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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.

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