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  1. #1

    Security Breach Could Expose 40M to Fraud

    Be on your guard, everyone. It happens even to the best:

    Security Breach Could Expose 40M to Fraud

    By JOE BEL BRUNO, Associated Press Writer
    30 minutes ago

    NEW YORK - The names, banks and account numbers of up to 40 million credit card holders may have been accessed by an unauthorized user, MasterCard International Inc. said Friday.

    The credit card giant said the security breach involves a computer virus that captured customer data for the purpose of fraud and may have affected holders of all brands of credit cards.

    It said the breach was traced to Atlanta-based CardSystems Solutions Inc., which processes credit card and other payments for banks and merchants.

    The compromised data did not include addresses or Social Security numbers, said MasterCard spokeswoman Sharon Gamsin. The data that may have been viewed names, banks and account numbers could be used to steal funds but not identities.

    Gamsin said she did not know how a virus-like computer script that captured customer data got into CardSystems' network, which MasterCard said was infiltrated by an unauthorized individual. Neither company would elaborate.

    The FBI was investigating.

    The incident was the latest in a series of security breaches affecting valuable consumer data at major financial institutions and data brokers in an increasingly database-driven world.

    The breach appears to be the largest yet involving financial data, said David Sobel, general counsel at the Electronic Privacy Information Center.

    "The steady stream of these disclosures shows the pressing need for regulation of the industry both in terms of limitation in the amount of personal information that companies collect and also liability when these kinds of disclosures occur," Sobel said.

    A flurry of disclosures of breaches affecting high-profile companies including Citigroup Inc., Bank of America Corp. and DSW Shoe Warehouse has prompted federal lawmakers to draw up legislation designed to better protect consumer privacy.

    MasterCard, which said about 14 million of its own cards were exposed, first announced the breach in a news release Friday afternoon, saying it was notifying its card-issuing banks of the problem.

    However, CardSystems said late Friday in a statement vetted by the FBI that it first learned of a potential breach on May 22. It said it was told by the FBI not to release any information to the public. The company said it was surprised by MasterCard's decision to go public.

    "We were absolutely blindsided by a press release by the association," CardSystems' chief financial officer, Michael A. Brady, told The Associated Press when reached on his cell phone. He refused to answer any questions and referred calls to the company's chief executive, John M. Perry, and its senior vice president of marketing, Bill N. Reeves.

    Reeves said the information the company gathered initially was "on a need-to-know basis." He said he could not comment beyond a company statement, which did not give any details about the breach but noted that CardSystems is implementing increased security measures.

    "I understand and fully appreciate the seriousness of the situation," Reeves said.

    Under federal law, credit card holders are liable for no more than $50 of unauthorized charges, and many card issuers including MasterCard will even waive the $50.

    CardSystems processes less than 0.5 percent of American Express' domestic transactions, said company spokeswoman Judy Tenzer. She said a small number of its cardholders were affected, though she did not have an exact figure.

    Discover Financial Services Inc. said it was aware of the situation and would not say whether any of its cards were involved. Visa USA and a large issuer of cards, MBNA Corp., did not immediately calls seeking comment.

    CardSystems, which has a processing center in Tucson, Ariz., has been in business for more than 15 years and handles transactions for more than 115,000 small to mid-sized businesses, according to the company's Web site. The company says it processes transactions worth more than $15 billion annually.

    Sobel said the fact that the latest breach involved a third party "indicates that this is a shadowy industry where the consumer never really knows who is going to be handling and using their personal information."

    Earlier this month, Citigroup said UPS lost computer tapes with sensitive information from 3.9 million customers of CitiFinancial, a unit that provides personal and home loans.

    There have also been breaches involving other kinds of sensitive data.

    ChoicePoint Inc. said in February that thieves using stolen identities had created 50 dummy businesses that pulled data including names, addresses and Social Security numbers on as many as 145,000 people.

    In March, LexisNexis Inc. disclosed that hackers had commandeered a database and gained access to the personal files of as many as 32,000 people.

    The company has since increased its estimate of the people affected to 310,000. Information accessed included names, addresses and Social Security and driver's license numbers, but not credit history, medical records or financial information, corporate parent Reed Elsevier Group PLC said in a statement.

  2. #2
    Join Date
    Feb 2005

  3. #3
    Join Date
    Feb 2005
    Yeah been on news and in alot of papers. Rediculous.

  4. #4
    Join Date
    Aug 2003
    Honestly with all this mess they seriously (if this is 100% true) tighten down on who has access to what and properly acl their systems. If they bothered to run tighter security such risks would have been alot more minimal. Not sure how a banking institution would even be allowing their internet systems access to their backend without going through screen'ing systems (eg virus, firewall, internal addressing, etc). Obviously someone in this mess wasn't secure worth a bean at all. 40 Million cardholders seriously this is why carding fraud is so high and so much of a risk to all of us anymore.
    Justin Schurawlow :: Technology Enthusiast
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  5. #5
    Join Date
    Jul 2003
    Castle Pines, CO
    At least they are taking responsibility:
    Credit Card Processor: We Goofed - although I am sure their attorneys would have wanted to speak with them before they issued the statement:
    The head of the credit card processing company whose computer system was breached by hackers, exposing millions of credit card accounts, has acknowledged that his firm should not have been keeping the consumer records in the first place.

    The official, John Perry, chief executive of Atlanta-based CardSystems Solutions Inc., said that the records known to have been stolen covered roughly 200,000 of the 40 million compromised credit card accounts, from Visa, MasterCard, and other companies.

    "This particular company, CardSystems, processes $15 billion in transactions a year. This is huge," Money magazine's Ellen McGirt told CBS News Early Show co-anchor Harry Smith.

    Perry said the data was being stored for "research purposes" to determine why some transactions had registered as unauthorized or uncompleted. "We should not have been doing that," Perry said in Monday's editions of The New York Times.

    Under rules established by Visa and MasterCard, processors cannot retain cardholder information after handling transactions.

    "CardSystems provides services and is supposed to pass that information on to the banks and not keep it," Joshua Peirez, a MasterCard official, told the Times. "They were keeping it."

    The security breach was first reported Friday when MasterCard International Inc. said computer hackers may have accessed more than 40 million credit card accounts. About 13.9 million were from MasterCard accounts.

    "Because MasterCard has been on top of it pretty much, we're not recommending that people cancel accounts. Wait until you hear from your issuer," said McGirt. "But everybody needs to be vigilant. This is a time when the consumer needs to be checking their credit reports and opening their mail. All the things that we should be doing anyway to make sure there's no suspicious activity."

    Reporting fraudulent use of a credit card limits the cardholder's responsibility to $50.

    "But it's a hassle. It's a huge hassle," said McGirt. "The onus of responsibility is on you to document that these were not your charges. That's where it gets tough."

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