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May 20, 2018

For Luxury Brands, Cyber Security is a Big Deal

How Luxury Brands Handle Digital Security and IT Challenges

For luxury brands in fashion, auto, and design, few things are more important than cyber security. It’s one of the most pressing issues on the IT front. However, very few brands are adequately prepared.

The Top Digital Security and IT Challenges

Luxury brands face a number of unique challenges in the business world. They typically find themselves handling larger than average transactions and frequently work with high-status customers. And because of the aura surrounding the brand name, these companies often have invisible targets on their backs.

As an owner, manager, executive, or IT director for a luxury brand, it’s imperative that you understand the risks you face and implement proactive steps and procedures that allow you to protect the identity and integrity of your brand. 

With all of that being said, let’s take a look at some of the top digital security and IT challenges your brand may face – as well as some ways to deal with them.

1. Protecting Customer Data

In April of this year, it was announced that the JokerStash hacking group, also known as Fin7, walked off with an astounding 5 million credit and debit card numbers from Saks Fifth Avenue, Saks Off 5th, and Lord & Taylor. Not only was this an attack on a luxury brand, but it was also one of the more significant credit card heists in history.

“The hackers likely got malware to infect the systems via phishing emails and then managed to steal the more than 5 million records by quietly sitting on the network for nearly a year,” CSO Online explains.

This hack is frightening on many fronts, but is especially tough to swallow because it went on for nearly a year before it was detected. If it takes a brand like Saks Fifth Avenue that long to uncover a hack, how long would it take other brands?

The key to protecting customer data is to be proactive. You have to be forward-thinking, rather than reactionary. It’s the only way to keep your brand safe.

This is something Estate Diamond Jewelry, a leading online retailer of vintage engagement rings and fine estate diamonds, is extremely careful about. As Afshin Shaddiae says, “We have to continually remain aware of what’s happening on the digital front. The jewelry and rings on our website are both rare and highly collectible. If we let our guard down, even momentarily, it opens the brand up to incredible risk. That’s why we implement proactive security measures to fend off threats before they emerge.”

You need a customer-focused data protection plan. Not an idea that you talk about – an actual documented strategy. If you’re worried about making your customers jump through too many hoops, don’t be. While safety shouldn’t come at the expense of user experience, you’d be surprised to learn this is rarely the issue.

“Most customers are probably quite content to comply with the more stringent customer-facing security tasks such as replying to a confirmation message before being allowed to access their account from a new device,” tech advisor Paroma Sen writes.

Design with security in mind and your customers will be thankful. 

2. Internet Spoofing

There was a period of time where luxury brands, especially those in the fashion industry, were hesitant to get involved with digital commerce. They felt that it may water down the brand images they had carefully crafted. And while this fear hasn’t been realized – luxury brand sales have actually increased over the past few years – there are other challenges associated with maintaining an internet presence.

Lately, luxury brands like Louis Vuitton and Fendi have been forced to deal with something known as “spoofing.”

“Spoofing is just a technical term for the sort of fraud that’s long been the bane of many a luxury brand,” explains Robert Klara of AdWeek. “It refers to the practice of using variants of a brand’s name to set up a series of URLs that lure unsuspecting shoppers to sites that steal traffic or money or both.”

These scammers typically set up the fraudulent sites in the hopes of making money, stealing credit card information, and then selling that information on the dark web. And while this activity technically has nothing to do with luxury brands, it certainly hurts their brand image and dissuades digital commerce.

Spoofing is believed to be a $460 billion industry, which shockingly dwarfs the estimated $264 billion value of the online luxury goods market.

Vigilance is the key to preventing internet spoofing. While you can’t stop it from happening, you can identify it early in the process and prevent it from becoming a major issue.

3. Authenticating Website Transactions

Protecting customer data, and the brand as a whole, ultimately comes down to carefully authenticating website transactions and then storing data in a safe environment that’s free from outside manipulation.

“To protect their designs, fashion companies should conduct a risk assessment of where IP data (such as design files or manufacturing instructions) is stored, the security assets in place to support that data, how that data flows through the company’s operations — including third parties like garment factories — and who has access to it,” explains Kate Abnett, an expert in the intersection of fashion and technology.

The better your brand gets at authenticating transactions and remaining aware of your surroundings, the lower your risk will be.

Get Ahead of the Curve

The best piece of advice, for small businesses and luxury brands alike, is to get ahead of the curve with cyber security. The more proactive you are, the less time and money you’ll have to pour into reactive strategies that attempt to mitigate damage.

Obviously, the big challenge is knowing where to spend your time and resources. We’ve outlined some of the bigger areas of concern in this article, but you may find that the unique nature of your business and/or niche exposes you to additional threats.

Stay ahead of these and learn what it looks like to proceed with care and caution.

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