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High Tech Data Breach

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It was just a week before Christmas when millions of credit and debit accounts may have been compromised in what is now commonly called a high tech data breach. If it happened at one of the nations leading retail chains it can happen at any time anywhere people use credit and debit cards. All too frequently we have heard about individuals whose identity was stolen. A very sad commentary for today and especially right before Christmas. One of the fastest growing businesses today is identity theft protection and home security systems. But even with instituting all of these protections accounts still are compromised. For millions high anxiety and bewilderment have already replaced the anticipation and joy of the Christmas season. It is as though with all this fairly new technology has come at a price. We have put in place devises that sure make buying and selling transactions that much more easier and faster but inadvertently we also have failed to anticipate the dangers that go along with all this new technology. Like in chess, when one is supposed to figure out the opponents next move based on your move and his past counter moves society today has put out all this technology out without the safe guards in place that anticipate data being stolen for illegal gains. The U.S. is the juiciest target for hackers hunting credit card information. And experts say incidents like the recent data theft at Target's stores will get worse before they get better.

One of the biggest reasons why our credit and debit cards are such an easy target is that they still rely of the magnetic strip on the back. But, it is that magnetic strip which stores and the credit card industry that actually is the source for all the identity thefts that are still occurring. They have failed to up grade the existing technology. Essentially, what the United States is still doing is using 20th century credit cards where the hackers have already figured ways using 21st century technology to steal ones information and identity. Remember 8 track and cassette tapes well that is the technology we are still using in our credit and debit card industry today.

The United States is the last industrialized country that has yet to put in place 21st century technology and upgrade banking and individuals financial transactions using credit and debit cards. This, to guard against the enormous numbers of individuals whose identity has been stolen. In most other countries especially in Europe and Japan their credit cards use digital micro chips that hold account information. It is that chip that generates a unique code every time it is used. This makes the cards much more difficult for hackers to replicate. They have now become so difficult to decipher that it is most impossible to steal ones information.

Of all the countries the US is the number one location for credit card counterfeiting. Although, it is still unclear how many of the 40 million people who used credit cards at Target remain unaffected and what information the hackers already have there are still protective measures that companies like Target can put in place. But, why haven't they already done so? Companies haven't yet improved and enhanced security for the sole reason they don't want to spend the money to do so. Security system upgrades are expensive even though credit an debit card fraud reached another record breaking year at over $12 billion. This still wasn't justification for companies to foot the bill. So what has happened is that millions of people have had their lives turned upside down just because stores and companies feel there is really no need to spend that kind of money for such a small percentage of their gross earnings in transactions to have in place safeguards that would minimize customers identity from getting in the wrong hands.

Another sobering problem that hinders many companies from up grading is the retailers, banks, and credit card issuers. They continue to point fingers at each other and everyone wants someone else to pay for those upgrades. Card companies want stores to pay for the upgrades and stores want the credit card issuers to use more sophisticated technology on the back of their credit cars. Finally, Banks want to preserve their profits that they get from credit card users using the older processing systems.

To put this all in perspective we have to understand how credit cards function. When one uses a credit or debit card today it really is the same way they have been used for decades. The magnetic strip on the back of the card contains the cardholder's name, account number, card's expiration date and one of two security codes. When the card is used an electronic conversation take place between the store's bank and the customers bank. The store's bank pays the store right away when the customer swipes his or hers card and the customers bank approves the transaction if there are sufficient funds in the customers account and pays the stores bank. If there is insufficient funds to cover the cost of the merchandise the transaction fails. All of these transactions only takes less than 2 seconds.

What makes this so tempting for hackers is that they have been known to snag information as it passes through the network of pilfered databases where the card users information is stored. In the case of Targets customers many may have already had their information compromised because the magnetic strip on each card in the United States is so easy to duplicate thieves can simply reproduce them and issued fraudulent cars that look and act like the real thing.

Once these hackers and thieves capture ones card information they in turn check the type of account, balances, and credit limit all obtainable when they swipe that card. Now they have the information where they are able to sell replicas on the internet. Take a simple card with a low balance and limited customer information probably goes for $3. On the other hand a no-limit "black" card with the security number printed on the back can fetch as much as $1,000 or more.

What makes Europe and other countries succeed in limiting the frequency of credit card fraud is that even though hackers and thieves can nab and sell card data that already have digital chips is the fact that they cannot create fraudulent copies of the cards. Here in the United States we are pretty well set to implement digital chips in almost all credit and debit cards by 2015. It is the retailers that continue to worry that card companies won't institute more protective measures like in Europe where they already use PIN numbers that replace the outdated signature methods that are so easy to duplicate.

What it all boils down to is profits and who care if one's identity was compromised. Retailers continue to say that banks want to keep garnishing huge profits every quarter when a signature is all that is needed because there are fewer signature processing networks and less price competition. When money and profits are in play higher profits outweigh the cost of fraud. Meanwhile, too many individuals whose lives have been changed just because of their identity was stolen.

To put an end and eliminate so much theft will require retailers to up grade using very strong firewall's around those internet checkout systems that have been recently implemented to guard against being hacked. To further safeguard not only themselves but the customer as well they have to install encryption technology which scrambles data to make it unrecognizable for anyone who accesses it unlawfully. But, in the end the cost to put in place will ultimately come back on to the customer. Like everything else people will only pay more for the things that they buy. Will it be worth the price for renewed safeguards to secure ones identity when they use a credit or debit card? Using the technology developed to secure 21st century financial transactions the piece of mind alone for all those millions of credit card users it will be money well spent.

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