Is the tide beginning to turn on data security breaches? If so, IT can expect to be at the forefront of catching the brunt of any backlash, at least internally, if not externally.Consider the case of TJX Companies Inc.'s "incident," as the company is fond of calling it, announced Jan. 17. Up until now, consumer outrage and legislative posturing aside, the fallout from security breaches involving identity theft or the loss of customer and employees' personal data has been minimal. A few days of bad press, a year of credit monitoring, a budget spike as security is bolstered, some cranky customers, and maybe, just maybe, a fine from Visa and MasterCard. But that was pretty much it, except for two high-profile explosions of market frustrations, which culminated in the public pillorying of the Veterans Administration and data aggregator ChoicePoint (who was also the recipient of the FTC's largest fine ever - $15 million.)
All in all, nothing to lose sleep over.
But this most recent publicized data theft is different. It's different in terms of the scope, the criminal investigation, and most important, the reactions from the public, partner, and political spheres. And none of this bodes well for future targets of data breaches.
From a business standpoint:
Consumer trust has been deeply violated on at least five levels:
Business-to-business frustrations have boiled over:
Government agencies are starting to stir:
Some sectors of the government appear ready to drop the hammer, with calls for the FTC to investigate, and a committee to be formed to write a data protection standard.
And at the company itself? It has paid IBM and General Dynamics to come in and audit, bolster, and monitor its defenses, shelled out money to run full-page newspaper ads in a bid to repair it's badly tarnished reputation, put together a Webcast and other data and tips on its Web site, and most likely, assembled an army of lawyers on monster retainers.
Which it will need, given that one class-action lawsuit has been filed, and more could be on the way from consumers, banks, perhaps credit card issuers, and maybe even the feds and various consumer protection arms of state AG offices.
In short, it's going to take a lot of time, money, technology, public humiliation and, heaven knows, a lot better PR, before TJX can wriggle out of this one.
This brings me back to my initial point -- that the tide is turning on public reaction to data breaches. So consider the TJX "incident" to be a screaming wake-up call for IT and the businesses they serve: The world will no longer look the other way.
Hopefully, this will scare some businesses straight. If you are in IT, don't wait for the business side to come to its senses.
You need to find out what your customer data consists of, what your business counterparts are doing with it, what it's expiration date is, in what form it is stored, where it is stored, and who has access -- any access -- to it, and where they are.
You need to check and recheck your defenses and think long and hard about how up to snuff they are. You need to check your agreements with third-party processors, bankers, and credit card issuers. Are you all on the same page, are you following policy to the letter? Are you each doing your part?
You need to make sure your transaction processing software isn't retaining or collecting data it shouldn't be.
You need to have a disaster readiness plan worked out with the business side in case something happens. It needs to cover all aspects of a disaster -- investigation, recovery, consumer aid, publicity, and legal issues.
You need to do a cost assessment. What is the cost of taking these steps, (and documenting them) versus the cost of cleaning up the aftermath of a data breach? At least, then, if the business chooses to stick its head in the sand, you'll be covered.
And you'll want to be. Because if IT and businesses do not work together to do these things, new laws are going to be written, fines are going to be assessed, heads will roll, careers will be dead-ended, business relationships will be severed, customers will be lost, stocks will drop and some people may even go to jail.