Chad Leedy
Chad Leedy

Vice President, Franchise Development

How Digital Transformation Can Open Doors for Retail Cybersecurity Attacks


Retailers are Investing in Digital Transformation

retailers have either implemented digital transformation initiatives or are in the process of implementing digital transformation projects.

60% Retailers are Investing in Digital Transformation

retailers have either implemented digital transformation initiatives or are in the process of implementing digital transformation projects.

Primary focus of
digital transformation

Customer Experience

Workforce Experience

Supply Chain Optimization

Digital Transformation Projects Can Create Security Vulnerabilities

Retailers’ data lakes are attractive targets, often combining detailed identity and demographic data with credit card information.


organizations sacrificed the security of mobile devices to facilitate their response to restrictions put in place due to the pandemic.


organizations said that they’d come under pressure to sacrifice the security of mobile devices for expediency.


percent of consumers are confident that retailers will be able to navigate the challenges of a data breach

Retailers are apparently more likely to pay off ransomware attackers. Of those that experienced such an attack, 51% paid the ransom directly (versus 37% of their peers in other industries).

Retailers surveyed tend to have smaller SOCs than their peers

report that their SOC consists of more than 50 FTEs (versus 20% of SOCs across industries).

say the cybersecurity team being understaffed for the size of their organization is a top challenge (versus 25% across other industries).


Four basic security policies are needed for today's enterprise


Restrict access to data on a need-to-know basis.


Encrypt sensitive data sent across open public network.


Regularly test security systems and processes


Change all default, vendor supplied processes

14% of organizations complied with all four requirements in 2018

Only 9% of organizations complied with all four requirements in 2021

Retail Cybersecurity Threats Targets , Actors & Implications



attacks include one of the following –
System Intrusion, Social Engineering, Basic Web Application attacks

Threat actors


External actors


Internal actors

Data lost









Data compromised









Retail Cybersecurity Threats Targets , Actors & Implications

Retailers are betting big on enabling employees to work from anywhere. Convenience is now offered in the form of:

  • BYOPC (Bring Your Own PC)
  • BYOD (Bring Your Own Device)
  • CYOD (Choose Your Own Device)
  • COPE (Company Owned Personally Enabled)
  • COBO (Company Owned Business Only)

The top compromised asset varieties were


respondents said mobile devices are their company’s biggest IT security threat


respondents agreed that mobile device threats were growing faster than other threats.

How Can Retailers Secure Mobile Devices?

Cybercriminals Are Checking Out POS

Cybercriminals Are Checking Out POS Retail chains face a variety of security challenges, from connected POS systems and devices to online ordering and delivery applications. Self checkout solutions in the Retail Environments setting could generate $430 billion to $520 billion in economic value in 2030.

Adoption of self checkout use cases is expected to increase from a relatively low 15 to 35 percent of organized retail today to 80 to 90 percent in 2030.

In store purchases are vulnerable to fraudulent purchases according to 49.3% of retailers. Multichannel purchases (bought online and picked up in store) are vulnerable to fraudulent activities according to 18.8% of retailers. (NRF, 2020)

POS applications are directly connected to credit card data, loyalty management applications, and inventory management systems. They are easily accessible to anyone and retailers struggle to manage the sheer number of in store terminals, self service kiosks, mobile payment devices, and phone based payments directly from customers.


attacks on POS environments are completed through remote access.

Scamsters rely on shimming and man in the middle (MITM) attacks to impersonate EMV credit cards at the POS.

In 2019, an employee clicked on a malicious link in a phishing email and downloaded a Remote Access Trojan. The attackers used the Trojan to move laterally into the merchant's PoS environment where they deployed a RAM memory scraper for harvesting payment card data.

Data Breaches are Expensive

$ 3.28 M

is retail industry’s average cost of a data breach (IBM Cost of Data Breach Report, 2022)

How Can Retailers Secure POS?

Cyberattacks on the Cloud

50% of retailers surveyed have a cloud first policy for new applications compared to 38% of organizations across other verticals.

Cloud misconfiguration accounted for 15% of the breaches and costs the company $4.14 million on average.

Malware targeting Linux environments rose dramatically in 2021—a surge possibly correlated to more organizations moving into cloud based environments, many of which rely on Linux for their operations.

Cloud Security Maturity

Sky High Cost of Cloud Security Breaches​

How Can Retailers Secure the Cloud?

Loyalty Programs and Gift Cards


consumers shop exclusively with retailers to take advantage of loyalty programs.

$140 billion

Estimated value of loyalty points in the US

$100 billion

Estimated value of rewards that go unclaimed

$ 259B by 2026

The gift card market in the US will increase from US$172 billion in 2021 to reach US$259 billion by 2026.


number of gift card cyberattacks when compared to other targets

Impact of Loyalty and Gift Card Fraud


Estimated value of rewards fraudulently redeemed each year $1 billion


The FTC estimates an based on 64,000 consumer complaints that amount to a collective loss of $233 million.


Any data breach involving loyalty management applications could potentially attract regulatory fines under the provisions of the California Consumer Privacy Act (CCPA) and GDPR

Loyalty account takeover fraud is a ticking timebomb. According to Forter, As fraudsters accrue more account data during this period, merchants should remain vigilant. Fraudsters are breaching accounts and stealing personal data, using this time to age the accounts they steal. They are taking the time to build the account’s reputation, making it more difficult for rules based systems or manual review teams to detect a hacked account from a legitimate one.

How Can Retailers Minimize Loyalty and Gift Card Frauds?

Implement a robust data analytics system to flag suspicious transactions.

Enforce password policies and encourage multifactor authentication.

Limit the personal data needed to enroll in the rewards program.

Regulate access to loyalty management systems and implement a zero trust security framework.

Accelerate Retail Digital Transformation with Interface

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