Stolen Photos Good News for these Stocks

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Last week my daughter turned two. She invited her 10 best friends — popular girl — to a local petting farm we’d reserved for the morning. Cake, presents, and pony rides for all. And of course plenty of pictures.

With two parents per toddler in attendance, there were more cameras than kids.

These days it seems everyone is more concerned with capturing the moment — every moment — on film, rather than in their memories. And it’s not just pictures. You’ve got to have video too. Lots and lots of video.

I grew up in an era when film was, well, film. You probably did too. You couldn’t just take 100 pictures and sort through them later for a few gems. You had to be selective. Film cost money. Developing it cost money. Then, if you were organised, it all eventually had to fit into an album.

And the only people who ever saw your pictures — photos of your kids playing or maybe taking a bath — were the friends and family you chose to share them with. If a thief did break into your house you could be certain the last thing he’d go for was the family photo album.

Unfortunately that’s changed. And for the worse.

Sharing family photos with thieves

I brought up my daughter’s birthday party for a reason. And not just because I’m a proud dad.

Earlier this week I heard from Sam Volkering. You probably know Sam from Australian Small-Cap Investigator, or from his premium advisory, Revolutionary Tech Investor.

Sam told me that there had been yet another major hacking attack. This one struck children’s electronics company Vtech. Five million accounts were breached.

According to the Independent:

Cyber attackers broke into Vtech, which makes tablets and other devices for kids, and got into a database that stores kids’ personal information, recordings and images.

The site said last week that it had been hacked and that five million customers had been affected. But the hacker at the centre of the attack claims to have access to chat logs and personal information.

Those include pictures of children taken with the devices’ camera, according to Vice’s Motherboard, who interviewed the hacker.

Security expert Troy Hunt said that all communication through the app was unencrypted, meaning that when a hacker got access to the database all of the information could be read.

Much of the information and pictures can be traced back to specific usernames, meaning that the children and adults in the files can be identified, according to Motherboard.’

Now my daughter’s a bit young to have her own tablet or other ‘devices’ that do more than flash coloured lights and make funny noises. And having an…ahem…somewhat older dad, she’ll likely be among the last of her friends to be ‘connected’.

But the idea that hackers can waltz in and steal personal details and images from so many unsuspecting users…children no less…did cost me a few hours’ sleep. And if it cost me sleep, imagine how the parents of the affected children feel.

As I said before, back in the days of the good old family photo album, thieves had no interest in pictures of your kids. They were of no value.

In today’s world of file sharing the story is vastly different. And potentially highly unsavoury.

And almost 20,000 of the victims are right here in Australia. From Technology Spectator:

The information includes names, addresses, passwords and the names and birthdays of up to 200,000 children.

Hackers are also able to link children with their parents and access their photographs and voicelogs.

“We are aware of reports of some 18,000 Australian parents and children being affected by the VTech app breach,” Australian consumer advocacy group Choice said in a statement.’

You’d think that a major data service provider like Vtech, holding this kind of sensitive technology, would be impossible to penetrate. But to be fair they’re in ‘good’ company.

According to Bloomberg:

Since 2005, more than 75 data breaches in which 1,000,000 or more records were compromised have been publicly disclosed. The attacks on Home Depot and EBay in 2014, and on Target at the end of 2013, indicate an increase in attacks on retail and merchant data.’

The chart below gives you an idea of just how prevalent these attacks are becoming.

Data Breaches Since 2005

Source: Bloomberg

 

Other major recent breaches include Sony, JPMorgan and the rather notorious Ashley Madison leak. Not to mention numerous hacks of various government websites…in truth too many to list here today.

Of course every major data breach like these is followed by a public backlash. And private companies can generally expect to lose the faith and business of valued customers. Which in turn impacts their share price.

Bloomberg reports that Sony shares lost 1.1% when the company announced hackers had broken into their network. And Home Depot shares fell 2.2% when it revealed 56 million payment cards and 53 million e-mail addresses had been stolen.

You’d hope these companies would invest in the best possible data security available out of the goodness of their hearts. Especially companies like VTech, holding images and personal information of young children. And perhaps they might.

But you don’t have to hope they’ll do it to protect their bottom line. That’s a sure bet.

For that reason the cyber security business is set to see massive growth in the years ahead. It’s a trend Sam’s been on top of for years. But he’ll be the first to tell you that not every start-up cyber security firm will make it big. Only the best will rise to the top and deliver you the potential of multi-hundred percent gains.

Sam has recommended a group of these top cyber security companies  to subscribers of Revolutionary Tech Investor. He calls them the ‘Defenders’. And he tells me he’s got his eye on a few more companies with truly revolutionary technologies up their sleeve. Technologies that could change the nature of cyber security as we know it today.

You can learn more about Sam’s work and the ‘Defenders’ here.

That’s all for today.

Cheers,

Bernd Struben,

Managing Editor, The Daily Reckoning

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Bernd Struben

Bernd Struben

Bernd Struben is the Managing Editor of Port Phillip Publishing. Bernd has worked on four different continents, and has more than 20 years of professional finance, editorial, and management experience. He holds a degree in economics.
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