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Data breaches are running at record levels, according to the San Diego-based Identity Theft Resource Center, a non-profit that tracks cybercrime. ITRC says it recorded 342 data breaches from Jan. 1 through June 24, up 69% from the same period in 2007. But, like the origins and perpetrators of so many individual data breaches, mystery also lies behind the aggregated numbers. "I'm not sure that this says breaches are increasing," ITRC founder Linda Foley tells Digital Transactions News. "What we know is the reporting of breaches is increasing." A handful of states now require some disclosure of data breaches to authorities, Alaska being the most recent. And some companies that have been hacked are starting to report breaches voluntarily, Foley says. While data breaches can compromise all manner of personal and business records, they often involve credit and debit card data and bank-account information. ITRC lists five major categories of breached entities, with the so-called banking/credit/financial sector accounting for 10% of 2008's breaches. Businesses, which include physical and Internet retailers, insurance companies and other private enterprises, accounted for 36.8%. Schools accounted for 21.3%; government and military facilities, 17%; and health-care facilities, 14.9%. IRTC also categorizes breaches by how they happened, such as through hackings-break-ins into computers and related systems, insider thefts, data lost in physical transit, and by other methods. The number of 2008 hackings through late June in the banking/credit/financial category was 10-double the five for all of 2007. The estimated number of records compromised as a result was 227,864. In 2007, the reported number of compromised records at financial institutions through hackings was 83,500. But Foley says not to put too much stock in the records numbers because so many breached organizations don't know or fail to report the number of compromised records when they report a bre

Salesmen and parents know the technique well. It's called the takeaway, and as far as Keith Mularski is concerned, it's the reason he kept his job as administrator of online fraud site DarkMarket. DarkMarket was what's known as a "carder" site. Like an eBay for criminals, it was where identity thieves could buy and sell stolen credit card numbers, online identities and the tools to make fake credit cards. In late 2006, Mularski, who had risen through the ranks using the name Master Splynter, had just been made administrator of the site. Mularski not only had control over the technical data available there, but he had the power to make or break up-and-coming identity thieves by granting them access to the site. And not everybody was happy with the arrangement. A hacker named Iceman -- authorities say he was actually San Francisco resident Max Butler -- who ran a competing Web site, was saying that Mularski wasn't the Polish spammer he claimed to be. According to Iceman, Master Splynter was really an agent for the U.S. Federal Bureau of Investigation. Iceman had some evidence to back up his claim but couldn't prove anything conclusively. At the time, every other administrator on the site was being accused of being a federal agent, and Iceman had credibility problems of his own. He had just hacked DarkMarket and three other carder forums in an aggressive play at seizing control of the entire black market for stolen credit card information. ....In the end they would regret that decision. Iceman was right

Exactly one week after the Heartland Payment Systems (HPY) breach was first announced to the public, the first lawsuit has been filed against the payments processor. The class action lawsuit filed Tuesday by Chimicles & Tilellis LLP of Haverford, PA in the U.S. District Court for the District of New Jersey on behalf of Woodbury, MN resident Alicia Cooper, asserts that Heartland "made unreasonably belated and inaccurate statements concerning the breach." The complaint says Heartland does not appear to be offering any credit monitoring services or other relief to consumers affected by the breach. Chimicles & Tilellis' complaint also says in addition to the questionable timing of the announcement of its breach, (Read Heartland Class Action suit PDF) "there are materially misleading statements and omissions in Heartland's public description of the breach and its consequences." Heartland announced the breach in a press release on the same morning of President Barack Obama's inauguration. The law firm says it is suing on behalf of consumers whose sensitive financial information was compromised in the data breach at Heartland. The complaint raises a claim pursuant to the New Jersey Consumer Fraud Act, and asserts causes of action for negligence, breach of implied contract, breach of contracts to which Plaintiffs and Class members were intended third party beneficiaries, breach of fiduciary duty, and negligence. The payments processor did not disclose how many credit card account numbers were compromised as a result of the breach. Heartland is the fifth largest payment processor in the country and handles 100 million transactions per month for more than 250,000 small retailers, gas stations, restaurants and other small and midsized companies. The suit also states that Heartland only became aware of the breach after it was notified of patterns of fraudulent credit card activity by VISA and MasterCard. "Analysts have stated that the fact that Heartland did not detect th

SAN JUAN, Puerto Rico-An identity-theft ring that catered to illegal immigrants seeking to establish themselves in the U.S. stole the personal data of 7,000 public school children in Puerto Rico, officials said Tuesday. Members of the ring broke into about 50 schools across the U.S. island territory over the past two years to steal birth certificates and Social Security numbers to sell to the illegal immigrants, the FBI and other agencies announced at a news conference. The victims were largely unaware their information had been stolen-and likely would not have learned of the thefts until they became adults and tried to buy something on credit, said assistant U.S. Attorney Julia Diaz Rex. "A kid is going to have a perfect credit history," Diaz said. "They reach 18, 20 years of age. They go buy a car and their credit is damaged." The authorities did not disclose how they uncovered the ring but said seven people have been arrested and one more is being sought. At least some of them were illegal immigrants from the Dominican Republic. Investigators determined the birth certificates and Social Security numbers were sold as a package in a number of states including Texas, Alaska and California, for up to $250, authorities said. Two suspects are accused of possessing nearly 6,000 birth certificates and Social Security cards. One was accused of intending to sell 40 Social Security cards for nearly $3,000, while another was seeking the same amount for 12 cards. The suspects in custody were being held on charges that include aggravated identity theft and social security fraud and face up to 15 years in prison, said U.S. Attorney Rosa Emilia Rodriguez. One suspect had been previously arrested for the kidnapping of a Dominican man last year that led to the shooting of a police officer during an FBI raid, said Luis Fraticelli, special FBI agent in charge of Puerto Rico. It is unclear if other members of the ring are at large, and whether they received help from sch

Symantec may not be concerned about the much-discussed Conficker virus, but the company is now dealing with an incident involving its own data security. Two weeks ago, the BBC published an investigative report in which reporters, working with an India-based middleman, bought credit-card information obtained from a Symantec call center. Cris Paden, a spokesman for the Cupertino, Calif., security-software firm, said it sent warning letters to the slightly more than 200 customers affected by the theft. It began an internal investigation immediately after being notified by the BBC. "We believe this was an isolated incident," Mr. Paden said, "but as the investigation continues, we will promptly notify any additional customers affected by the situation and will take appropriate action to protect their interests." In a letter to New Hampshire's attorney general, Symantec said, "We have no evidence that the credit card information of any United States resident was actually compromised." Mr. Paden added that to his knowledge, none of the stolen credit cards were used before their owners canceled them.

It was only a matter of time! Auditor accuracy being examined in lawsuit may signal change in PCI and other compliance processes.

When CardSystems Solutions was hacked in 2004 in one of the largest credit card data breaches at the time, it reached for its security auditor's report. In theory, CardSystems should have been safe. The industry's primary security standard, known then as CISP, was touted as a sure way to protect data. And CardSystems' auditor, Savvis Inc, had just given them a clean bill of health three months before. Yet, despite those assurances, 263,000 card numbers were stolen from CardSystems, and nearly 40 million were compromised. More than four years later, Savvis is being pulled into court in a novel suit that legal experts say could force increased scrutiny on largely self-regulated credit card security practices. They say the case represents an evolution in data breach litigation and raises increasingly important questions about not only the liability of companies that handle card data but also the liability of third parties that audit and certify the trustworthiness of those companies. "We're at a critical juncture where we need to decide . . . whether [network security] auditing is voluntary or will have the force of law behind it," says Andrea Matwyshyn, a law and business ethics professor at the University of Pennsylvania's Wharton School who specializes in information security issues. "For companies to be able to rely on audits . . . there needs to be mechanisms developed to hold auditors accountable for the accuracy of their audits." The case, which appears to be among the first of its kind against a security auditing firm, highlights flaws in the standards that were established by the financial industry to protect consumer bank data. It also exposes the ineffectiveness of an auditing system that was supposed to guarantee that card processors and other businesses complied with the standards. Credit card companies have touted the standards and the auditing process as evidence that financial transactions conducted under their purview are secur

Identity thieves are getting more clever and are increasingly using stolen information to get driver's licenses, employment and government assistance, according to a new report. The survey by the Identity Theft Resource Center also found that the greater awareness of this problem by the public has led to more people discovering they are victims themselves, through monitoring of their bank accounts and credit card statements. Typically, victims learned of their identity theft when they were denied a job or credit or were informed by law enforcement. "Most of our information is beyond our control," said Linda Foley, co-founder of the Identity Theft Resource Center, which surveys victims each year to see how identity theft is changing. "If a thief wants to get it, he will find a way to get it." The report covers the experiences of around 100 of the 1,500 people who were victimized in 2008 and contacted the center, a nonprofit that helps people recover from identity theft. Stolen personal information is now cheap - identities may sell on the black market for as little as 60 cents each - and thieves churn through them quickly to lower their chances of getting caught, Foley said. Rather than opening 10 or 20 credit card accounts in a victim's name, they now open two or three, charge as much as they can and move on to the next person. This raises the cost of identity theft to businesses, whose average loss to fraud nearly doubled last year to $90,107, up from $48,941 the year before.

In a decision that has privacy advocates and others scratching their heads, a federal judge has ruled that LifeLock has been breaking California law for years by placing fraud alerts on its customer's credit profiles. The decision is a blow to the burgeoning identify-theft protection industry, and means that companies that experience data breaches may no longer be able to offer victims free subscriptions to such services - a standard damage-control tactic in recent years. Consumers can still place fraud alerts by contacting one of the three U.S. credit reporting agencies directly. Bo Holland, founder and CEO of Debix, a competitor of LifeLock, called the ruling "dramatic and unexpected." "It causes a real shift in the industry," he told Threat Level. The pre-trial partial summary judgment comes in a lawsuit filed last year against LifeLock by Experian, one of the nation's three credit reporting bureaus. Experian claimed LifeLock is trying to "game the system" of fraud alerts to make a profit.

To assist small businesses and other entities, the Federal Trade Commission staff will redouble its efforts to educate them about compliance with the "Red Flags" Rule and ease compliance by providing additional resources and guidance to clarify whether businesses are covered by the Rule and what they must do to comply. To give creditors and financial institutions more time to review this guidance and develop and implement written Identity Theft Prevention Programs, the FTC will further delay enforcement of the Rule until November 1, 2009. The Red Flags Rule is an anti-fraud regulation, requiring "creditors" and "financial institutions" with covered accounts to implement programs to identify, detect, and respond to the warning signs, or "red flags," that could indicate identity theft. The financial regulatory agencies, including the FTC, developed the Rule, which was mandated by the Fair and Accurate Credit Transactions Act of 2003 (FACTA). FACTA's definition of "creditor" includes any entity that regularly extends or renews credit - or arranges for others to do so - and includes all entities that regularly permit deferred payments for goods or services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor. "Financial institutions" include entities that offer accounts that enable consumers to write checks or make payments to third parties through other means, such as other negotiable instruments or telephone transfers.

The loss of personally identifiable information, such as an individual's Social Security number, name, and date of birth can result in serious harm, including identity theft. Identity theft is a serious crime that impacts millions of individuals each year. Identity theft occurs when such information is used without authorization to commit fraud or other crimes. While progress has been made protecting personally identifiable information in the public and private sectors, challenges remain. GAO was asked to testify on how the loss of personally identifiable information contributes to identity theft. This testimony summarizes (1) the problem of identity theft; (2) steps taken at the federal, state, and local level to prevent potential identity theft; and (3) vulnerabilities that remain to protecting personally identifiable information, including in federal information systems. For this testimony, GAO relied primarily on information from prior reports and testimonies that address public and private sector use of personally identifiable information, as well as federal, state, and local efforts to protect the security of such information. GAO and agency inspectors general have made numerous recommendations to agencies to resolve prior significant information control deficiencies and information security program shortfalls. The effective implementation of these recommendations will continue to strengthen the security posture at these agencies. Identity theft is a serious problem because, among other things, it can take a long period of time before a victim becomes aware that the crime has taken place and thus can cause substantial harm to the victim's credit rating. Moreover, while some identity theft victims can resolve their problems quickly, others face substantial costs and inconvenience repairing damage to their credit records. Some individuals have lost job opportunities, been refused loans, or even been arrested for crimes they did not commit as a result of identit

The loss of personally identifiable information, such as an individual's Social Security number, name, and date of birth can result in serious harm, including identity theft. Identity theft is a serious crime that impacts millions of individuals each year. Identity theft occurs when such information is used without authorization to commit fraud or other crimes. While progress has been made protecting personally identifiable information in the public and private sectors, challenges remain. GAO was asked to testify on how the loss of personally identifiable information contributes to identity theft. This testimony summarizes (1) the problem of identity theft; (2) steps taken at the federal, state, and local level to prevent potential identity theft; and (3) vulnerabilities that remain to protecting personally identifiable information, including in federal information systems. For this testimony, GAO relied primarily on information from prior reports and testimonies that address public and private sector use of personally identifiable information, as well as federal, state, and local efforts to protect the security of such information. GAO and agency inspectors general have made numerous recommendations to agencies to resolve prior significant information control deficiencies and information security program shortfalls. The effective implementation of these recommendations will continue to strengthen the security posture at these agencies. Identity theft is a serious problem because, among other things, it can take a long period of time before a victim becomes aware that the crime has taken place and thus can cause substantial harm to the victim's credit rating. Moreover, while some identity theft victims can resolve their problems quickly, others face substantial costs and inconvenience repairing damage to their credit records. Some individuals have lost job opportunities, been refused loans, or even been arrested for crimes they did not commit as a result of identit

Network Solutions Hack Compromises 573,000 Credit, Debit Accounts Hackers have broken into Web servers owned by domain registrar and hosting provider Network Solutions, planting rogue code that resulted in the compromise of more than 573,000 debit and credit card accounts over the past three months, Security Fix has learned. Herndon, Va. based Network Solutions discovered in early June that attackers had hacked into Web servers the company uses to provide e-commerce services - a package that includes everything from Web hosting to payment processing -- to at least 4,343 customers, mostly mom-and-pop online stores. The malicious code left behind by the attackers allowed them to intercept personal and financial information for customers who purchased from those stores, Network Solutions spokeswoman Susan Wade said.

"* 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 new report from Javelin Strategy and Research suggests that many credit and debit card holders fail to understand the importance of a notice saying that a credit card or debit card has been breached and do not protect themselves from fraud. The company's research found that people notified of a breach of their secure data were four times as likely as the public at large of actually experiencing financial or other fraud within a year of the notification. Further, those who experienced a breach in their secure data and then an incident of fraud very rarely link the fraud to the breach. "Among consumers who received a data breach notification in the past 12 months, 19% suffered fraud, yet only 2% attributed their fraud to a data breach, the firm reported. "It seems as if consumers are not connecting the dots on data breach notifications to fraud events. They are aware, in the abstract, some personal records of theirs have been compromised, but when they become a victim of fraud they do not make the connection to the breach notification.""

April 13, 2009 (Computerworld) The PCI standard, long touted as one of the private sector's strongest attempts to regulate itself on IT security, is increasingly being slammed by critics who claim that the rules aren't doing enough to protect credit and debit card data. And amid all the complaints, Visa Inc. - the standard's biggest proponent - is working one-on-one with banks and retailers to test new security measures that go beyond the controls currently mandated by PCI. What it all adds up to is a new sense of uncertainty about the future of the specification, which is formally known as the Payment Card Industry Data Security Standard, or PCI DSS. Created by Visa and other credit card companies, the PCI rules will have been in effect for four years as of June 30. But with breaches of card data continuing and questions about the standard's effectiveness on the rise, PCI DSS is showing signs of coming apart at the seams.

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Individuals have been at risk of having their personal information stolen and used to commit identity-related crimes long before the emergence of the Internet. What the Information Age has changed, however, is the method by which identity thieves can access and exploit the personal information of others. One method in particular leaves hundreds of thousands, and in some cases tens of millions, of individuals at risk for identity theft: large scale data breaches by skilled hackers. In this method, criminals remotely access the computer systems of government agencies, universities, merchants, financial institutions, credit card companies, and data processors, and steal large volumes of personal information on individuals. Such large scale data breaches have revolutionized the identity theft landscape as it relates to fraud on existing accounts through the use of compromised credit and debit card account information. Large scale data breaches would be of no more concern than small scale identity thefts if criminals were unable to quickly and widely distribute the stolen information for subsequent fraudulent use (assuming, of course, that the breach would be quickly detected). Such wide-scale global distribution of stolen information has been made possible for criminals with the advent of criminal websites, known as "carding forums," dedicated to the sale of stolen personal and financial information. These websites allow criminals to quickly sell the fruits of their ill-gotten gains to thousands of eager fraudsters

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Financial fraud last year caused 7.5 percent of all adults in the United States to lose money, largely because of data breaches. That's the finding of a survey conducted by Stamford, Conn. research firm Gartner. The survey polled 5,000 U.S. adults and also found that when compared with average consumers, nearly twice as many people who lost money to fraud changed their shopping, payment, and e-commerce behavior. In particular, victims of electronic checking and/or savings account transfer fraud were nearly five times more likely to change banks because of security concerns. "Fraud victims are also more cautious about which brick-and-mortar stores they shop at and how they pay for goods when they get there, demonstrating more awareness of the risk of data breaches," said Avivah Litan, vice president and distinguished analyst at Gartner, in a news release. High-tech crimes, such as data breaches (which typically involve hacking into enterprise systems) and phishing attacks against consumers, are the most prevalent causes of payment card fraud. Gartner found that financial losses were highest with new-account, credit card and brokerage fraud, with average losses per incident totaling $1,097, $929 and $900, respectively. However, victims of brokerage, credit card and debit/ATM card fraud find it easiest to recover their losses, receiving an average of 100 percent, 86 percent, and 77 percent of the funds stolen, respectively.

A Port Washington medical practice was defrauded of nearly $250,000 by a former employee who for four years paid her credit card bills with automatic debits from a doctor's checking account, Nassau police said. Debra Camilo, 42, of 110 Malba Dr., Whitestone, began the transfers in the spring of 2004 and even though she was fired a year later -- for reasons unrelated to the fraud -- she continued until July 2008, police said. All told, the former office manager made more than 80 unauthorized debit transfers to her Visa credit card amounting to $241,341, police said. Crimes against property bureau detectives arrested Camilo Thursday afternoon in Manhasset and charged her with grand larceny, identity theft and fraud. She was scheduled for arraignment Friday in First District Court, Hempstead.

It is hard work looking for a job, Matt Sawyer said. "Well with the economy being down right now, it's pretty hard," said Sawyer. Like most job hunters, Matt is posting his resume on various online job sites. But you have to be careful when sending out your personal information over the Internet, privacy expert Pam Dixon said. "The problem is, if you don't use it correctly, it can come back to haunt you," she said. Dixon runs the World Privacy Forum and warns job hunters to be cautious with their personal information when posting their resume. "In fact any competent job site will give you the option of hiding your personal information," said Dixon. Scam artists have been known to steal personal information from resumes and use it to apply for credit. That is why Dixon said you should only include your first initial and last name, no full names, when writing your resume. She also said not to include your phone number or address. Dixon said you should create an email address that is temporary and just use it for your job search. Dixon said scam artist will even call people from their resume and ask for detailed information like a copy of their driver's license or social security number or even their credit card information. The scammers will claim it's for a background check but it's only to steal from the job seeker. Matt admits if he was approached for a job he might give away too much information. "I think when people first get that call and they're real excited about it, they might just jump into it and go ahead and do it," he said.

Until now, lawsuits seeking to recover significant damages based on the loss of, or unauthorized access to, sensitive personal information have not been especially successful for plaintiffs. Most companies suffering data breaches have escaped by offering affected consumers inexpensive credit monitoring services. But two recent cases show plaintiffs a way to expose many previously safe companies to substantial claims for damages. Any company that thinks there are no risks in employing less than best practices for data privacy and security needs a wake up call. The headlines are all too familiar. Some well known consumer services company (or less known wholesale data processor) announces that millions of individual records containing names, Social Security numbers, account numbers and other sensitive information were left in a dumpster, saved to a stolen, unencrypted laptop, or stored on a misplaced USB drive or backup tape. The press is terrible, the company's stock takes a temporary plunge, and sometimes the Federal Trade Commission enters into a consent decree where the company promises to never do it again. But when affected individuals or groups of consumers tried to sue for damages, they seldom recover significant amounts. These cases have not often succeeded because the plaintiffs have been unable to prove actual pecuniary losses resulting from the security breach. Sure, if identify theft occurs the affected individuals can suffer significant emotional trauma, loss of time, etc. But Courts have been unwilling to award damages for anxiety, fear, and other emotional harm that can result from a data breach, for the risk of future identify theft, or for actual identity theft when the plaintiff could not prove that the theft occurred as a direct result of a data breach at a particular source. Most companies facing claims based on data breaches have been able to settle cheaply by offering to provide credit monitoring services, which most consumers do not use, resu

Still think that today's computer viruses and other malware come from some maladjusted teen out to vandalize your PC to make a name for himself? Think again. The persistent myth is a holdover from days long gone, and it's important to dispel it if you want to know what you're up against-and how to protect yourself. The splashy worms and malicious viruses that clogged entire networks and indiscriminately wiped hard drives are essentially gone. Today, it's all about cash-and lots of it. If there's a way to use evil software to make money, whether it means taking over a PC to send pharmacy-advertising spam, or stealing financial logins and credit card info, or even hacking game accounts, it's out there in some form. There's even a thriving online black market that sells everything from software kits to roll-your-own malware to spam services using infected PCs to reams and reams of credit card data stolen by keylogger malware. It's most important to get rid of this myth in order to get rid of the idea that you can usually tell whether you're infected by obvious signs like big pop-ups or suddenly missing files. Malware writers today work to keep infections as quiet as possible for as long as possible so that they can continue to make money. But it's also important to keep in mind that today's online crooks have become very creative in figuring out how to make money with their malware. Stolen Webmail accounts have been used to send messages to the account's contact list asking for money transfers. Popular online games such as World of Warcraft are a huge target, with thieves raiding hacked accounts to sell the items or in-game currency for real money. So don't assume that there's no risk using an untrusted PC as long as you don't log onto your bank.