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Tim Wilson
Tim Wilson
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Michaels Retail Chain Reveals Details Of Breach: Nearly 3M Affected

Attack on point-of-sale systems went on for more than six months, officials say.

Retail chain Michaels Thursday released information regarding the data breach it disclosed in January, reporting that more than 2.6 million customers’ credit card data may have been affected.

In a letter to customers posted on the Michaels corporate website, CEO Chuck Rubin reported that "the attack targeted a limited portion of the point-of-sale systems at a varying number of stores between May 8, 2013 and January 27, 2014. Only a small percentage of payment cards used in the affected stores during the times of exposure were impacted by this issue.”

About 2.6 million cards may have been affected -- about 7% of the cards used at Michaels stores during that time period, the letter says. The company posted a list of the locations and potential dates of the attacks it recorded.

The company also found malware at its Aaron Brothers subsidiary. "Regarding Aaron Brothers, the company has confirmed that between June 26, 2013 and February 27, 2014, 54 Aaron Brothers stores were affected by this malware,” the letter states. About 400,000 cards were potentially affected during this period, Rubin says.

The breach in data, the result of investigations by two different security firms, the letter attributes to "highly sophisticated malware that had not been encountered previously by either of the security firms." The company says it has "identified and fully contained the incident" and that the malware no longer threatens customers at Michaels or Aarons.

The affected systems contained certain payment card information, such as payment card numbers and expiration dates, for both Michaels and Aaron Brothers customers, according to the letter. "There is no evidence that other customer personal information, such as name, address or PIN, was at risk in connection with this issue," the letter says.

Michaels says it has received "a limited number of reports from the payment card brands and banks of fraudulent use of payment cards potentially connected to Michaels or Aaron Brothers." It is offering free fraud assistance services to affected customers.

"Based on what Michaels has reported, the only information that attackers were able to access was payment card numbers and expiration dates, about both Michaels and Aaron Brothers customers," said Patrick Harbauer, senior security consultant at Neohapsis, a security and risk management consulting company specializing in mobile and cloud security services. "So the good news is that the bad guys didn't gain access to additional data such as cardholder name, address and other highly sought-after magnetic stripe data that allows the bad guys to create counterfeit credit cards.

"What this story does highlight is that the malware seems to be getting harder and harder to detect -- or companies are still completely dropping the ball when it comes to effectively monitoring their systems and detecting the installation of malware and the copying of data off of their systems," Harbauer says. "The industry as a whole needs to focus on better logging and monitoring of critical systems and we need to focus on deploying technologies that detect when unauthorized software is installed on systems."

"As evidence by the new details out from Michaels and its subsidiary Aaron Brothers, we’re seeing many of these breaches go undetected for weeks and months, making the impact even greater," said Eric Chiu, president and co-founder at HyTrust, a cloud security company.

Tim Wilson is Editor in Chief and co-founder of Dark, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

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User Rank: Strategist
6/1/2014 | 2:13:10 PM
databasing financial information?
Late to reading this article.... Why do the POS systems database card info? 

A simple terminal connects to the processor, transfers the card data, gets a response, and done.  There is no client side data collection. 

I guess I'm not sure why Target & Michaels need to store this data.  My capitol one card was comprimised at some point in the last year.  When I talked to them, I asked which CV code was used, and they said the CV (swiped code), not the 3 digit CVV2, which means mine was most likely one from the Target hack.

I guess I can see why a company like Target would want to dbase my name and address for marketing purposes, but databasing my finacial information without my concent should be illegal.
User Rank: Strategist
4/22/2014 | 8:22:48 AM
Re: Type of Malware

Agreed, Robert. Michaels did not give details on the malware itself, but I was impressed that after the initial disclosure, they did come back and give some specifics on the breach and its scope. A lot of companies do only the bare minimum and try to avoid the bad headlines that a breach causes, but Michaels was willing to reveal how the breach occurred and how many customers were affected.

Attacks on POS systems have led to a number of major retail breaches, going back to the Heartland Payment Systems/TJX attacks a few years ago. Chain stores are very difficult to protect physically, and many stores continue to use older POS systems because the cost to replace them is high. Additionally, it can be easy to socially-engineer a cashier or store clerk, or to eavesdrop on wireless systems used in stores. The steps taken recently by the retail industry suggest that they are beginning to recognize the depth of the potential threat and to act to defend against it.
Robert McDougal
Robert McDougal,
User Rank: Ninja
4/20/2014 | 11:14:35 AM
Re: Type of Malware
I haven't been able to find information on the exact malware used or the infiltration method, however, it has been reported that the same group that breached Target is also behind this attack. Therefore, the malware used in this breach is probably a variant of the Target attack.
User Rank: Ninja
4/19/2014 | 11:36:19 AM
Type of Malware
Has there been any report as to what type of malware was used to exploit the POS machines? Also, how were the machines infiltrated? 
User Rank: Ninja
4/18/2014 | 6:18:06 PM
It is an embarrassing situation. The level of security offered to the customers is very poor. In many cases pos systems are common windows based machine with a few defense systems that in many cases are not sufficient to detect in time ongoing attacks. Another serious problem is related to the level of security of credit/debit card that in US still not use crypto chip.

Summing the number of compromised credit/debit cards in the different data breach occurred in 2013 in US we will obtain a disconcerting total ... nearly one of 5 card has been compromised.

It's time to think to a different approach to security.  
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