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Another Huge Data Breach
June 12, 2005 - A security breach of customer information at a credit card transaction company could expose to fraud up to 40 million cardholders of multiple brands, MasterCard International Inc. said Friday. MasterCard said its security division detected multiple instances of fraud that tracked back to CardSystems Solutions Inc., which processes credit card and other payments for banks and merchants. The compromised data included names, banks and account numbers — not addresses or Social Security numbers, and that such data could be used to steal funds but not identities. It was the latest in a series of security breaches affecting consumer data at major financial institutions and data brokers. More recent 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.
CardSystems was hit by a virus-like computer script that captured customer data for the purpose of fraud The FBI was investigating. MasterCard, which said about 14 million of its own cards were exposed, first announced the breach in a news release late Friday afternoon, saying it was notifying its card-issuing banks of the problem. 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. 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 Tuscon, AZ., 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. Earlier this month, Citigroup said United Parcel Service 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.
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