Korean credit card companies hit with 90-day, $100m sales ban
Punishment for losing 20m customer records makes other data breach laws look wimpy
Three South Korean credit card firms which are thought to have exposed the personal data of 20 million customers have been forced to suspend all new business for three months in a blow which could cost them nearly $100 million.
Korean regulator the Financial Services Commission (FSC) said the firms were not allowed to sign up new customers or offer new products and services for the period, according to local news agency Yonhap.
One of those affected, KB Kookmin Card, said in a regulatory filing seen by Yonhap that the ban, which began on Monday, could cost it 44.6 billion won ($41.8m, £25m) in operating revenue.
The figure estimated by Lotte Card is around 29 billion won ($27.2m, £16.3m), while the hit to NH Nonghyup’s bottom line is thought by “industry sources” to be in the region of 30 billion won ($28.1m, £16.9m).
The total estimated losses for the three firms comes to $97m (£58.3m) – a cautionary tale for any business which fails to properly secure customer data.
For its part, the FSC is apparently trying to improve the data protection environment by drawing up new rules for financial firms.
These will include limiting the amount of information firms can collect from customers and the amount of information they share with third parties and affiliates.
South Korea’s Financial Supervisory Service last month revealed the massive data breach - which could affect nearly 1 in 2 Koreans - included customer names, social security numbers, credit card numbers and expiry dates.
An IT contractor working at the Korea Credit Bureau was arrested last month on suspicion of lifting the data on a USB and selling it to a marketing firm.
The card companies involved will not only face revenue losses from the three month new biz suspension but have to fork out for “any financial losses caused to their customers due to the latest accident”.
That’s aside from the brand damage to the companies and the cost of IT forensics and remediation. ®