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Neiman Marcus, Target Data Breaches: 8 Facts

A cyberattack campaign, likely coordinated, breached data from Target, Neiman Marcus, and at least three other retailers.

9 Notorious Hackers Of 2013
9 Notorious Hackers Of 2013
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Neiman Marcus confirmed Friday that it suffered a data breach that extended throughout at least part of December, and which resulted in the theft of an unknown amount of credit and debit card data.

The luxury retailer said it learned in mid-December that its systems may have been compromised. "Neiman Marcus was informed by our merchant processor in mid-December of potentially unauthorized payment card activity that occurred following customer purchases at our Neiman Marcus Group stores," company spokeswoman Ginger Reeder said Monday via email.

In response, the retailer hired a digital forensics investigation firm. "On January 1st, the forensics firm discovered evidence that the company was the victim of a criminal cyber-security intrusion and that some customers' cards were possibly compromised as a result," Reeder said.

Neiman Marcus first publicly detailed the breach Friday, which happened to be the same day that Target updated its data breach notification, revealing that in addition to the 40 million credit and debit cards stolen from the retailer from late November until mid-December, personal information on 70 million customers was also compromised.

[Security efforts must be worth the money they cost. Is Your Security Program Effective? 7 Must-Ask Questions.]

Are the breaches connected? According to a Reuters report on Sunday, investigators now believe that Target, Neiman Marcus, and at least three other retailers -- which have yet to be named -- were successfully breached at the end of 2013, likely all by the same gang.

Here's what's known about this apparent hack-attack campaign against US retailers:

1. Remediation, investigation ongoing at Neiman Marcus
Neiman Marcus said that as soon as it learned of the breach, it brought the appropriate resources to bear to both identify and fix the underlying information security problems, which it declined to identify. "We informed federal law enforcement agencies and are working actively with the US Secret Service; the payment brands; our merchant processor; a leading investigations, intelligence, and risk management firm; and a leading forensics firm to investigate the situation," Neiman Marcus's Reeder said.

One question that Neiman Marcus executives will likely face in coming days is whether they warned breach victims quickly enough. About one month appears to have elapsed between when the retailer first learned that its systems may have been compromised and when it warned its own customers.

On the other hand, the retailer only positively learned two weeks ago that its systems had been breached, and it's still trying to harden those systems against similar attacks. "We have begun to contain the intrusion and have taken significant steps to further enhance information security," spokeswoman Reeder said Monday.

2. Finding solid answers may still take weeks
As Neiman Marcus's breach investigation unfolds, the retailer may find that attackers stole more than card data. Target first disclosed on Dec. 19 that information for 40 million credit and debit cards that it processed had been compromised. On Friday, Target said its investigators discovered that personal information for 70 million of the retailer's customers was also stolen, meaning that up to 110 million consumers may have been affected by the breach.

"There may some overlap between the two groups -- the 40 million and the 70 million -- but we don't know to what extent at this time," Target spokeswoman Molly Snyder said Monday via email, highlighting how the investigation and a full picture of what happened are works in progress.

3. Neiman Marcus will notify affected customers
Like Target, Neiman Marcus has apologized to its customers for the data breach, and the high-end retailer said it also plans to notify anyone that it believes was affected. "The security of our customers' information is always a priority and we sincerely regret any inconvenience," Reeder said. "We are taking steps, where possible, to notify customers whose cards we know were used fraudulently after making a purchase at our store."

But both the Target and Neiman Marcus breaches only came to light after information security reporter Brian Krebs received reports about fraudulent purchases traced to cards used at both retailers. After Krebs publicized the suspected fraud, first at Target in December, and then Neiman Marcus on Friday, both retailers confirmed that they'd been breached.

To date, Neiman Marcus has yet to specify whether, as Target has done, it will offer free ID theft and credit monitoring services to affected customers. Target has stopped short of offering to foot the bill for replacement cards for affected consumers. As a result, not all card issuers plan to send replacements to affected consumers.

(Source: Wikimedia Commons)

4. Neiman Marcus attack timing correlates with Target breach
Target said that its systems were breached from Nov. 27 -- the day before Thanksgiving, and the start of the year's busiest shopping period -- until Dec. 15. Meanwhile, Neiman Marcus said it first learned that its systems were breached in mid-December. Given the apparent overlap in attack times, was the same gang behind both exploits? That's not clear, although investigators who spoke to Reuters on condition of anonymity said that they suspect that a single gang, based in Eastern Europe, was behind the attacks.

Neiman Marcus spokeswoman Reeder declined to respond to an emailed question about whether it was coordinating its breach investigation with Target or any other retailer that might have been targeted by the same set of attackers.

5. Trial runs likely preceded recent attacks
Investigators now believe that the attacks against Target, Neiman Marcus, and other -- as-yet-unnamed -- retailers were preceded by a series of smaller attacks that began a few months before the post-Thanksgiving shopping rush.

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User Rank: Apprentice
1/15/2014 | 7:51:46 AM
Re: All that spying and the Police & Security State let's another massive crime happen.
There is plenty of blame to pass around.  What amazes me is that 40 million cards could be stolen and the banks didn't notice a trend in their customers spending habits changing all of a sudden.  I highly doubt that they were only using a handful of cards at a time after the breach.  Secondly and I'm not saying this is the best plan but it would surprise me if banks have a team that is out there trying to buy stolen card numbers in order to head off any attacks.  I know if I was running a large bank I would have a team that worked undercover to buy card numbers so that when there were big leaks like this I could quickly shut off the taps.  From the retailer's side it makes me wonder if the group that did the hacking used the same vulnerability to access all of the affected networks. 
Thomas Claburn
Thomas Claburn,
User Rank: Ninja
1/14/2014 | 8:11:45 PM
Re: Chips ahoy
I'd like to see more options for requiring additional authentication, like a mobile phone confirmation step, added as an option at online and retail stores.
User Rank: Apprentice
1/14/2014 | 3:39:49 PM
Re: All that spying and the Police & Security State let's another massive crime happen.
Not that breached retailers shouldn't bear the brunt of the costs associated, the card issues are also to blame for not keeping current with card technology, such as Chip and Pin (required in Canada) and one-time card numbers.  The card issuers are cheap bastards that won't spend on the more secure cards.  Shame!
User Rank: Apprentice
1/14/2014 | 11:31:26 AM
Re: Chips ahoy
Great question. The short answer is that the attack could still have succeeded. That's because the type of malware tied to the Target breach scraped the POS device memory, which must handle acquired data in plaintext format.

So an attack against a region that uses the smartcards to which you refer -- known as EMV, and branded as "chip & PIN" in the UK and Ireland -- would theoretically have been able to steal cardholder data.

But attackers or buyers of the stolen card data would not -- I believe -- be able to use this data to create fake cards for making in-person purchases or withdrawals. That's because POS systems are programmed to not accept "swipes" for EMV-compatible cards, as a fraud-protection measure. As a result, attackers would also need the four-digit PIN code. (That said, one risk is that attackers could rewrite the firmware on the EMV-compatible POS device itself. But that's a different scenario.)

Would-be fraudsters with EMV card data could still use the data for online or remote purchases, provided that additional defenses weren't in place. Some European banks and card providers, for example, require that cardholders register a secret word (say, FOOTBALL), and then ask for specific characters of that word to be used to authorize any online transactions (such as asking for 1st, 2nd, and 5th characters of the secret word, so F+O+B, on one instance, and a different set of characters the next time).

So like all types of security, the more layered the defenses, the better the likelihood of preventing these types of attacks.
Jim Donahue
Jim Donahue,
User Rank: Apprentice
1/14/2014 | 10:19:54 AM
Chips ahoy
Mat-- Would smartchips, as used on European credit cards, have prevented this?
User Rank: Apprentice
1/13/2014 | 5:16:33 PM
Re: All that spying and the Police & Security State let's another massive crime happen.
It's a good idea.  But industry CEOs, and their lawyers, have generally rejected the idea, in part because they would need to share information with the government that might compromise competitve information; and in part because of concerns that such private-public cooperation could raise the risks for corporations of getting slammed with lawsuits.

User Rank: Apprentice
1/13/2014 | 2:19:04 PM
Re: All that spying and the Police & Security State let's another massive crime happen.
Yes, but what about the multiples of terrorist attempts, most of them unpublicized for security reasons, that "The Security State" has prevented? And The Security State isn't responsible for stopping massive credit card information theft at the likes of Target and Neiman Marcus. Target and Neiman Marcus are responsible for that. If the government were to stick its nose in those affairs, you'd be citing them for doing just that, no?

User Rank: Apprentice
1/13/2014 | 12:56:14 PM
All that spying and the Police & Security State let's another massive crime happen.
The Security State spends billions, spies on all of us, infiltrates groups and still they can't prevent Oklahoma, WTC, 9/11, London Metro, Spanish train, Boston maraton and now this massive credit card theft. 

Maybe they need to rethink their focus and tactics. Maybe they should leave the peace activists and the environmentalist alone. Maybe they need to get a little smarter about who they are frisking and who they are asking to take off their belt at the airports.

Maybe they could stop being so focused on recreational drugs and actually do something about financial, banking and credit crimes.

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