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Hannaford, Security Industry Hunt for Cause of Massive Breach

Speculation runs rampant as grocery retailer attempts to find out how 4.2 million credit card records were stolen

Just how did thieves steal 4.2 million credit card records from grocery retailer Hannaford Bros.? The possibility of space aliens has yet to be raised, but with Hannaford circling the wagons and security experts running wild, nothing has been ruled out.

In case you've been trapped under a bus for the last 24 hours, Hannaford yesterday revealed that some 4.2 million of its customers' credit card transactions were exposed during the verification process over the past three and a half months. Now everyone in the retail and IT security arenas -- including Hannaford -- is speculating how it happened.

A statement from Ronald Hodge, president and CEO of Hannaford, is typically vague. "The stolen data was limited to credit and debit card numbers and expiration dates, and was illegally accessed from our computer systems during transmission of card authorization," Hodge says.

At least 1,800 cases of fraud resulting from the breach have been reported, according to an Associated Press report. The Massachusetts Bankers Association reported that 60 to 70 banks have been notified of potential danger to their credit card holders in that state alone.

News of the theft has spurred a wave of speculation about the cause of the theft, particularly from vendors who claim their products would have prevented the breach.

Data loss prevention vendors say the theft was caused by violation of internal security policies; wireless security vendors postulate that the data was stolen via wireless links. Compliance management vendors speculate that Hannaford failed to meet the requirements under the Payment Card Industry (PCI) standard; security appliance and management tool vendors say Hannaford would never have experienced the breach if it had used their products.

Some analysts did their own speculating, using a more educated approach of analyzing the bits of data that Hannaford issued in its statements and frequently-asked questions. One of the most cogent efforts came from Rich Mogull of Securosis, who analyzed the data in his blog.

"Since the information was stolen during the authorization process, and was distributed over many locations, it means a compromise of the central authorizations system or the credit card processor," Mogull postulated. "It could be as simple as sniffing unencrypted communications, or a more complex compromise of a database or application. My money is 70 percent on sniffing, 30 percent on something in the database."

Mogull traces the Hannaford timeline, which states that the first thefts took place on Dec. 7, and that the retailer was notified of the possibility of a breach on Feb. 27. This suggests that banks or credit card authorization companies may have detected the fraud first, and then traced it back to Hannaford.

"It looks like some sort of a network breach, which could be anything from phishing/malware to compromise from a retail location to full network hack," Mogull says. "A sniffer was possibly installed, since it seems [Hannaford] doesn't keep credit card information (again, assuming statements are true).

"The fraud was detected by the banks or credit card companies, then it took a little under two weeks to contain," Mogull continues. "Not great, and indicative of either a little sophistication on the attacker’s part, or a lack of sophistication on their part." Encrypting the authorization data while in transit is the most likely answer to the Hannaford problem, he says.

Meanwhile, Hannaford searches for its own answers. Officials at law enforcement agencies confirm that the grocery chain has contacted them, but they would give no more information. Hannaford's own Website was unavailable for part of the day today, displaying a "system maintenance" message in reply to all queries.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message.

Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, 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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