Card Ratings

Potential Security Breach at Michaels Stores

As if fierce competition to capture the loyalty and dollars of America’s consumers wasn’t enough of a challenge, it now seems that big retailers also face an ongoing threat from cyber criminals. On January 25th, Michaels Stores, Inc., the Irving, Texas-based arts and crafts chain announced that it was investigating the possibility that it had experienced a data security attack.

In a statement, the company said that it was working with federal law enforcement officials and third-party data security professionals to determine whether an attack had occurred and, if it had, to what extent customer payment information was compromised. “We are concerned there may have been a data security attack on Michaels that may have affected our customers’ payment card information and we are taking aggressive action to determine the nature and scope of the issue,” said Chuck Rubin, CEO of Michaels. “While we have not confirmed a compromise to our systems, we believe it is in the best interest of our customers to alert them to this potential issue so they can take steps to protect themselves, for example, by reviewing their payment card account statements for unauthorized charges.”

While not speculating on the possible extent of the data theft, Michaels said it would provide updates on its website as investigations continue. If a cyber attack on Michaels is confirmed, it will be just the latest in a string of high profile data thefts directed at national retailers. Late last year, Target had a security breach and revealed that the names, mailing addresses, phone numbers and email addresses of as many as 110 million of its customers had been obtained by criminals during the height of the holiday shopping season.

Earlier this year Neiman Marcus also confirmed that as many as one million of its customers may have had their card payment information stolen. According to an article in The New York Times, the attacks on both Neiman Marcus and Target involved the installation of malware on the companies’ computer systems, which then fed card information to servers controlled by the criminals.  The Times also reported that the attacks on Target, Neiman Marcus and, if it is confirmed, Michaels, are believed to be the work of the same group of Eastern European criminals. The paper reported that the attacks might be part of a larger effort that could involve as many as six other retail companies.

Author: Chris Warren

  • Potential Security Breach at Michaels Stores

    Potential Security Breach at Michaels Stores

    As if fierce competition to capture the loyalty and dollars of America’s consumers wasn’t enough of a challenge, it now seems that big retailers also face an ongoing threat from cyber criminals. On January 25th, Michaels Stores, Inc., the Irving, Texas-based arts and crafts chain announced that it was investigating the possibility that it had experienced a data security attack.

    In a statement, the company said that it was working with federal law enforcement officials and third-party data security professionals to determine whether an attack had occurred and, if it had, to what extent customer payment information was compromised. “We are concerned there may have been a data security attack on Michaels that may have affected our customers’ payment card information and we are taking aggressive action to determine the nature and scope of the issue,” said Chuck Rubin, CEO of Michaels. “While we have not confirmed a compromise to our systems, we believe it is in the best interest of our customers to alert them to this potential issue so they can take steps to protect themselves, for example, by reviewing their payment card account statements for unauthorized charges.”

    While not speculating on the possible extent of the data theft, Michaels said it would provide updates on its website as investigations continue. If a cyber attack on Michaels is confirmed, it will be just the latest in a string of high profile data thefts directed at national retailers. Late last year, Target had a security breach and revealed that the names, mailing addresses, phone numbers and email addresses of as many as 110 million of its customers had been obtained by criminals during the height of the holiday shopping season.

    Earlier this year Neiman Marcus also confirmed that as many as one million of its customers may have had their card payment information stolen. According to an article in The New York Times, the attacks on both Neiman Marcus and Target involved the installation of malware on the companies’ computer systems, which then fed card information to servers controlled by the criminals.  The Times also reported that the attacks on Target, Neiman Marcus and, if it is confirmed, Michaels, are believed to be the work of the same group of Eastern European criminals. The paper reported that the attacks might be part of a larger effort that could involve as many as six other retail companies.

  • Banks Sponsor Prepaid Debit Cards

    Banks Sponsor Prepaid Debit Cards

    The recent announcement about wireless carrier T-Mobile’s new prepaid debit card has highlighted the popularity of this still relatively new financial product among banks. According to a recent article in The Washington Post, banks are increasingly excited about the prospect of teaming up with retailers like T-Mobile to offer prepaid debit cards.

    The reason? Money, of course. “The cards are attractive because they are exempt from an amendment in Dodd-Frank that restricts the amount banks can earn from debit and credit card fees,” writes Post reporter, Danielle Douglas. It’s also a matter of simple popularity. Indeed, according to data compiled by the trade journal Nilson Report consumers made nearly 3 billion prepaid Visa and MasterCard transactions totaling almost $100 billion in 2012, a spike of 19 percent from the year before. With numbers like these, readers may continue to see more headlines like “Banks Sponsor Prepaid Debit Cards” over the next few years.

    But there’s also a symbiosis at work here. As Douglas explains in her article, prepaid cards issued by the likes of T-Mobile are only possible when they have a bank to handle card transactions and hold deposits – which they’re more than happy to do for a cut of the fee income. In the case of T-Mobile, Bancorp Bank is the sponsor of the wireless carrier’s new Visa prepaid debit card. In fact, Nilson Report estimates that Bancorp sponsors 25 percent of all prepaid cards.

    Still, as attractive as it may be, not all banks are cut out to do it. Banks have to be sophisticated enough to handle millions of transactions and well equipped to respond to government regulation. “There’s great demand for bank sponsors,” Karen Garrett of Stinson Leonard Street told The Washington Post. “But it’s not something to be done without an enormous investment into the infrastructure to manage the whole thing.”

    Nevertheless, it’s likely that more revenue-seeking banks will pursue sponsorship of prepaid debit cards in the future. A growth industry like prepaid debit cards is just too enticing to skip. “Payment transactions have been an area that banks have identified as a potential revenue stream,” Bankrate.com analyst Greg McBride told the Post. “They understand the risks.”

     

     

     

Credit and Debit Card Ratings