Credit card lenders could be facing more than US$300 million of card replacement costs if customers affected by the Sony Corp data breach decide to replace their credit cards.
Analysts have previously estimated that the incident could cost Sony more than US$1.5 billion, but this is the first time they have put a price tag on how much major lenders will also suffer.
“It’s not insignificant,” Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, said at the sidelines of a payments industry conference in Miami Beach on Wednesday evening.
The FBI is working with federal prosecutors in San Diego as agents try to determine the facts and circumstances surrounding the alleged crimes, FBI spokesman Darrell Foxworth said on Thursday.
Each customer request to replace a credit card would cost lenders about US$3 to US$5 per card, several analysts said on Wednesday and Thursday. Those costs would include the new piece of plastic itself, postage and various customer service costs.
Hackers earlier this month broke into Sony’s PlayStation Network, stealing names, addresses and possibly credit card details from 77 million users. Sony shut down the network on April 19, but waited about a week to disclose that the system had been hacked and users’ data could have been stolen.
Credit card lenders could also lose business from the customers affected by the breach, even if they were quick to replace the cards. New cards take time to be activated, and in the meantime consumers could use a different card, said Aite Group analyst Julie Conroy McNelley in an e-mail on Thursday.
Consumers may also be reluctant to use a card that they perceive as higher risk because it might have been involved in a hacking episode, even if the breach of security was not the issuer’s fault, Conroy McNelley said.
The Sony breach was one of the biggest online data infiltrations ever and is a sign that the industry may face new threats.
“As we move into the digital world, we put more and more of our digital identity into the cloud, or digital devices ... Security is going to be a tremendously important part of what we do,” Daniel Schulman, American Express group president of enterprise growth, said at the sidelines of the annual conference, hosted by PaymentsSource publisher SourceMedia.
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