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Epsilon Security Breach a Reminder of Constant Threat

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Epsilon Security Breach a Reminder of Constant Threat
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Important Email Security Alert!

That’s an email subject line that gets your attention during the work day. The message itself can appear to be just another scammy / spammy headline to distract from an otherwise productive day. But, when I received two today, I clicked through to see what was happening. The first message came from Chase, the second from Best Buy – my bank and a widely known rewards program where I am a member. I was concerned.

Speaking with a colleague about an hour later, he referred to the Epsilon security breach as if it were common knowledge. Things happen fast and you can miss a lot when you’re not tied to your email over the weekend.

Security Week was all over the story and you can see the growing list of brands affected here.

I had to ask myself about the implications of yet another data breach by hackers. In this case, the most immediate threat posed is the possibility of increased, and more efficiently executed, phishing scams. Obviously if financial data is breached, the threat is magnified and the possiblity of financial loss for consumers and for the business affected is higher.

The key reaction that I landed on was to not point fingers. Today it is Epsilon, tomorrow it will be another firm. Walgreens, disclosed on the Security Week list, has been breached before. I tend to think longer term and wonder what the impact of continued breaches will be on customer loyalty programs, online shopping, and the level of customer engagement in all sorts of mobile applications and social location applications.

Another article I saw today in the Wall Street Journal recounted that “Federal prosecutors in New Jersey are investigating whether smartphone applications illegally obtained or transmitted information about their users without proper disclosures”, citing a specific investigation of Pandora Media.

It seems consumer data is at risk from several angles. Hackers seeking fame and fortune test the fortitude of corporate security regimens, and some application developers are alleged to expose data, intentionally or not, through the design of their applications.

Putting your data online is almost unavoidable, just as it’s almost impossible to live without a plastic payment card. Like any of this or not, it’s part of life and the challenge is to manage your risk, rather than thinking you can just “opt-out” of life.

For marketers, I expect that consequences of continued news about security breaches will fall into several areas:

  1. The cost of data collection will increase in the “feral” marketplace. Some months ago, I documented the cost of building a database for one retailer. I think the task is going to become more difficult and that incentives combined with assurances will be needed to cover the gap.
  2. The bar is raising for suppliers in the loyalty business. PCI compliance is already important, but now will become mandatory for any supplier of loyalty processing software to compete in the broader market. There will be a shift in attention from functionality of the software to security features over time.
  3. Loyalty programs may actually benefit from security fears. Every server is subject to attack, so the data security game is an equal ill for every business. The ability to collect detailed customer data will increasingly be the domain of customer clubs and loyalty programs where there is a relationship based on trust and the premise of a value exchange.

Living in hurricane alley, I know what it is like to be without electricity for prolonged periods. I also understand how dependent we are on the devices that are electrically powered to conduct our lives. Data is the marketer’s equivalent of electricity and without it, commerce comes to a grinding halt.

As an industry, we’ve got to collectively take a stand to increase data security standards and to reassure the loyal customers we seek to motivate and delight that they are “safe” in our care.

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