Robert Baldwin, Heartland's president and CFO, told reporters that the intruders had access to Heartland's system for "longer than weeks" in late 2008. The number of victims is unknown. "We just don't have the information right now," Baldwin said.
Tech security experts say the breach could surpass the record set by retail giant TJX, which lost 94 million customer records to hackers in 2007. With more than 100 million transactions per month, Heartland could discover that several months' worth of transactions were captured, says Michael Maloof, chief technology officer at TriGeo Network Security.
Heartland processes card payments for restaurants, retailers, and other merchants. It discovered the hack last week after Visa and MasterCard notified it of suspicious transactions stemming from accounts linked to its systems. Investigators then found the data-stealing program planted by the thieves.
"Our discussions with the Secret Service and Department of Justice give us a pretty good indication that this is part of a group that appears to have done security breaches at other financial institutions," Baldwin said. "This is a very sophisticated attack."
According to published reports, attackers managed to slip keylogger and sniffer programs onto the network, enabling them to record keystrokes and collect unencrypted data in transit. Most of the lost data is probably credit card numbers, names, and expiration dates, which could be used to create counterfeit cards, experts say.
Several reports indicate that Heartland had complied with Payment Card Industry (PCI) security standards and was using strong encryption, but the keylogger collected the data before it was encrypted. Some reports indicate that the breach began as early as May 2008, and may have been detected months ago.
Experts say the keylogger attack might have gone undetected even if Heartland was using a variety of off-the-shelf security tools. "Most security technologies in use today are about looking for the explicitly -- and in most cases already known to be -- bad. And that leaves a lot of room for error," says Chris King, director of strategic marketing at firewall vendor Palo Alto Networks.
Once it sorts out the matter, Heartland plans to notify each victim in compliance with data-loss disclosure laws in more than 30 states, he says.
"It is quite unlikely they will be able to confidently determine whose data was lost," says Michael Argast, senior security analyst at Sophos. "If they have great logging, it is possible, but the nature of any compromise makes it difficult to have assurance on the event. At worst, it could be every customer who has used their infrastructure since the breach. "The reality is cleaning up the mess could be potentially much more expensive than any fines or penalties. For example, issuing a new card costs around $30. Multiplied by 100 million cards, $3 billion is much more than the scope of any fines. In reality, that could bankrupt the business."
Heartland's disclosure coincides with reports of heightened criminal activities involving stolen payment card numbers. Security firm CardCops has been tracking a 20 percent year-over-year increase in Internet chat room activity where hackers test batches of payment card numbers to make sure they're active. "The numbers could have come from a processor, like Heartland, or some other source that has access to a lot of customer data but is not a retailer," says Dan Clements, president of CardCops president.
Also, Forcht Bank in Kentucky last week began issuing replacement debit cards to 8,500 patrons due to reports of fraudulent card activity. "There are several other banks affected, and this is not isolated to Forcht Bank customers," the bank said in a Jan. 12 statement to customers.
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