This week, the Michaels craft store chain became the fourth retailer to step forward and say that hackers had breached its computer systems and may have obtained customer information. The announcement followed those of Target, Neiman Marcus and Easton-Bell Sports, all of whose systems have been compromised in the last two months. The Easton-Bell breach was slightly different from the others in that its online, not physical, store was compromised.
As I’ve been reading the news coverage of the latest attack, I have a gnawing feeling that we are doing something wrong in how we treat data breaches and the companies affected. In at least two of the cases above -- Target and Michaels -- class action lawsuits have been filed against the retailers. Congress has called for hearings and some lawmakers have sent the companies letters and other inquiries asking for more details about their security practices. One Senator has requested the Consumer Financial Protection Bureau investigate credit card hacking while another has asked the Federal Trade Commission to examine at least one of the company’s data security policies and practices. All of these actions make me wonder how we have evolved into blaming the victim whose systems have been compromised. Yes, the consumer is also a victim. But short of a significant failure to practice cybersecurity norms or misrepresenting what efforts exist, is it healthy for us to fall into blaming the companies rather than focusing on those who are perpetrating the criminal acts?
I recognize that the companies affected by the hacks have a duty of care -- both to their customers and to their stakeholders (if they are public). For the lawyers out there, I’m well-aware of the case law in this area, including the First Circuit case Anderson v. Hannaford Brothers Co., where a grocery store whose systems had been hacked was found to potentially be liable for the costs incurred by customers to protect them from a breach. Despite all this, I worry that we are establishing an impossible situation, especially in an environment where systems throughout the government and commercial space are regularly hacked by criminal organizations and foreign interests. How do we balance the convenience customers demand with the security measures really required to lock down systems?
Over the last week, much has been discussed about how point-of-sale attacks could have been avoided if we moved away from outdated magnetic strip credit and debit cards to chip-based smart cards. That change would solve some problems but would also require a significant investment to change the readers and systems currently in place. It may be that the attacks push us to making that change but to do so is much bigger than one retailer.
The question going forward is what is the proper standard for protecting data, especially without the existence of universal technical, operational, and policy standards? In the lawsuit against Target, the plaintiffs allege that Target’s failure to act on a white paper outlining point-of-sale attacks by a security expert should suffice for showing that Target dropped the ball. Will the standard really be that a victim’s failure to act on every research paper explaining vulnerabilities will open it up to attack?
I am not suggesting that the specific retailers affected by the latest attacks were right or wrong in the security measures they used, especially as there is conflicting information on what they may or may not have had in place. I do think, though, if we are truly to develop a culture of security then all stakeholders must work together and recognize that when hackers attack an element of our society in such a systematic manner, we need to take a more holistic approach to protecting our networks.