Target Taking Actions on Security, Executive Says

Updated: 02/04/2014 7:23 PM
Created: 02/04/2014 5:45 AM
By: Scott Theisen

An executive of Target Corp. said Tuesday the retailer has taken actions to shore up security following the massive breach of millions of consumers' data during the holiday season.
The testimony at a Senate hearing by John Mulligan, executive vice president and chief financial officer at the No. 2 U.S. discounter, also revealed that Target discovered an additional 25 cash registers infected by malicious software on Dec. 18. The company had said earlier that it had removed all the malware from its system by Dec. 15.
Mulligan's testimony before the Senate Judiciary Committee was the first public appearance by a Target executive addressing the issue since the breach that occurred between Nov. 27 and mid-December. An estimated 40 million credit and debit card accounts were affected.
Mulligan said Target is "deeply sorry" for the effect of the data theft on consumers, and he acknowledged that their confidence in the Minneapolis-based company has been shaken.
Sen. Patrick Leahy, D-Vt., the panel's chairman, said the erosion of consumers' confidence - with data breaches on the rise affecting retailers, Internet companies and others - could hinder the U.S. economy's recovery.
The recent data hackings at Target, luxury retailer Neiman Marcus and arts-and-crafts chain Michaels Stores "compromised the privacy and security of millions of consumers," Leahy said.
Senators pressed Mulligan and Michael Kingston, senior vice president and chief information officer at Neiman Marcus Group Inc., about how quickly they notified customers of the breaches.
Mulligan said Target executives were told on Dec. 12 by the Justice Department of suspicious activity involving payment cards. The company started an investigation, removed malware and publicly announced the data theft on Dec. 19.
A processing firm told Neiman Marcus of a problem on Dec. 13, and the company's investigators made a report on Jan. 2, Kingston said. Customers were notified on Jan. 10. The malware causing the breach appeared to have been operating in many Neiman Marcus stories between July and October, Kingston testified.
An estimated 1.1 million accounts were affected.

Moving forward, Mulligan hopes to gain support from the federal government and banks in moving toward chip and pin technology for credit and debit cards. 

The technology would replace the common magnetic strip. It would add extra layers of encryption, making it harder for hackers to access account information. 

In addition, each chip would have a unique credential, making fraudulent cards more difficult to create. Target plans to use the technology on their own cards starting in early 2015. 

The Associated Press contributed to this report.

John J. Mulligan, executive Vice President and Chief Financial Officer of the Target Corporation, left, testifies on Capitol Hill in Washington Tuesday before the Senate Judiciary Committee hearing on data breaches and combating cybercrime.
Photo: AP/Pablo Martinez Monsivais
John J. Mulligan, executive Vice President and Chief Financial Officer of Target Corporation, left, is sworn-in on Capitol Hill in Washington on Tuesday prior to testifying before the Senate Judiciary Committee hearing.
Photo: AP/Pablo Martinez Monsivais

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