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"* To pay all costs tied to administration of settlement * To pay class members' attorney costs Dec 21 (Reuters) - Credit card processor Heartland Payment Systems Inc (HPY.N) said it would settle consumer cardholder class actions tied to claims arising from breach of its system by cyber thieves, and pay up to $2.4 million to class members submitting valid claims. Heartland agreed to pay a minimum of $1 million to class members and take up settlement-related administration costs, including up to $1.5 million for the cost of notice to the settling class. The company will pay up to $760,000 of the costs of attorneys representing the class members. Heartland said it could terminate the deal if costs of notice exceeded $1.5 million, or if it received more than 2,500 requests for exclusion from the settlement class. The deal settles all intrusion-related proceedings by consumers who used the payment cards between Dec. 6, 2007 and Dec. 31, 2008, including those who may allege to have suffered losses, the company said in a statement. Heartland, which agreed to pay $3.6 million last week to settle claims with American Express Co (AXP.N) related to the criminal breach, reported in January this year that cyber thieves hacked its payment system and stole credit card information. Shares of the New Jersey-based company were down 18 cents at $13.29 Monday morning on the New York Stock Exchange. "

A recent data breach study commissioned by the state of Maine sheds light on the losses banks experienced as a result of the data breaches at TJX and Hannaford Brother's supermarkets. The state's banks said they incurred $2.1 million in expenses related to data breaches since January 1, 2007. The Hannaford breach had the largest impact, affecting 71 financial institutions and incurring $1.6 million in expenses according to the Maine Data Breach Study. Hannaford is based in Scarborough, Maine. The TJX breach accounted for $485,000 in expenses. The report was issued by the Main Bureau of Financial Institutions in November 2008. It studied the impact of data security breaches on Maine banks and credit unions. Fifty credit unions and 25 banks headquartered in Maine responded to the survey. Financial institutions reported more than 18 million records breached last year, according to the Identity Theft Research Center. The San Diego-based nonprofit found that data breach reports across five industry sectors jumped to 656 last year, up 47% from 2007. About 12% of the reports came from financial-services firms, up from 7% in 2007. In Maine, the Hannaford breach resulted in more than $318,000 in gross fraud losses, according to data reported by 22 financial institutions. More than 700 accounts were used to buy items fraudulently, although five of the 22 institutions that suffered a fraud loss did not report the number of accounts, according to the report. The Hannaford breach cost some banks as much as $58,000 to reissue credit cards to customers. Investigation expenses cost nearly $30,000 for some banks. Communication to customers cost nearly $28,000, some banks and credit unions reported. Fraud losses of nearly $45,000 were tied to the TJX data breach. The losses were reported by six financial institutions. The expenses for reissuing credit cards cost some banks as much as $32,000. Investigation expenses were as high as $21,000 for some banks. Communication to custom

More consumers are growing comfortable with online behavioral targeting, perhaps as a result of an increase in familiarity, but the majority remain uneasy with the practice. That's according to a new study conducted by TNS on behalf of the privacy group Truste. For the study, consumers were asked whether they agreed or disagreed with the statement: "I am comfortable with advertisers using my browsing history to serve me relevant ads, as long as that information cannot be tied to my name or any other personal information." Twenty-eight percent of respondents agreed, up from 24% who agreed when the same study was conducted last year. At the same time, 51% said they disagreed that they were comfortable with anonymous behavioral targeting. While that figure represents a slim majority, it's down from last year, when 57% of respondents said they disagreed. At the same time, more respondents than in the past now say they delete cookies. Almost half--48% of survey respondents--said they erase cookies at least weekly, up from 42% last year. It's not clear how much overlap there is between the respondents that regularly delete cookies and those who say they're uncomfortable with behavioral targeting. Colin O'Malley, vice president of strategic business at Truste, attributed the increase in the proportion of consumers who said they were comfortable with behavioral targeting to increased publicity over the issue. He said the recent attention to the issue in the mainstream media has helped to increase transparency. He added that the increased cookie erasures showed that consumers want to be able to manage their experience. "Cookie deletion is just one more indication that consumers are seeking tools to increase their level of control," he said.

Bruce Schneier is the chief security technology officer at BT and a celebrated writer and speaker on privacy, cryptography and security issues. Welcome to the future, where everything about you is saved. A future where your actions are recorded, your movements are tracked, and your conversations are no longer ephemeral. A future brought to you not by some 1984-like dystopia, but by the natural tendencies of computers to produce data. Data is the pollution of the information age. It's a natural byproduct of every computer-mediated interaction. It stays around forever, unless it's disposed of. It is valuable when reused, but it must be done carefully. Otherwise, its after effects are toxic. And just as 100 years ago people ignored pollution in our rush to build the Industrial Age, today we're ignoring data in our rush to build the Information Age. Increasingly, you leave a trail of digital footprints throughout your day. Once you walked into a bookstore and bought a book with cash. Now you visit Amazon, and all of your browsing and purchases are recorded. You used to buy a train ticket with coins; now your electronic fare card is tied to your bank account. Your store affinity cards give you discounts; merchants use the data on them to reveal detailed purchasing patterns.

Heartland Payment Systems, the sixth-largest payments processor in the U.S., announced Monday that its processing systems were breached in 2008, exposing an undetermined number of consumers to potential fraud. Meanwhile, Forcht Bank, one of the 10 largest banks in Kentucky, told its customers it would begin reissuing 8,500 debit cards after being informed by its own card processor of a possible breach. In the case of Heartland, while the company continues to assess the damages inflicted by the attack, Robert Baldwin, the company's president and CFO, says law enforcement has already noted that the attack against his company is part of a wider cyber fraud operation. "The indication that it is tied to wider cyber fraud operation comes directly from conversations with the Department of Justice and the U.S. Secret Service," Baldwin says. The company says it believes the breach has been contained. Heartland, headquartered in Princeton, NJ, handles approximately 100 million transactions per month, although the number of unique cardholders is much lower. "It is still a question as to the percentage of the data flow they were able to get," Baldwin says, adding he would not speculate on the number of cards potentially exposed. Specifics surrounding when the breach occurred are still being analyzed. But Baldwin says two forensic auditing teams have been working on the breach analysis and investigation since late 2008, after Heartland received the notification from Visa and MasterCard. The investigation began immediately after the credit card companies told Heartland they saw suspicious activity surrounding processed card transactions. Described by Baldwin as "quite a sophisticated attack," he says it has been challenging to discover exactly how it happened.

Government Information Security Podcasts Credit Eligible As a GovInfoSecurity.com annual member, this content can be used toward your membership credits and transcript tracking. Click For More Info Lessons Learned from TJX: Eric Fiterman, Cyber Crime Expert August 13, 2008 Interview with Cyber Crime Expert Eric Fiterman In the wake of the arrests of 11 hackers tied to the TJX data breach, security experts everywhere are warning of bigger, bolder threats to come. So, what should banking institutions have learned from TJX-style breaches, and what can they do now to protect their customers and critical financial/informational assets? In this interview, former FBI agent Eric Fiterman, founder of Methodvue, offers: Insights on the TJX and other breach investigations; How banking institutions can better protect their assets; The types of crimes institutions need to look out for in the months ahead.

The following is an excerpt from the book The Truth About Identity Theft. In this section of Chapter 11: Social Engineering (.pdf), author Jim Stickley explains how easy it really is to hack a password. People often ask me how hard it is to hack a password. In reality, it is rare that I ever need to hack someone's password. Though there are numerous ways to gain passwords on a network and hundreds, if not thousands, of tools available to crack encrypted passwords, in the end I have found that it is far easier to simply ask for them. A perfect example of this type of attack was a medium-sized bank that I was testing recently. The bank's concern was related to the new virtual private network (VPN) capabilities it had rolled out to a number of its staff. The VPN allowed staff to connect directly to their secured network while at home or on the road. There is no doubt that a VPN can increase productivity, but there are some pretty major risks that can come with that convenience. The bank explained that the VPN was tied into its Active Directory server. For people who are not technical, basically this just means that when employees log in via the VPN, they use the same credentials they use to log on to their computer at the office. So I went back to my office, sat down, and picked up the phone. The first call I made was to find out the name of an employee in the IT department. I called the company's main line to the bank, pressed 0, and asked to speak with someone in the IT department. I was asked what I was calling about, so I told the employee I was receiving emails from that bank that seemed malicious. I could have used a number of excuses, but I have found that if you tie in an unhappy customer with a potential security issue, your call gets further up the food chain. In this case, I reached a man who I will call Bill Smith. I made up a story about the email, and after a few minutes, he was able to explain to me that I had called the wrong bank and it was actuall

A 10-month cyberespionage investigation has found that 1,295 computers in 103 countries and belonging to international institutions have been spied on, with some circumstantial evidence suggesting China may be to blame. The 53-page report, released on Sunday, provides some of the most compelling evidence and detail of the efforts of politically-motivated hackers while raising questions about their ties with government-sanctioned cyberspying operations. It describes a network which researchers have called GhostNet, which primarily uses a malicious software program called gh0st RAT (Remote Access Tool) to steal sensitive documents, control Web cams and completely control infected computers. "GhostNet represents a network of compromised computers resident in high-value political, economic and media locations spread across numerous countries worldwide," said the report, written by analysts with the Information Warfare Monitor, a research project of the SecDev Group, a think tank, and the Munk Center for International Studies at the University of Toronto. "At the time of writing, these organizations are almost certainly oblivious to the compromised situation in which they find themselves." The analysts did say, however, they have no confirmation if the information obtained has ended up being valuable to the hackers or whether it has been commercially sold or passed on as intelligence. Although evidence shows that servers in China were collecting some of the sensitive data, the analysts were cautious about linking the spying to the Chinese government. Rather, China has a fifth of the world's Internet users, which may include hackers that have goals aligning with official Chinese political positions.

Online spying or behavioral targeting?

A question: If you have 347 followers on the Twitter microblogging service, what are the chances that they'll click on the same online ad you clicked on last night? Advertisers are dying to know. Or, say you and a colleague exchange e-mails on a Saturday night. Can managers assume that you have a tight working relationship? Researchers at IBM and Massachusetts Institute of Technology are investigating. Friendships aren't what they used to be. We now have tools, from e-mail to social networks, to keep in touch with people who a decade ago would have drifted into distant memories. Practically every hand we shake and every business card we exchange can lead to an invitation, sometimes within minutes, for a "friendship" on LinkedIn or Facebook. And unless we sever them, these ties could linger for the rest of our lives. What do these relationships say about us and the people in our networks? Companies armed with rich new data and powerful computers are beginning to explore these questions. They're finding that digital friendships speak volumes about us as consumers and workers, and decoding the data can lead to profitable insights. Calculating the value of these relationships has become a defining challenge for businesses and individuals. Marketers are leading the way. They're finding that if our friends buy something, there's a better-than-average chance we'll buy it, too. It's a simple insight but one that could lead to targeted messaging in an age of growing media clutter.

Photos, addresses, family ties, court documents, details from MySpace profiles -- the moment information is published online, it can be copied and re-posted, and often is.

Is the price to safeguard America's information systems and networks on a collision course with efforts to rescue the economy? One would hope not, but the $789 billion stimulus package that contains nearly $10 billions for IT-related projects offered very little for cybersecurity. Still, the president sees protecting government and private-sector information systems as crucial to the economic vitality of the country. So, when Acting Senior Director for Cyberspace Melissa Hathaway hands the President her recommendations on securing the nation's information infrastructure later this month, a sharper picture should emerge on how much money the government will need to spend to do just that. What Price Security? The government isn't a spendthrift in protecting its IT networks; it earmarked $6.8 billion a year on cybersecurity this fiscal year, up from $4.2 billion five years ago, according to the White House Office of Management and Budget. But is that enough? Appropriating money to find new and innovative ways to protect our critical information infrastructure doesn't seem to be a government priority, at least not yet. Of the $147 billion the government planned to spend on all types of research and development this fiscal year, only $300 million or 0.2 percent was slated for cybersecurity, according to the Securing Cyberspace in the 44th Presidency report issued by the Center for Strategic and International Studies. By comparison, the budget contained five times as much money $1.5 billion for nanotechnology R&D.