The United States is not the only country where credit card data theft is a major issue.
On the heels of high-profile credit card security breaches at Target Corporation (NYSE:TGT) and Neiman Marcus, South Korean officials are reportedly seething over the theft of data from more than 100 million credit card accounts. The thieves even snatched credit card data from South Korean President Park Geun-hye and UN chief Ban Ki-moon, according to reports.
Unlike the digital breaches in the U.S., which were likely executed overseas and perpetrated by hacking through internet security protocols, the South Korean episode involves physical theft. South Korean prosecutors are accusing a private contractor with responsibility to improve security systems of stealing the data and selling it to a loan company to make marketing “cold calls.” The security lapse at the three credit card companies – Kookmin Card, NongHyup Card and Lotte Card – is reminiscent in some ways of the NSA security breach when NSA contractor Edward Snowden walked out of secure NSA offices with a treasure trove of top secret documents.
As a result of the scandal, three dozen financial executives have resigned their positions in disgrace, according to a report in the Financial Times.
Largest credit card data breach in South Korean history
The largest breach in South Korean history first came to light in a Financial Services Commission report that claimed the theft occurred incrementally over the course of a year. According to a Reuters report, financial regulators said that an independent contractor with the Korea Credit Bureau downloaded the credit card data of over 100 million people onto a portable disk drive. Korea Credit Bureau is a private firm that manages the credit information for Korean financial service providers. The credit information was sold to at least two organizations, a loan marketer and a broker, and the contractor and one additional suspect involved in the data theft are in custody.
South Korea significant users of credit cards
Although assurances were made to a nervous public that the credit card data was not used for fraudulent purposes, more than 500,000 people have canceled their cards and lines at bank branches were reported for people seeking assurances their credit card information was safe. Lawyers have also started to file class action lawsuits against credit card providers. The average South Korean has four credit cards and among the highest individual debt relative to the size of the economy in the third world, according to a Reuters report.
In related news, two Mexican nationals were arrested on the U.S. border with 96 credit cards cloned with account information from the recent Target data breach. Officials are quoted as saying the incident is not directly related to the larger Target hacking incident.