Target is a Titanic-size disaster

The data breach upending the company is a really big deal. Here's why.

By Traders Reserve Dec 27, 2013 4:19PM

Target store in San Bruno, California /Justin Sullivan/Getty Images By Jamie Dlugosch

Like many folks, I thought the data breach story at Target (TGT) was a yawner.

I had more important things to focus on, like lining up my Top 10 One-Year Sizzling Stocks for 2014.

Then I realized I should probably care a bit more. The story is not too different from the Titanic striking that iceberg.


This is a really big deal -- far bigger than the market realizes at the moment.


Last Friday, Target tried to make amends for the data breach by offering shoppers discounts. While on the surface that good-faith gesture was admirable, it will not work to reverse the damage that has been done -- and even worse the damage that is coming. 

Target has now acknowledged that PINs for customers' debt cards were also part of the data stolen, according to reports Friday.

I had an enlightening experience at my local bank Saturday. A chance conversation with the teller revealed information that should have all Target investors shaking in their shoes.

A telling moment: Safeguard your assets

The bank teller asked me if I had multiple accounts at the bank. At first I simply thought he was trying to pad his numbers by opening as many accounts as possible. I was wrong.

He had other motives. Specifically, he was referring to the Target credit and debit card debacle and what his bank was recommending to its customers in response.

What in the world?

The bank's message boiled down to this: If you shop at Target, you might want to use a card with only a minimal balance. Keep the rest of your assets safe in other accounts.


Obviously this teller was instructed to share this information with me from on high. The problem for Target that is telling? That a bank would go out of its way to do this in the first place.

Bigger problems dead ahead for Target

Behaviors will change because of this lapse. The discounts are bad enough. Changed behavior is so much worse. Add in the potential liability and you see the problem. Earnings are going to get whacked and whacked in a big way.


Look for the first pre-announcement after the holidays. At that point it will be sober-up time for Target management, and the look at the damage will be not so fun.


Get out of Target stock now while you still can. There are far better opportunities elsewhere.

More from Traders Reserve

Tags: TGT
Dec 27, 2013 6:03PM
"Get out of Target stock now while you still can. There are far better opportunities elsewhere." - This does not make any sense, can the author justify this statement ? Its not Target that is a risk here, its the card system that we use. This very same thing can happen with Walmart, Krogers, Frys. Fred  Meyers or pretty much any store with a card reader + POS system + customer database built from  it. So this article blaming Target makes no sense. Instead it would have been helpful to detail out to the common user that the risk is in the card manufacturing process, card reading system and then post reading how and where the information is stored and how much of it is stored too, that's where the real risk is. Just moving from Target to another store isn't going to help the customers one bit, if they hackers decide to steal from the new store you just started going.
Dec 27, 2013 4:39PM
In Europe credit cards have a chip, not a magnetic strip, that has 21st century security enhancements. Why hasn't this happened in the US? Because the industry doesn't want to pay for the upgrade in hardware to accept the new cards.
Dec 27, 2013 5:33PM
I used to work in a bank branch, we used the "you need a separate account with a minimal balance  just for shopping online" a few years ago.  This new focus on Target fears is just a variation.  Sadly the same concerned banker will probably link your new "shopping" account up to your main account with the majority of your money in it so you have overdraft protection, therefore opening the fraud door to the same money you intended to protect.   The banker is likely just concerned with meeting his/her quota for new accounts this month and their District Manager likely told them to use this ploy.  In reality many consumers have a hard enough time staying positive in one account let alone multiple accounts - wait for the $35 overdraft fees to pile up.  I'd reiterate advice given by previous poster: use credit instead of debit that way you're risking the bank's money and not yours. 
Dec 27, 2013 5:28PM
Never use a debit card anywhere except your bank to take out money.  Credit card charges can easily be disputed and taken off your bill.  A debit card is a direct connection to your checking & savings account.  If there is fraud you have to fight to get your money back and they can drain your entire account.
Dec 27, 2013 5:06PM
I know merchants are pissed because it costs them more, but this is why you use credit for everything instead of debit.  Massive data breach on a credit card, comb through your statement for fraud like you should do anyway.  Report anything that qualifies and you're done.  Debit.. you lose YOUR money when the card number is stolen.

Dec 27, 2013 5:57PM
I never use debit cards, credit only.
Dec 27, 2013 7:28PM

Never ever use a debit card especially online! Use only one credit card for gasoline purchases. Use a separate credit card for all internet purchases.

Dec 29, 2013 1:20PM
We are not selling our TGT stock....
Dec 27, 2013 6:39PM
Yup let's beat up on Target for a few hours....
Dec 27, 2013 7:30PM
What if this happen to Wal-Mart and the 242,000,000 credit and debit cards they have stored.
Dec 27, 2013 7:58PM
  Lots of left field, not talking political, remarks on here james but that one is left field foul beyond the fences. Did not catch it.
Dec 29, 2013 6:00PM

So now we are to listen to "advice" from bank tellers about how we should manage our credit and debit cards.  Right.  How about using debit cards in the future only for ATM cash withdrawals, which is what they were originally intended for in the first place?  And by the way, I didn't see any advice in this article about getting new cards issued with new account numbers if your account could have been compromised. Shouldn't this "knowledgeable" writer have included that?   My credit card company was happy to issue me a new credit card with a new account no.  at no charge as soon as I notified them that I had shopped in Target during the problem period.  Problem over for me.  They even sent it via Fedex, which I didn't even request.   

Dec 29, 2013 5:44AM

Like previously  stated in a comment (credit cards and debit cards)  LIKE EUROPE, could be upgraded and use a chip instead of a magnetic strip,   costing the banks and credit card companies,   

Banks should use  billions from the bailout to implement new security cards, but when they do get around to making this change,   they will increase their fees to cover this cost.   It's good enough for Europe, why not the US?

Also, this could also be a ploy from this teller,/along with a ploy by the bank to sell more accounts, rather than a real concern for the customer?   More bank accounts = more potential bank feesAuthor/Jamie Dlugosch.  Why not do a little research and report on the equipment used in this security breach and if other retailers use the same?

Dec 27, 2013 7:52PM
   Never would have debit card before because I'd heard they were easy to penetrate. Finally got one at small regional bank. They put use limits on the card for us. anything over $200 one time or per day freezes the account Only use at Safeway fuel to get $.10 per gallon discount, other wise use credit card and pay off monthly or check were can. Like the handiness. Really don't like caring a lot of cash around. So far so good.
Jan 6, 2014 2:42PM
Screw all you investors!  You are the ones full of bulls$it! Unfettered Capitalism is what is destroying the world.



Dec 27, 2013 6:16PM
If the NSA was so effen smart why didn't they have this whole operation figured out ahead of time?  We spend how many billion a year and give up how much freedom to be spied on and they miss this?  And if they didn't figure this out ahead of time and stop it then why and what do we pay them for?  Notice how when they go before congress they all boast up how important and professional they are?  I'm calling BS. We need to just pound the crap out of those pinheads until they get sick of even listening to us and go and get some real work.
Dec 27, 2013 10:30PM
For customers, it's not just the potential loss of funds, but also potential identity theft.

Might be good to freeze your credit....check out Clark Howard's web site.

Dec 28, 2013 9:13PM
"Get out of Target stock now while you still can. There are far better opportunities elsewhere."

Please listen, folks: and when you do I'll be waiting to scoop up the shares of an excellent company that's leaving Walmart in the dust at rock-bottom prices.  The author of this article will probably do so as well - and then tell you afterward Target is underpriced.
Dec 30, 2013 11:16AM

Think I've heard of some people losing Thousands out of Bitcoin accounts....

One guy even lost in the Millions because of a "hard drive problem"...?

So I guess most transactions are about secure as the person that is responsible for them. 

Dec 30, 2013 10:42AM
Nonsense. Whether value carnage or mere annoyance.....sell sell sell so I can buy buy!
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