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Target takes security steps with new executive, MasterCard deal

By Kevin Orland and Elizabeth Dexheimer
Bloomberg News

Target Corp. took two big steps to put the holiday data-breach nightmare behind it Tuesday.

The second-largest U.S. retailer said in a statement that Bob DeRodes, who has advised the Department of Homeland Security, the Department of Justice and the Secretary of Defense, will become chief information officer on May 5. The company also named MasterCard Inc. as the provider of the more secure house-brand credit and debit cards it plans to introduce early next year.

Chief Executive Officer Gregg Steinhafel has been working to regain customers’ loyalty after hackers stole card data and personal information from tens of millions of shoppers during the holiday season. The Minneapolis-based retailer said earlier this year that it would spend $100 million to accelerate the rollout of cards with better security technology. Beth Jacob, who had served as Target’s top technology officer during the breach, stepped down last month.

“Establishing a clear path forward for Target following the data breach has been my top priority,” Steinhafel said in the statement. “Target has a tremendous opportunity to take the lessons learned from this incident and enhance our overall approach to data security and information technology.”

As part of its plan to convert to cards that store information on embedded chips, rather than less-secure magnetic strips, Target will have its REDcards use MasterCard technology. Its co-branded cards will run on the Purchase, New York-based company’s network instead of Visa Inc.’s network. The new cards also will require customers to enter a personal identification number, known as a PIN.

Paul Cohen, a spokesman for Visa, based in Foster City, Calif., declined to comment.

The new technology has become a standard in Europe and much of the rest of the world. Starting October 2015, retailers and banks that don’t use cards with the EMV chips – named for its founders EuroPay International, MasterCard and Visa – will assume liability for counterfeit transactions. The technology makes it more difficult for hackers to clone card data.

Target said Tuesday that it will introduce new payment devices in all of its almost 1,800 U.S. stores by September, six months earlier than originally planned.

DeRodes, the new technology chief, is on the board of NCR Corp. and has held technology positions at companies including Home Depot, CitiBank and Delta Air Lines.

Target isn’t the only retailer to have had its systems attacked in the past year. Luxury department-store chain Neiman Marcus Group said in January that about 1.1 million credit cards may have been compromised in a data breach. Days later, arts-and-crafts retailer Michaels Stores said some customer payment-card data may have been used fraudulently.

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