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Bad Gift Cards Follows Data Breach for Target

January 02, 2014

According to the National Retail Federation, the holiday season can represent as much as 20-40 percent of annual sales for many companies. With so much at stake, any mishap during this time can have long term ramifications for an organization. For Target, the 2013 holiday season will be memorable for all the wrong reasons. Beginning November 27 and ending December 15 an estimated 40 million accounts were possibly compromised because of a security breach. If this wasn't bad enough for the company, up to 40,000 gift cards could have been scanned incorrectly by cashiers, making them useless.

With gift cards purchases totaling around $118 billion in 2013, consumers are increasingly turning to the convenience it provides for the buyer and recipient. The only downside is when the activation goes awry and becomes an inconvenience.

All the mishaps aside, Target was enjoying a pretty good year with $1.6 billion in profits for the first three quarters of 2013 and $51 billion in sales.

According to company spokesperson, they are well aware of the problem and consumers with the improperly activated cards can call the contact center or go to the guest services desk at the store.

Anticipating the increase of calls to the contact centers, the company has increased staff to answer any question and resolve issues associated with the gift cards. Although 40,000 gift cards might seem a lot, it only represents less than one percent of gift card sales for the company.

Whether it is mistakes committed by cashiers or a security breach by a sophisticated attack resulting in millions of consumers having their data compromised, companies have to use available technology to authenticate purchases and increase their effort in protecting their customers.

With fraud related costs accounting for only 5.2 cents of every $100 in transactions, companies are apathetic when it comes to protecting the data of their customers. Until they feel a bigger pinch to their bottom line, it will be business as usual for the multinational companies with billions of dollars in revenue.

Edited by Cassandra Tucker