Breach Incidents | Office of Inadequate Security

Schnucks says data breach could cost $80M in Illinois

May 252013

Becky Yerak of the Chicago Tribune reports:

The grocer laid out the math in its filing: It notes that, based on the plaintiff’s allegations, the class could be as large as 500,000. If each one spent at least two hours of “time and effort” dealing with the breach – even if they were minimum-wage workers being paid $7.25 an hour – the potential damage could be $7.25 million, says Schnuck, which also has stores in Champaign, Urbana, Peoria, Springfield, Normal, DeKalb and Roscoe.

Furthermore, Schnucks points out, the Illinois Supreme Court has in the past approved a ratio of punitive to compensatory damages of about 11 to 1.

When has any databreach resulted in an hourly rate for damages to consumers? And when has there been any award, period, where there has been no demonstration of actual harm? I realize that Schnucks would be eager to consolidate cases and remove them to federal court, but can the court look at this and say, “No court has ever awarded anything like this for a data breach, so this is unrealistic?”

GA: Callaway Gardens alerts customers of potential credit card fraud

Business Sector, Malware, U.S. No Responses »

May 252013

Chuck Williams reports that a number of companies have been notified by card processors of what may be a major breach. In Callaway Gardens’ case, it seems to involve malware, but the other companies affected are not named nor whether the same malware was involved in their compromises:

Consumers who have used credit or debit cards at Callaway Gardens are being urged to check their accounts for possible fraudulent charges after the Harris County resort was notified this week of a breach of its system.

The problems could impact anyone who used a card at the resort before Friday, according to a news release from Callaway Gardens. The release did not say when the problem started.

A credit card processing company identified and notified multiple companies, including Callaway Gardens, that sophisticated fraudulent credit card activity had been detected, according to the news release. The companies were identified by common points of counterfeit purchases reported by consumers, according to the release.

Read more on Ledger-Enquirer. I don’t see any notice or link on the resort’s home page, but a Google search led me to this notice on their site.

Anyone know who the other companies are? If anyone has any additional details, please email me or contact me via Twitter, @pogowasright.

Stockton Police Chief Arrested for Identity Theft Stemming from Love Triangle

Government Sector, Hack, Insider, U.S., Unauthorized Access No Responses »

May 252013

Another case where someone in law enforcement hacked and misused a law enforcement database for personal reasons?

The chief of police is the last person you expect to be arrested, but on Tuesday deputies from the Jo Daviess Sheriff’s Department took Stockton Police Chief Robert Beeter into custody. Beeter’s charges of 16 counts of identity theft and four counts of misconduct weren’t committed while on the job in Stockton, but while he was deputy chief at the Elgin Police Department.

[...]

The indictment reads that Beeter, without lawful authority, used personal identification information of someone he knew to access that person’s personal e-mail account on several occasions between August 2010 and April 2011. In addition, on four occasions in June 2010, Beeter used the Law Enforcement Agencies Data System to gain information on a specific individual for his personal use.

Are TerraCom and YourTel the poster children for how NOT to respond to a breach?

Business Sector, Commentaries and Analyses, Exposure, Non-U.S., Subcontractor, U.S. No Responses »

May 252013

Isaac Wolf reports:

A month ago, two phone carriers participating in a federal benefit program were alerted that sensitive customer records, including Social Security numbers and bank-account records, were freely posted online.

Now, Oklahoma-based TerraCom Inc. and affiliate YourTel America Inc. — the companies that collected the records — say they don’t plan to notify all affected consumers of the privacy breach, which affects residents of 26 states.

Read more on Evansville Courier & Press.

So if you were not one of the 343 individuals who did get notification letters because of heightened risk and you do not reside in Texas, Minnesota, Nevada, or Illinois – the four states where TerraCom will be sending notifications because of state notification laws – you probably will not get a notification letter. Only four states’ residents will get notification letters out of 26 states? There’s a lesson for state legislators and Congress to learn from this.

Frankly, TerraCom and YourTel seem to positioning themselves as the poster children of how not to respond to data breaches. First they accused TScripps Howard News Service of hacking and violations of CFAA. As Ms. Smith recaps:

Lee wrote a letter informing Scripps that the “intrusions and downloading” of sensitive records were associated with Scripps IP addresses. Lee warned that “the ‘Scripps Hackers’ have engaged in numerous violations of the Computer Fraud and Abuse Act by gaining unauthorized access into confidential computer files maintained for the Companies by Vcare, and by digitally transferring the information in these folders to Scripps.”

Lee added that the Scripps Hackers eventually used Wget to find and download “the Companies’ confidential files.” (Wget was the same tool used by Facebook’s Mark Zuckerberg in the film The Social Network to collect student photos from various Harvard University directories.) The rest of the letter pretty much blamed the “Scripps Hackers” for the cost of breach notifications, demanded Scripps hand over all evidence as well as the identity and intentions of the hackers, before warning that Scripps will be sued.

Perhaps not fully appreciating the backlash they would incur from a breach at an outsource contractor (VCare) and how absurd they look blaming reporters who did what reporters do – and were able to document their methods – they’ve now compounded their problems and the likelihood of lawsuits by consumers and investigation by the FTC by taking the position that there is no need to notify everyone because of their risk assessment.

That simply will not fly in this day and age.

The breach is already under investigation by at least three states (Indiana, Illinois, and Texas).

TerraCom and YourTel would be well-advised to get a breach response firm with experience involved as soon as possible, if they haven’t already, take full responsibility, apologize to Scripps Howard, and offer consumers some free services. If they don’t do those things, I expect some states will sue them, and the FTC may investigate them for their data security failures and for allegations that despite regulations and policies, they may have retained information that they were not supposed to retain. Although the FTC could not fine them for a first offense, any investigation and possible corrective action plan and monitoring requirements could be costly for the firms.

Previous coverage of this breach on this blog can be found here and here.

Proxy advisory firm settles SEC charges over data breach: info for concert tickets and meals deal incurs $300,000 fine

Breach Incidents, Business Sector, Insider, U.S. No Responses »

May 242013

Sarah N. Lynch reports:

Institutional Shareholder Services has settled civil charges by U.S. regulators that an employee of the prominent proxy advisory firm shared nonpublic voting data in exchange for meals and concert tickets.

The Securities and Exchange Commission said on Thursday that ISS, a unit of MSCI Inc, will pay a $300,000 penalty and hire an independent compliance consultant.

[...]

The SEC alleged that, from 2007 through early 2012, an ISS employee provided a proxy solicitor, a firm that gathers shareholder votes, with nonpublic information revealing how more than 100 ISS clients were voting their proxy ballots.

[...]

A spokesperson for Georgeson, a proxy solicitation firm owned by Computershare Ltd, confirmed late on Thursday that its employees were involved in the matter, but declined to comment on details of the “ongoing SEC investigations” or the SEC’s case against ISS.

ENRC fears data loss from hacking and stolen laptop

Breach Incidents, Business Sector, Hack, Non-U.S., Theft No Responses »

May 232013

Terry Macalister reports:

The mining group Eurasian Natural Resources Corporation warned on Thursday that it may have lost internal data as a result of computer hacking and the theft of a laptop.

The problems add to a complicated picture for ENRC, a London-based but Kazakh-facing producer of minerals from iron ore to coal, which received an indicative takeover offer last week but is also the subject of an investigation by the Serious Fraud Office.

ENRC said it had notified the information commissioner about the data loss saying: “The first incident relates to the theft of a laptop during a domestic burglary, while the second incident relates to an intrusion into the group’s electronic systems by a third party.