Last December, millions of consumers busily rang up more than $600 billion in holiday purchases. Unfortunately, hackers were also having a field day — at consumers’ expense. We learned that lax security procedures combined with an insecure payment mechanism resulted in as many as 110 million shoppers at retail giant Target having their personal information compromised.
Security researcher Brian Krebs, who first broke the story of the Target breach, recently published a startling set of numbers that demonstrates the impact of this one incident. They include:
- $200 million – The cost to credit unions and community banks for reissuing 21.8 million credit and debit cards;
- $18-35.70 – The media price range per card stolen from Target and resold on the black market in the months after the breach;
- 1-3 million – The estimated number of cards stolen in the Target breach that were sold on the black market and successfully used to commit fraud;
- $53.7 million – The estimated income that hackers generated from the sale of 2 million cards stolen from Target (at a median price of $18-35.70); and
- $55 million – The size of outgoing Target CEO Gregg Steinhafel’s golden parachute.
Sobering as these numbers are, they represent the fallout from a single data breach, albeit a massive one. In 2013, the Verizon RISK team reported more than 1,300 data breaches. The non-profit Privacy Rights Clearinghouse, which tracks data breaches, reported that more than 257 million records were compromised last year as well. A recent study by the Ponemon Institute found that the average total cost of a data breach in the U.S. is $5.85 million per incident. The probability that a U.S.-based organization will experience a breach of at least 10,000 records in the next 2 years is 18.7 percent, according to the Ponemon study.
By 2020, annual global data production is expected to hit 35 zettabytes, (or 35 trillion gigabytes). This data explosion will power unfathomable changes to consumers’ daily lives. However, the existence of that much data – much of it personal and very valuable to malicious actors – demands stronger security practices. Federal agencies like the FTC are doing yeoman’s work to hold companies to account for lax data security. But the FTC’s authority in this area is in question in the courts, and case-by-case adjudication is unlikely to sufficiently address the larger problem. Organizations like the National Institutes of Standards and Technology have developed voluntary frameworks for cybersecurity, but companies and other entities are not compelled by law to adopt it. Standards bodies like the PCI Security Standards Council have industry backing, but they are sector-specific.
While no one can wave a magic wand and solve the problem of data security, more can and should be done in Congress to give enforcement agencies the tools they need to protect consumer data and prod industry to make data security a top priority.
That is why we are announcing today the launch of the NCL #DataInsecurity Project. We are calling on policymakers in Congress, federal agencies and the states to be champions for data security. For too long, policy inertia has prevented meaningful reform on Capitol Hill and elsewhere that would better protect consumers’ data. There are a number of promising bills currently pending in Congress, but more can and must be done. Pro-consumer steps to enhance data security include:
- Creating a national data breach notification standard, modeled on strong state protections such as California’s;
- Requiring businesses that maintain consumers’ personal data to protect that information via specific data security requirements;
- Giving the Federal Trade Commission and state Attorneys General civil penalty authority to enforce violations of data security requirements;
- Increasing civil and criminal penalties for malicious hacking;
- Increasing efforts to enhance cooperation with international partners to bring overseas hackers to justice;
- Requiring retailers and banks to implement the highest level of security available to protect consumers’ payment data
In an era when vast amounts of data are being collected about them, consumers must have confidence that their information is safe. The Target breach was a wake-up call. We can no longer sit idly by while sophisticated hackers steal with impunity and businesses accept the status quo as just another cost of doing business. The time for reform is now.