Week in review: The cost of insecurity

Consumers and retailers come to grips with the largest-ever breach of personal data security.

As news of what may be the largest-ever personal data security breach spread, consumers and retailers grappled with how the lost information would affect them.

Late last week, MasterCard International revealed that information on more than 40 million credit cards may have been stolen. Of those exposed accounts, about 13.9 million are for MasterCard-branded cards. Some 20 million Visa-branded cards may have been affected and the remaining accounts were other brands, including American Express and Discover.

The data security breach happened because intruders were able to exploit software security vulnerabilities to install a rogue program that captured credit card data on the network of CardSystems Solutions, a MasterCard International spokeswoman said. The malicious code was discovered after a probe into the security of CardSystems' network.

The probe also found that the Atlanta-based payment processor did not meet MasterCard's security regulations. CardSystems held onto records that it should have discarded, and it stored transaction data in unencrypted form, the spokeswoman said.

Despite those details, many consumers are largely being left in the dark. Pressure is mounting for companies to alert individual cardholders whose details were exposed by the breach at data processor CardSystems Solutions. But representatives for JP Morgan Chase, Citigroup and MBNA said they would not notify customers unless the accounts are actually abused. At that point, the providers would close the account and issue a new card, they said.

Retailers may have more to lose than consumers by the lack of notification. If a fraudster makes purchases on an individual's card, then the cardholder has to pay for the first $50 of unauthorized transactions, or nothing at all. Businesses, however, in many cases have to cover the loss--a potentially heavy burden in the CardSystems case, given the large number of accounts exposed. If consumers aren't alerted, that means the compromised cards could still be active and may be used by criminals in a transaction.

Tech in court
Two of the most closely watched court cases in the tech world were left undecided this week as the U.S. Supreme Court chose to delay its rulings.

One case focuses on how much responsibility technology companies have for the actions of customers who use products to break copyright laws. Peer-to-peer file swapping is the heart of the issue, but the court is addressing a delicate legal balance between copyright interests and technological progress that has lasted for two decades. Despite the lack of judicial resolution, some entrepreneurs are pushing ahead with plans to harness the anarchic networks for commerce.

The other major case pits the Federal Communications Commission against a small Internet service provider called Brand X, which could set the ground rules for competition in the broadband market for years to come. Though the details of the case are seemingly arcane, the issue could influence how quickly high-speed Internet services come online across the country, what features they will have and how much they will cost--particularly in regions where cable is the only broadband choice for consumers.

Decisions on these cases could come as early as Monday.

No stranger to the courtroom, Apple Computer found itself on the receiving end of a suit when a Vermont company alleged that the interface for iTunes infringes on its patent. Contois Music & Technology filed suit last week, alleging that Apple's actions are "irreparably" damaging Contois.

The company seeks a preliminary and permanent injunction, as well as unspecified damages, according to the lawsuit. Contois is also charging that Apple's patent infringement is willful, and is asking the court to take this into account in calculating damages by tripling the amount it would otherwise award.

Meanwhile, PC manufacturer Dell is involved in a lawsuit with national implications that challenges the generous tax incentives the company was promised by North Carolina lawmakers. Lawyers for the North Carolina Institute for Constitutional Law filed a 69-page complaint on behalf of seven small-business owners in the Forsythe County area who say Dell is getting grossly unfair tax advantages to build its 527,000-square-foot manufacturing facility in the city of Winston-Salem.

The complaint claims Dell's package deal violates the U.S. Constitution's commerce clause, which says Congress (and by extension, the states) cannot make laws that favor commerce in one state over commerce in another. The suit asks for an injunction preventing Dell from receiving any further tax incentives and asks that the company be required to pay back the funds it has received so far.

Invasion of the robots
Robots are being enlisted for a variety of tasks these days, from military manuevers with guns to more dangerous jobs--keeping an eye on your toddlers.

Rubi, a teacher's assistant at the Early Childhood Education Center in San Diego, is part of an experiment to study how robots and humans interact. Rubi is capable of tracking heads, detecting faces and interpreting basic expressions. Additionally, it can teach songs and--through the touch-screen--conjure up interactive games.

The robot is also animated with Bayesian artificial intelligence, meaning that it compiles data on its past experiences and changes its behavior to try to achieve certain outcomes. In other words, if the kids forget there's a second verse to "Itsy bitsy spider," the system will prompt Rubi to prompt them.

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In a slight setback in the march of robots into war, the U.S. Army has delayed deployment of a robot equipped with a machine gun. The Talon Sword, an autonomous vehicle with a machine gun (or rocket launcher) mounted on top that soldiers can fire from a remote location, was supposed to be deployed in live situations in Iraq by April. Adjustments have been made, but the Army is currently conducting further testing.

Various branches of the armed services have already deployed robots in battlefield situations, but mostly to conduct reconnaissance. The PackBot from iRobot, for instance, crawled into caves in Afghanistan to seek out Taliban fighters. In Iraq, robots equipped with chemical sensors get sent into sensitive areas in advance of troops.

Roomba Scheduler

Meanwhile, the Roomba is about to become far more customizable in the home. The Roomba Scheduler comes with a handheld remote control and lets people program vacuuming times and create two virtual walls. The virtual walls prevent the Roomba from going beyond a certain point, sort of like an electric dog fence.

The vacuum itself comes with improved software, but is otherwise identical to the Roomba Discovery SE currently on sale. The Roomba Scheduler will sell for $330. At the same time, iRobot will sell the scheduler, two virtual walls and a software update for $60 to current Roomba owners who want to upgrade their machines.

Also of note
Apple Computer has confirmed that it has discontinued its single-processor Power Mac G5 system in favor of an all dual-chip lineup...Yahoo has shut down its user-created chat rooms after reports that some of them were being used by adults to promote sex with minors...In a short-lived mass media experiment, the Los Angeles Times has closed a Web site that allowed readers to rewrite editorials after the site was flooded with obscene messages and photos...More than a third of all CDs purchased worldwide are pirated, according to a record label report.

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