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TheStreet Open House

The 5 Dumbest Things on Wall Street: May 6

Stocks in this article: CSCOFSLRSNEBAFCTJX

5. Sony Makes World Safe for Hackers

For the hackers who haven't figured it out yet, Sony's (SNE) online security code is up, up, down, down, left, right, left, right, triangle, X, start.

We're joking, of course. (Or maybe we're not...?) Regardless, Sony's sure making it look like it's as easy to get a PlayStation 3 user's credit card number and other personal information as it was to get extra lives in Contra about 25 years ago. This week, it was revealed that Sony's Swiss-cheese system allowed hackers access to yet another 24.6 million accounts, at least 12,700 non-U.S. credit or debit card numbers and expiration dates (although not the 3-digit security code on the back of credit cards), and about 10,700 direct debit records of certain customers in Austria, Germany, Netherlands and Spain.

The latest reported breach took place in the Sony Online Entertainment division -- which makes multiplayer online games including Free Realms and DC Universe Online -- and was directly tied to the infiltration of Sony's online PlayStation Network that the company copped to just a week ago and put roughly 77 million users' account information in jeopardy.

Sony's going to be begging for some extra lives after this one, especially after taking great pains to tell customers that Sony Online Entertainment and the PlayStation Network aren't part of the same network and that information stored in one wouldn't necessarily be vulnerable if the other was hacked. Oops.

The biggest blow to Sony's health meter, however, came when security expert Dr. Gene Spafford of Purdue University testified against Sony during a meeting of the House Subcommittee on Commerce, Manufacturing and Trade on Wednesday. Spafford told the committee that not only was Sony using outdated versions of Apache Web server software that were "unpatched and had no firewall installed," but that the problem was "reported in an open forum monitored by Sony employees" two to three months before the security breaches. Oops fatality.

This is nowhere close to the same scale as the hacker attack on Alliance Data Systems marketing firm Epsilon in April that exposed the e-mail addresses collected by 2,500 corporate partners including Chase (CCF), Best Buy (BBY) and TiVo (TIVO). The credit card information exposed by Sony's hack also falls well short of 46 million credit card numbers lifted when T.J. Maxx and Marshall's parent company TJX (TJX) decided the best way to secure customers' information was with a smile and a polite handshake. It's far more annoying, however, as Sony's continued revelations of breaches and other assorted bungling -- which doesn't include hackers' development of a "jailbreak" device last summer that allowed them free access to online games usually reserved for developers -- haven't abated and haven't given PlayStation 3 users much confidence in the company's ability to keep information safe anytime soon.

Sony claims the breach and the service outages that followed have cost the company upwards of $20 million. Gamers who've spent the last week calling credit agencies, cutting up credit cards and changing passwords won't be weeping, especially in light of Sony's lax security.

TheStreet Says: Battling hackers with the technological equivalent of toothpicks bound by bubblegum and prayer is about as smart as trying to beat Killzone 3 with a character armed only with spitballs and harsh language.

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