In an earnings call, the transcript of which has been posted online as well as summarized in the firm's fourth quarter 2008 financial report, Heartland chairman and CEO Bob Carr said the malware that infected the firm's systems could read and collect unencrypted data in motion, and that the attackers may have been able to "trade" from its network some of the data that was accessed.
"Keep in mind that Heartland passed its PCI certification last April, and assessors are currently on-site for 2009 certification, which we are targeting to begin to complete by the end of April. In that regard, throughout the potential period of the breach, Heartland did have antivirus software installed on its payment processing network," Carr said.
Heartland, which processes 100 million payment card transactions per month for 175,000 merchants, announced on Jan. 20 that it had discovered malware on its processing system. Security experts say this may be the largest ever data breach. A second, as-yet undisclosed payment processor has also suffered a big breach, according to several credit union organizations.
Carr said Heartland thinks the malware was not always active on its servers. "And [it] was probably not gathering information from 100 percent of transactions flowing through the system even when active or exporting all of the captured information to the criminals," he said. "For this reason, it is simply not possible at this time to determine accurately the number of card accounts that had information placed at risk of compromise during the breach, or to what extent any such information placed at risk was, in fact, compromised."
Carr noted that while PCI provides some security, data in motion also must be encrypted. The company previously had announced its plans to spearhead an end-to-end encryption effort in the payment industry. "To this end we have formed an internal department dedicated exclusively to the development of end-to-end encryption, designed to protect merchant and consumer data use and financial transactions," Carr said.
Heartland considers end-to-end encryption to encompass "the point of card swipe or data entry by a hardware appliance with the encrypted data flowing through all the gateways and communication links to the front-end authorization in data capture switch," he said. Data also must be encrypted between the front-end and back-end processing systems, in transit as well as at rest, he said.
Robert Baldwin, president and CFO of Heartland, also said that the company was "the subject to several governmental investigations and inquiry, including an informal inquiry by the SEC and a related investigation by the Department of Justice, an inquiry by the OCC [Office of the Comptroller of the Currency], and an inquiry by the FTC."
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