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The Rising Threat of Cybersecurity for Retailers

BY Greg Crowley

December 15, 2022 | 4 MINS READ

Third-Party Cyber Risk

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Stores across the country have their holiday lights on display and retailers everywhere are gearing up for the all-important fourth quarter and busy holiday shopping season.

As managers stock their shelves and shoppers hit the stores, many customers are pulling out their phones as they ‘Tap to Pay’ their way through self-checkout lines. Others are circumventing the big-box experience altogether, opting for curbside pickup of 'Buy Online, Pickup in Store' (BOPIS) orders, an offering made popular during the darker days of the pandemic that seems here to stay.

Cybersecurity risks in retail environments

While these conveniences have advantages for consumers and retailers alike, there are security pitfalls to abandoning the shopping traditions of holidays past.

BOPIS orders, for one, are often easy targets for fraud. Minimal customer information is required to make a purchase — there is no shipping address to verify against the cardholder address, for example — and because it is a “card not present” transaction, the fraud often becomes the retailer’s risk.

Additional security risks are incurred as connectivity through the Internet of Things (IoT) becomes increasingly prevalent in retail via self-checkouts, ATMs, mobile payments and more. Many businesses rely on IoT systems, but they lack the security measures necessary to ward off cyberattacks. Vulnerabilities are inherent in retail payment systems, often stemming from the vast array of software, hardware, and cloud-based components needed to power them. These vulnerabilities are easily exploited by cybercriminals seeking to deploy malware on devices or through back-end cloud services, enabling them to gain access to internal systems, launch attacks, and steal customer data.

Third-party risk affects retail

Beyond the point of sale, the manufacturers, wholesalers and fulfillment centers that play an integral role in today’s retail supply chain can also pose an additional security threat.

Most retailers utilize multiple vendors, and those vendors have vendors, which creates a hidden web of potential data risk. In fact, 60% of security incidents result from issues arising from third parties, according to a recent Forrester report. As one example of how risk can creep into the supply chain, smaller retailers often use an unbranded fulfillment service that warehouses goods and ships items purchased online directly to the consumer. This partnership relieves these businesses of the physical space requirements to store their products and grants them access to better shipping rates. But as the old adage warns, a chain is only as strong as its weakest link. Each third, fourth, and nth-party vendor has systems — and humans — that are susceptible to threats. If a retailer’s supplier is attacked, this could lead to a compromise of the retailer and its customers' data.

So what can be done to mitigate against the rising risk of cybersecurity attacks in the evolving retail space?

Put simply, retailers — big and small — must to take security and privacy seriously, all the way through their supply chains. When an estimated two-thirds of breaches are a result of supplier or third-party vulnerabilities, retailers must be vigilant in identifying any weaknesses present in vendor’s systems or processes and establish policies and procedures to mitigate risk in business partnerships.

Internally, retailers can further protect themselves by leveraging fraud prevention technology that will look at customer buying patterns and other behavior analysis in BIPOS orders, as well as implement in-store verification of customer information such as the cardholder address. It is essential that all retailers follow PCI-DSS compliance controls and keep devices and POS systems up-to-date and on a separate network. Implementing a multilayered cybersecurity program is highly advisable to ensure the security of customer data, and a retailer's own business.

Know what information is being collected at the point of transaction

Consumers should also do their part and consider the information that Apple Pay, Google Pay and similar providers collect about them on each transaction and their buying habits. Many IoT systems track customer movements and purchase histories, so if privacy is a concern and there are doubts about how the tech giants may use personal information, customers may want to use an alternate method of payment. Retailers would be well-served to remind their customers who do prefer the convenience of mobile payments to keep their devices up to date. Vulnerabilities are inherent in technology, so setting phones to update automatically will allow security patches to be applied in a timely manner and keep customers and retailers alike better protected.

Cybersecurity threats continue to plague industries, and retailers will only become greater targets as technology replaces face-to-face interactions in stores and supply chains become more complex. Before the curbside pickup lines begin jamming parking lots this buying season, retailers need to do more than an inventory check to prepare. Now is the time to review and update systems, processes and policies and ensure there are comprehensive cybersecurity measures in place.

Originally posted on securitymagazine.com

Greg Crowley
Greg Crowley Chief Information Security Officer

Greg Crowley is an accomplished executive with over 20 years in Information Technology and Cybersecurity with extensive experience in managing enterprise security and mitigating risk for global hybrid networks. Greg believes that as a leader in the cyber world, being able to communicate and execute a strategic vision to defend and protect is the most important part of his role. Prior to joining eSentire, Greg oversaw the overall cybersecurity function as Vice President of Cybersecurity and Network Infrastructure at WWE (World Wrestling Entertainment). He spent over 17 years in various leadership roles across engineering, infrastructure and security within that organization. Greg holds a Bachelor's degree from Queens College. He is a Certified Information Security Manager (CISM) and a Certified Information Systems Security Professional (CISSP).

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