Target’s CEO Axed — Will Our Financial Data EVER be Safe?

I’m a generally cautious guy when it comes to my financial data.

Yes, I buy stuff online. But I don’t purchase things at random, obscure websites.

I don’t fall for those bogus Nigerian phishing emails requesting things like account information.

I cover up the keys when I type in my PIN number at the grocery store, and make sure no one is standing around me when I use an ATM.

But last week, it happened. First I got a text, then an email, from my bank asking if I authorized a couple of transactions and requesting I call them immediately. Soon I found out why. Buried in my transaction record was a charge for around $5 at some random California hotel I’ve never visited, followed by a credit back for roughly the same amount.

A little follow up research showed that this is often what happens when thieves hijack a bank card or credit card number. They’ll try to process a small transaction to see if the number is still “live” … and if it works, they go on a shopping spree!

You can’t be too careful when using an ATM.

Fortunately, my bank was very quick at identifying and nullifying the number theft. My card was cancelled and a new one express-mailed in a matter of a couple days.

But the sad thing is, this wasn’t the first time something like this happened to me. A few months earlier, the number on a separate card was somehow compromised.

What tipped me off? While reviewing my transactions, I found that I apparently ordered $160 in pizza from Papa John’s in the U.K.! I don’t know about you, but if I want a slice of pepperoni, I order from down the street not from across the Pond!

Again, my financial institution investigated, clearly agreed it was fraud, rebated the money, and issued me a new card. So I wasn’t out any money in the end. But the sad fact is, this kind of data theft is going on all the time!

Just look at the news today about Target (TGT) CEO Gregg Steinhafel, who was handed his walking papers. His exit from the retail chain comes just a few short months after a massive customer data breach.

Hackers reportedly stole credit and debit card information on 40 million customers, and email and phone number data on as many as 70 million more. Target racked up $61 million in expenses for those data protection lapses in the fourth quarter. Plus, the firm plans to spend another $100 million to switch over to a chip/PIN program for its branded debit and credit cards down the road.

It’s not like Target is alone either. The department store Neiman Marcus and arts and crafts retailer Michaels also suffered attacks aimed at stealing financial and customer data.

Michaels alone estimated last month that roughly 3 million customer cards could have been compromised. I suppose I’ll never know if that’s how my card was breached. But I do know my daughters spend an awful lot of time shopping there for duct tape, rubber bands, and other materials for arts and crafts projects.

“I found that I apparently ordered $160 in pizza from Papa John’s in the U.K.! I don’t know about you, but if I want a slice of pepperoni, I order from down the street not from across the Pond!”

Bottom line? Keeping your portfolio safe from investment losses is hard enough. But keeping your financial data — and your hard-earned money — from thieves is a whole other ballgame!

I plan to keep being cautious about where I transact business. I will also keep a close eye on my transaction records, checking them every couple of days, to make sure I don’t get any more overseas pizza delivery charges. I also recommend paying cash when you can, and making sure you keep data safety in mind when using the ATM.

What about you? Has your financial information been breached before? How much of a hassle was it to get your money back? Was your financial institution proactive and sympathetic … or reactive and aloof?

Also, are there any other tips you’d like to share with your fellow readers? Hop on over to the blog if so.

OUR READERS SPEAK

Meanwhile, I saw some great reader comments about the unemployment data there in the wake of Friday’s report showing a plunge in joblessness. Let’s just say there’s plenty of healthy skepticism in the numbers being cooked up in D.C

John C. said “This latest jobs report is just more government hogwash. If all those who have lost their unemployment benefits, and all of those who are no longer looking, were counted, I am sure the number would be well over twice 6.3 percent.”

“Further, what happened to the 0.1 percent GDP growth figure of yesterday? Which, by the way, is still more government fudging of the figures. I strongly suspect that the growth was really negative. Finally, if the inflation rate is so low, how come our grocery bill has increased by 7-10 percent over the past year? And why am I paying 30 cents per gallon more for gasoline?”

Poster IQ added to the debate, saying “I don’t know about anyone else but I sure could use a raise. Expenses are quickly catching up with disposable income in my case. This consumer will be tightening his belt for the rest of this year.”

Great points all around! The huge number of workers dropping out of the workforce raises serious questions about the stronger-than-expected job creation data. And let’s be honest, I don’t think anybody’s REAL expenses are going up at the slow rate we’re being told they are.

Oh, and kudos to Jon and Richard G. for correctly identifying a “bubblah/bubbler” as a water fountain. No prize for that one, but if you guys would like to meet up for pub trivia sometime, I’m game!

MARKET ROUNDUP

Here’s a quick recap of the OTHER important news of the day …

 Stocks opened much weaker thanks to lackluster Chinese economic data and more turmoil in the Ukraine over the weekend. But we rallied back on improved U.S. data and an upside reversal in some of the beaten-down momentum names. The dollar was roughly flat, while interest rates rose by a couple of basis points.

 What’s that about good data? Well, the ISM Services Index spiked to 55.2 in April from 53.1 in March. Not only did that beat the average forecast of economists, but it also was the strongest reading in eight months!

 I’m hearing lots of chatter these days about the disconnect between stock prices and bond yields. We have reasonably strong economic data, and a stock market near all-time highs. Yet long-term bond yields have spent the first few months of 2014 declining.

Me? I’ve said that in light of the economic data, bond yields should be higher — much higher. And apparently, Warren Buffett agrees with me. In responding to a question at the Berkshire Hathaway annual gathering this past weekend, he said “I don’t think there is a good long-term fixed income investment — No.” Pretty much sums up my thinking!

 Well, Wicked Strong wasn’t wicked good enough in the Kentucky Derby. He finished fourth out of the field of 19. California Chrome took top honors, quite a feat for a horse that cost his owners only a few thousand dollars to breed his mother.

 At least the fat-cat bankers are getting fat-cat-er-er! The Wall Street Journal notes that “Banks again are doling out money to hedge funds and other investors to finance purchases of complex debt securities, returning to a practice that helped fuel the debt boom ahead of the financial crisis.”

Investors are buying these things because they need higher yields in this era of still-low interest rates. And thanks to all the cheap money, issuance of complex Collateralized Loan Obligations (CLOs) surged to $35 billion in early 2014, the most since the tail end of the credit bubble in 2007.

Me? I’d rather stick with select higher-yielding, higher-potential stocks than lousy bonds or even lousier, highly leveraged bundles of corporate loans. Some of my best ideas can be found here.

Reminder: If you have any thoughts to share on these market events, don’t hesitate to use this link to put them on our blog.

Until next time,

Mike Larson