Debit card fraud outbreak raises questions about data breach

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March 9, 2006 (Computerworld) -- The continued refusal by major credit card associations and financial institutions to identify the source of a data compromise that has resulted in a wave of debit card fraud worldwide is fueling concerns about the scope of the problem.

It is also shining a spotlight on what may be growing attempts by criminal gangs to try to compromise PIN-based card transactions, which have until now been considered extremely secure, analysts said.

The immediate furor was ignited earlier this week by Citibank, which acknowledged that it had put transaction holds on an unspecified number of Citi-branded MasterCard debit cards after detecting fraudulent cash withdrawals in Canada, Russia and the U.K. (see "Citibank probes ATM withdrawals, cites potential U.S. ‘retailer breaches' ">).

In a brief statement, Citibank said that the fraud was the result of a “third-party business information breach” that took place last year. To protect its customers, the company said it “blocked PIN-based transactions in those locations for the customers affected by the breach." A spokesman for the company, however, refused to name the third-party retailer involved in the breach.

Citibank’s disclosure made it the latest in a fast growing list of financial institutions that during the past several weeks have reissued thousands of debit cards or blocked access to certain transactions in countries where ATM cards were used fraudulently to withdraw cash and make purchases on U.S. accounts.

The list includes banks such as Bank of America Corp., Wells Fargo Bank and Washington Mutual Bank, as well as numerous credit unions around the country. One example is $13 billion North Carolina State Employees Credit Union in Raleigh, N.C., which over the past two weeks has reissued more than 27,500 debit cards after being told by Visa U.S.A. Inc. of a security breach involving a U.S. retailer.

According to Leigh Brady, senior vice president at the credit union, many of the compromised debit cards were being used fraudulently in several countries, including Romania, Russia, Spain and the U.K. “This is the largest [card reissue] we’ve had one in quite a while,” Brady said.

In an advisory this week, analyst firm Gartner Inc. said the combined bank actions “reflect the largest PIN theft to date and point to a new wave of 'PIN block' card fraud."

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• Security snafu at Boston Globe exposes subscriber data
• Update: Fla. residents' data exposure a statewide issue
• Data exposure: Counties across the U.S. posting sensitive info online
• FBI: No credit card data breach in N.H. state server case
• Confidential patient data sent to wrong company -- for 15 months
• 'Human error' exposes patients' Social Security numbers in N.C.
• Update: Thief nabs backup data on 365,000 patients
• Data exposure: Using software to redact personal data from public documents
• Registrar's database said to have exposed data
• Idaho utility hard drives -- and data -- turn up on eBay
• FTC imposes $10M fine against ChoicePoint for data breach
• Lessons learned from corporate security breaches
• Creative Bungling: IT Can't Stop All Data Breaches
• Arrests made in debit card fraud case
• Offshore outsourcing cited in Florida data leak
• Analysis: Data breach notification law unlikely this year
• Ohio University reports two separate security breaches
• Bank tape lost with data on 90,000 customers
• Honeywell blames ex-employee in data leak
• N.H. IT worker disputes state government security breach
• Laptop theft at Fidelity exposes data on 196,000 HP workers
• Debit card fraud outbreak raises questions about data breach
• Hacker hits Georgia state database via hole in security software
• Ohio recalls voter registration CDs; Social Security numbers included
• Aetna says laptop stolen with data on 38,000 members

• Update: AMD spins off manufacturing to cut costs, raise funds
• Microsoft's (un)secret weapon for winning the BI battle
• IBM launches Bluehouse, a Facebook for business
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