As I read about the eBay hacking, I was reminded of an article I read about last November’s massive data hacking at Target stores, which took place around the Thanksgiving holiday. As many as 40 million Target customers were victims of theft of their credit card data. This particular article brought up an interesting point that other reports on the Target incident failed to address- America’s outdated credit card technology. From HuffingtonPost.com:
Experts say incidents like the recent data theft at Target’s stores will get worse before they get better. That’s in part because U.S. credit and debit cards rely on an easy-to-copy magnetic strip on the back of the card, which stores account information using the same technology as cassette tapes.
In most countries outside the U.S., people carry cards that use digital chips to hold account information. The chip generates a unique code every time it’s used. That makes the cards more difficult for criminals to replicate. So difficult that they generally don’t bother.
“The U.S. is the top victim location for card counterfeit attacks like this,” says Jason Oxman, chief executive of the Electronic Transactions Association.
You may be asking why the U.S., as technologically advanced as it is, wouldn’t have the most cutting edge anti-hacker technology. The reason is simple- we don’t want to spend the money. HuffingtonPost.com:
Companies haven’t enhanced security so far because it can be expensive. Another problem: retailers, banks and credit card companies each want someone else to foot most of the bill. Card companies want stores to pay to better protect their internal systems. Stores want cards companies to issue more sophisticated cards. Banks want to preserve the profits they get from older processing systems.
Apparently credit card companies in the U.S. have a plan to replace magnetic strips with digital chips by the Fall of 2015. Normally, I’d be skeptical that these companies would do anything about a problem when it requires them to spend any of their own money. But since the federal government is investigating Target and eBay as we speak, those changes just may happen. Either way, we as consumers need to stay on top of the issues that affect us.