The Underbelly of Innovation

By George L. Koroneos
I had a long conversation with a colleague about whether the headline for this month’s cover story was too sensational. “Is POS hacking really that big of an issue?” he asked me as I posted the latest cover on the wall. A few years back, I would have probably hesitated and said, “No.” But today, it’s becoming hard to ignore the amount of consumer data that’s being stolen by criminals ranging from kids with too much time on their hands to hacktivist groups, like Anonymous. It doesn’t matter whether it’s a POS breech or the hacking of a computer system/network/CRM, solution providers risk being held responsible for a system penetration—even if all they did was install the hardware.

A recent Symantec study shows that 40 percent of online security breaches target SMBs, which means there is a target directly over your clients. At RSPA’s RetailNow, Secret Services Agent Jason Berryhill, a POS fraud specialist, painted a vivid picture of how much damage a POS fraud can cause. “In the past few months there have been three separate POS compromises involving 3,500 individual locations,” Berryhill said at the conference. “All three instances occurred because of bad passwords or remote access. Cost for fraud reimbursement and other damages was $240,000 per incident.” Potential vendor liability has spiked from $138 per record in 2005 to $214 per record in 2010. Even with liability insurance, fines that big could seriously cripple a POS VAR. While it might not be a war; POS fraud is way too big to ignore.

This month, VSR examines the ramifications of POS fraud and what solution providers can do to help secure their clients’ systems (turn to page 8). Berryhill was kind enough to elaborate on his insights into the underworld of data theft and why SMBs make such an easy target. The past few years have been rife with innovation and excitement in the Channel, but we can’t ignore the challenges that come with change. As you can tell from the issue you hold in your hands, VSR is committed to covering the bad with the good, and there really is no sensationalizing that.