Alaska banks scramble after Target security breach

dkelly@adn.comJanuary 2, 2014 

Shoppers visit the new Target store in Wasilla in 2008.

STEPHEN NOWERS — Anchorage Daily News

Two weeks after a massive data breach hit the retailer Target, financial institutions in Alaska are still working to reissue debit and credit cards to thousands of customers across the state.

Target confirmed Dec. 19 that data connected to about 40 million credit and debit card accounts nationwide was stolen between Nov. 27 and Dec. 15, The credit card breach, the second-largest in U.S. history, descended at the height of the holiday shopping season.

Last Friday, Target said the stolen data included pin numbers for debit cards. That data was "strongly encrypted," and the encryption key never existed in Target's system, making the pin data much more difficult for hackers to access, the company said.

Three Target stores operate in Alaska -- two in Anchorage and one in Wasilla. No statewide numbers on the number of affected cardholders were available, but the Anchorage Daily News contacted individual financial institutions for information.

As of Dec. 27, slightly more than 2,200 debit and credit cards issued by Denali Alaskan Federal Credit Union were affected, said Eileen Thompson, associate vice president for marketing. Thompson said the credit union's VISA department is working on reissuing the cards.

She said Denali Alaskan has confirmed cases of fraud, but could not yet state the number of cases. VISA has a zero-liability policy, meaning customers pay nothing for unauthorized purchases, she said.

At First National Bank Alaska, where about 2,000 cardholders were affected, no fraud had been confirmed, but the bank has ramped up its monitoring and adjusted its fraud filters, said John Hoyt, a senior vice president at the bank.

"There's lots of active fraud monitoring going on, probably more than we've ever seen in the credit card industry right now, based on this," Hoyt said.

At Alaska-based Northrim Bank, a total of 1,076 customers were affected as of Thursday, said Jay Blury, director of marketing and communications. All of those cards are being re-issued.

Blury declined to comment on whether there had been confirmed cases of fraud. He did say that the bank updated its website, sent out letters and made personal phone calls to customers as soon as news of the breach surfaced.

Of more than 20,000 Alaska USA Federal Credit Union cardholders affected nationally, about 11,000 are Alaskan, said Dan McCue, a spokesman for the credit union.

Alaska USA sent out new cards as quickly as possible, but fraud can happen in that window of time before the customer receives the new card, McCue said.

Customers aren't liable for fraudulent charges, he said. But a new card still comes with a new number.

"And if you use that card to pay bills, memberships, whatever, you have to go out and change all of those," McCue said. "That's your time. It's an inconvenience to the consumer."

Financial institutions, meanwhile, have shouldered cost burdens. McCue said Alaska USA has already paid about $30,000 just in reissuing cards to customers. Hoyt, at First National Bank Alaska, said the bank has invested "significant overtime" and plastic costs into the reissue.

A spokesman for Wells Fargo in Alaska said in a statement the bank was monitoring accounts but declined to give further specifics on the Target breach.

Anchorage resident Kristin Worman received an email and letter from Alaska USA after the breach, saying her debit card had been compromised after she shopped at Target.

A new card is being sent, but Worman hasn't seen any unusual activity on her account.

In an email, Worman said her number was stolen in 2011 while she was on vacation and used to buy $400 in Fandango movie tickets. In the case of the Target breach, simply having her card replaced is less of a pain, she said.

"I think the bigger issue that I have with it is the loss in confidence that it gives me," she wrote. "I feel like using my card in a store should be more safe. I expect there's some risk in online purchases, but when I go into a store I expect to feel safe."

Some customers heading into the Target in northeast Anchorage on Tuesday, however, said the breach hadn't affected their shopping habits.

Air Force Staff Sgt. Manny Granados and his wife, Alex, said their debit and credit cards as well as their RedCard, or Target debit card, are being replaced. But they have not seen suspicious charges, and viewed the measure more as a reassurance.

And when Target announced a 10 percent discount on merchandise the weekend after the breach, "I thought there were even more people here than usual," Alex Granados said.

For Danielle Guipe, walking up to Target with her three children, the incident was just a sign of the times.

"People just have to be diligent about monitoring their accounts," she said.

Reach Devin Kelly at dkelly@adn.com or 257-4314.

 

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