Target Suffers Credit Card Security Violation - Analyst Blog

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In what could be the second largest credit and debit card breach, specialty retailer Target Corp. ( TGT ) acknowledged that security of nearly 40 million credit and debit accounts of its customers were compromised. Though the company did not disclose how the lapse occurred, it assured it was taking help of federal law enforcement and external experts to tighten the security to avoid similar frauds, going forward.

According to Target, the hacking took place during the ongoing holiday season - from a day before Thanksgiving up to Dec 15. 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 Target stores.

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.

In 2007, the biggest security breach in U.S history was detected when The TJX Companies, Inc. ( TJX ) - 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 beginning Jul 2005 to Dec 2006. In 2009, TJX Companies agreed to shell out $9.75 million in settlement with several states.

Ever since, companies like Wal-Mart Stores Inc. ( WMT ) as well as Target have been deploying substantial cash to tighten security. It is quite surprising that hackers could breach the security at Target in spite of the company's safeguards. Target has asked its customers to report any discrepancy in their card statements either to the company or to the Federal Trade Commission or the Credit card Company.

Irate consumers have taken to social media whereas a California-based customer filed a lawsuit against Target seeking damages for the cyber breach. 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). Another better-ranked retail stock is PriceSmart Inc. ( PSMT ) with a Zacks Rank #2 (Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: PSMT , TGT , TJX , WMT

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