The Christmas spirit at specialty retailer
) was dampened by media reports pointing to more lawsuits
following its massive credit and debit card security breach. Last
week, Target acknowledged that nearly 40 million credit and debit
accounts of its customers were hacked. According to the company,
the hacking took place during the holiday season - from a day
before Thanksgiving up to Dec 15.
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A source familiar with the investigation authorities claimed that
the company was alerted by credit card processors who detected an
increase in dubious transactions pertaining to cards used at
In an attempt to make reparation, Target is trying to woo back
its customers. Over the weekend, the company had allowed a 10%
discount to customers. However, it will require time to regain
Though the company did not disclose how the lapse occurred, it
assured it was taking the help of federal law enforcement and
external experts to tighten security to avoid similar frauds,
In 2007, the biggest security breach in U.S history was detected
The TJX Companies, Inc.
) - a leading off-price retailer of apparel and home fashions
-reported data theft involving nearly 90 million credit and debit
cards over a span of about one and a half years. Ever since,
Wal-Mart Stores Inc.
) as well as Target have been deploying substantial cash to
However, security and industry experts have pointed out a major
flaw in the card payment system. Unlike Europe and Canada, credit
card in the U.S. uses a magnetic strip to store data. For the
contemporary sophisticated hacking technology, obtaining card
information is effortless and as a result U.S. remains highly
vulnerable to card scams.
Outside the U.S., cards have digital chips to contain data, which
generate a new code after every use and thus makes hacking
The credit and debit card security breach of Target's consumers
could result in loss of millions of dollars. However, lawyers and
other experts on the matter remain tight-lipped as to who is
likely to bear the expense. Lawyers believe that Target could be
slapped with more litigation charges in the coming days. Though
public memory tends to be short lived, the scandal could mar the
retailer's performance in the crucial holiday season.
Target is the second largest discounter and operates 1,797 stores
in the U.S. It currently carries a Zacks Rank #3 (Hold). A
better-ranked retail stock is
) with a Zacks Rank #2 (Buy).