Heartland, After The HackingThe data breach at Heartland Payment Systems was a disaster for the company. But after picking up the pieces, the company is looking ahead to a more secure future.
On January 20, 2009, Heartland Payment Systems reported discovering malicious software in its payment processing system, a security breach of potentially massive magnitude given that the company's handles 100 million transactions per month for more than 250,000 businesses.
While the monetary and data loses following from the penetration of Heartland's systems -- the compromise that lasted for months -- are still being determined, the financial impact on Heartland's stock price alone was devastating.
The breach, in conjunction with the economic downturn, led to the loss of about $500 million in shareholder value, more than three-quarters of the company's market capitalization, two months after the news was announced.
And then there's the cost of more than several dozen breach-related lawsuits filed against the company this year and related expenses.
According to slides presented in August at a National Retail Federation Conference by Robert O. Carr, Heartland's founder, chairman and CEO, the breach cost the company $32 million in legal fees, fines, settlements, and forensics during just the first half of the year.
But Heartland's stock has mostly recovered and its executives have hit the road to restore confidence in the nation's fourth largest payment processor.
At a security conference in San Francisco on Tuesday, hosted by vulnerability management company Qualys, Steven Elefant, Heartland's CIO, described the breach as a disastrous event for the company and likened it to the 1982 Tylenol murders in terms of the corporate crisis response that followed.
For Elefant, who began consulting for Heartland last December and then joined the company in January, the breach made it clear that industry needs to collaborate and share information. The bad guys, he said, are already doing that.
"The bad guys wake up every day and think about how they can destroy us," he said.
To help financial companies communicate, Heartland began working with the Financial Services Information Sharing and Analysis Center (FS-ISAC), a non-profit organization formed in 1999 in response to a Presidential Directive to share information about financial threats, to create the Payments Processing Information Sharing Council (PPISC), an information sharing group specifically for the payment processing industry.
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