In the wake of a massive data breach that affected millions of Target shoppers, two banks – JPMorgn and Citigroup – have announced they will replace the debit cards of the customers that had their personal information stolen.
The Target data breach, which occurred between Nov. 27 and Dec. 15, has shined a light on how retailers and banks deal with consumers' security and protection. It was reported that more than 70 million shoppers had their personal information stolen, including names, phone numbers, mailing address and credit and debit information. Target originally reported that 40 million customers had their information accessed. The Associated Press said this is the second-largest theft of shopper information since 2007 when 90 million customers had their information stolen from retailer TJX.
Effects of a data breach
If a consumer's personal information is stolen during a data breach, they can not only be victims of identity theft, but their credit could also be negatively affected. A cyber criminal will access the personal or credit information of a consumer in order to get into their bank account or open a new line of credit. If either of these things happen, it could result in a consumer's bank account being drained or their credit score taking a hit.
Reissuing new cards
Several banks, including Citigroup, are issuing new cards to customers that were affected by the Target breach. Citigroup will reissue new debit cards to its customers. The Times said this move was not prompted by fear of a future data breach or any new information coming to light, but was more of a precautionary measure to ensure card holders do not have any future problems.
Along with Citigroup, JPMorgan will also offer new debit cards to its customers. The Times reported JPMorgan will be replacing 2 million of the 23 million debit cards it has issued. Neither bank is reissuing credit cards right away.
Security provisions of credit cards
When a data breach occurs, banks and credit issuers will deal with fraudulent charges on a credit card as long as it is reported quickly. Debit cards do not have this same luxury, which is a one of the reasons why the two banks are reissuing debit cards right now.
Action from lawmakers
Since the data breach occurred, several lawmakers have made efforts to help increase consumer privacy, which in turn can help protect consumers' credit. Senate Commerce Committee Chairman Sen. Jay Rockefeller (D-W.Va) sent a letter to Target CEO Gregg Steinhafel asking for the reasons the breach occurred. The Committee is also pushing to have a hearing to get to the bottom of the issue.
Many experts have called for banks and credit card issuers to use EMV chip cards as opposed to the magnetic stripe credit card. This type of card would contain a chip that contains card holders information, the same information that was stolen during the breach. Bloomberg Businessweek said these cards are much more difficult to hack and could better protect consumers' personal information and safeguard their credit.
Protecting consumer information is a top goal
JPMorgan Chase CEO Jamie Dimon said the reissuing of debit cards will help customers, but adopting new security measures could go a long way in protecting consumers' credit information.
"This cyber-security stuff we've now pointed out for a year is a big deal," Dimon said. "All of us have a common interest in being protected, so this might be a chance for retailers and banks to, for once, work together."