How Retail Security Breaches Turned into Fraud on Apple Pay
How many times each day do you swipe a credit or debit card? If you are like the average American, you probably use your credit or debit card several times a day. According to the Federal Reserve, in 2012 the number of credit card and debit card payments in the United States was almost 130 billion, valued at 79 trillion dollars in payments. That number increases about five percent each year. Unfortunately, cyber security has not been able to keep up with the pace at which we are moving towards a fully electronic economy. That same year (2012), the estimated annual number of unauthorized transactions, or third party fraud, was 31.1 million with a value of $6.1 billion. In just the last two years, some of the country’s biggest retailers have been hacked, putting millions of consumers at risk – and it’s not over yet!
Recent Retail Security Breaches
- Target was breached between November and December of 2013, affecting upwards of an astounding 70 million in-store shoppers and 40 million credit cards.
- In 2014, both Michael’s and Neiman Marcus were breached putting 3 million and 1.1 million cards at risk, respectively.
- In September of 2014, a breach at Home Depot may have eclipsed the Target breach, putting 56 million credit cards and 53 million e-mail addresses at risk.
- In October of 2014, both Dairy Queen and Kmart were hacked, though neither store released figures indicating how many cards were put at risk.
The bad news is that the risk to consumers continues. According to a report released by the Wall Street Journal in March, those same credit cards stolen during the 2013-2014 breaches are being used with Apple Pay, the mobile-wallet payment system launched by Apple last year. A significant number of those fraudulent purchases have been made at the Apple Store, which should come as no surprise given the value of the goods sold there. Though the Apple Pay system itself has not been breached, the system is ripe for fraudulent purchases because purchases can be made without the need to provide a physical card, or even the three digit CVV code on the back required by most websites. While Apple is taking the first massive hit to their mobile payment system, others may be at the same risk given the lack of two-factor identification required by most retailers and websites when purchases are made using a credit or debit card.
We at Harris Lowry Manton are experts in consumer and business fraud cases in Atlanta. If you believe you have been the victim of business or consumer fraud, contact the consumer fraud lawyers in Atlanta at Harris Lowry Manton LLP to discuss your legal options.
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