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The credit card security breach at Home Depot (NYSE:HD) has become the biggest on record for any retailer.
But you wouldn’t know it based on the stock’s performance. On Friday shares of the home improvement chain closed near their all-time high. And Home Depot stock still yields a healthy 2%.
That performance comes despite the Thursday announcement that 53 million customer email addresses were stolen. That’s in addition to the data breach involving 56 million credit-card accounts that was already announced.
The Home Depot case is just the latest reminder that the shift away from paper money to credit, debit and electronic transactions has a cost. Consumer account information is constantly at risk.
On Friday I activated a new debit card that my bank issued in the wake of the Home Depot breach. As a regular customer, my information was almost certainly compromised.
But the Home Depot isn’t the only one at fault. I’m sure my contact information was part of the JP Morgan Chase (NYSE:JPM) cyber-security hack that occurred last summer. The bank sent me a new credit card just to be safe. So that’s two new cards in as many months.
While I can take some solace in the likelihood that my social security and account numbers are safe, my name, address, phone number and email address were almost certainly compromised in these hacks.
JP Morgan says that 76 million households and 7 million businesses were affected. Do the math, and that means nearly two-thirds of U.S. households have contact info in hacker Rolodexes.
The Home Depot and JP Morgan Chase hacks were just one of the reasons NY Financial Services Superintendent Benjamin Lawsky is calling for bank cyber-security regulation.
I think it’s a matter of when these regulations happen, and in what form, and not when. In Lawsky’s own words, “…cyber security is one of the most important issues the Department of Financial Services (DFS) will face as a regulator in the months and years ahead across the entire financial system.”
That sounds pretty definitive to me. And a number of select cyber-security firms have seen shares of their stocks rise as it appears likely that business is going to pick up. For instance, shares of LifeLock (NYSE: LOCK) are up 34% over the last six months. LifeLock provides fraud and identify theft protection for consumers and businesses.
What’s interesting to me about the fight against hackers is that there is no single solution. That means there are a number of ways investors can try to gain exposure to the trend. LifeLock provides one that is great for consumers. But it’s not the only solution since many of the angles of attack aren’t what you’d think.
For instance, one might not think call-center technology and bank security technology have much in common. But they do.
One product that is gaining ground fast melds both cyber security and call-center technology. It’s called voiceprinting, and it’s a way to record callers’ biometric data.
Two of the U.S.’s biggest banks – Wells Fargo (NYSE:WFM) and JPMorgan Chase – are now recording calls to capture biometric data. The idea is that, by analyzing the details of the caller, the technology can help reduce fraud.
While the privacy guidelines are somewhat murky regarding voiceprint technology, one thing is crystal clear – call center providers are using it more and more.
According to a recent AP survey of 10 leading voice biometric vendors, over 65 million people around the world have had their voiceprints taken. And in addition to known use by JPMorgan and Wells Fargo, Barclays (NYSE:BCS) and U.S. Bancorp (NYSE:USB) are also rumored to be introducing the technology.
Banks and retailers are shelling out big bucks to protect financial data and avoid the costly breaches that have become all too common. And so are consumers, in one way or another. I think this presents an opportunity for investors.
LifeLock is one option worth considering. And there are number of publicly traded call-center and customer-service companies as well, including Convergys (NYSE:CVG) and Wipro (NYSE:WIT). Use these companies as a starting point for further research if you’re looking to invest in the trend.
This Company Makes the IPhone Possible – and I Bet You’ve Never Heard of It
Apple’s new iPhone is the most technologically advanced phone on the planet. Forbes magazine estimates AAPL will move more than 80 million units by the end of the year. That’s phenomenal volume. And cautious estimates have them selling hundreds of millions more over the next 12 months. And one company is responsible for providing the technology that makes it all possible. Without it, every smartphone would look pretty dumb. Even more importantly, for us as investors – this company’s stock rockets every time a new iPhone is released. Click here for the real story.