Tags: data | breach | security | Levin

Cybersecurity Expert: Prepare for More Data Breaches

By    |   Tuesday, 25 February 2014 02:12 PM

Expect another major data breach. In fact, expect many more, warns cybersecurity consultant Adam Levin, founder of Credit.com.

The flood of data breaches will continue unabated, the former director of the New Jersey Division of Consumer Affairs writes on Credit.com.

The reason? Companies calculate that they won't lose enough money to justify the costs of improving security, Levin argues.

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The companies aren't the ones being targeted, he says. Hackers are seeking consumers' money, not corporate intellectual property or trade secrets.

Target said its data breach cost $240 million so far. However, it didn't cost Target that much. That cost was split among many financial institutions. Target expects first-quarter sales to drop only 2 to 6 percent from last year.

Consumers, on the other hand, will pay more for data breaches: higher account fees, lower service levels, and other costs. Better laws requiring companies to protect customer data are not in the works.

The White House released its cybersecurity guidelines, which don't have any force of law or incentives. The administration does not plan to check if any companies follow the suggestions. The report does point out that data breaches might affect a company's bottom line.

Corporations are quite capable of improving cybersecurity protections, Levin writes. "But updating systems, doing regular information security checks and focusing on employee training can be time-consuming and expensive."

The problem is that costs of a data breach are shared by many companies and individuals. Costs of protecting data may be more than any one company will lose.

That mindset is evident in retailers' resistance to chip-and-pin cards, which are more secure but won't be in use until after 2015.

"Cybersecurity is fast becoming a classic market failure: the costs of protection thus far outweigh the potential costs of a breach," he argues.

In other situations, like education or environmental protection, the government has stepped in. This time there's no sign or government laws or even incentives.

"Instead, they're stuck reminding companies how costly a breach could eventually be."

Many countries have moved to chip-and-pin cards, which have computer chips and personal identification numbers, that are less vulnerable to fraud than cards with magnetic strips, according to Consumers Union, the advocacy arm of Consumer Reports.

"The United States has lagged behind because replacing all payment cards, updating ATMs to accept the new cards and updating the terminals in retail stores all cost money," stated Consumers Union Policy Counsel Delara Derakhshani in testimony to Congress. 

"We believe it is money well-spent, and it is a penny-wise pound-foolish philosophy to wait any longer, particularly when the burden of guarding against harm following a breach falls most squarely on the shoulders of innocent consumers whose data was compromised."

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Expect another major data breach. In fact, expect many more, warns cybersecurity consultant Adam Levin, founder of Credit.com.
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2014-12-25
Tuesday, 25 February 2014 02:12 PM
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