Is the Barnes & Noble Breach By The Same Gang That Hit Michaels, Aldi and Hancock Fabrics?

Written by Frank Hayes
October 24th, 2012

Barnes & Noble’s announcement on Wednesday (Oct. 24) of PIN pad breaches in 63 stores sounds eerily like last year’s breach at Michaels, the 2010 Aldi breach and the 2009 Hancock Fabrics breach. In each case, PIN pads were physically compromised, one per store, in dozens of stores clustered in specific geographic areas. The PIN pads were apparently tampered with during the spring and summer months, and tampering was limited to the countertop devices. How likely is all this to be coincidental? Not very.

According to a Barnes & Noble statement, PIN-pad tampering was found in September at 63 of the chain’s 689 regular stores, but not in any of the college bookstores that make up half the chain. Since then, B&N has removed all PIN pads from stores, requiring customers to hand over a payment card that the cashier then swipes. The chain’s E-Commerce site and mobile apps were not affected.

“The criminals planted bugs in the tampered PIN pad devices, allowing for the capture of credit-card and PIN numbers,” the chain’s statement said. “Barnes & Noble disconnected all PIN pads from its stores nationwide by close of business September 14, and customers can securely shop with credit cards through the company’s cash registers.”

The chain didn’t say, but a helpful B&N associate told us, that debit-card customers’ cards would be run through the system as credit cards. That means a higher interchange rate. But this is presumably a temporary situation, and all-new PIN pads will be installed shortly.

The 63 affected stores were clustered along the New York City-to-Boston corridor, as well as near Miami, Chicago, San Francisco, Los Angeles and Pittsburgh.

The chain is being very tight-lipped about other details of the breach, citing the ongoing FBI investigation. It even got a letter from the U.S. Attorney’s office in New York, giving the chain what it hopes will be a get-out-of-jail-free card when states with breach-notification laws, such as California, come asking why affected customers weren’t notified.

Because of the details blackout, we don’t know how up-to-date the PIN pads were, exactly how they were compromised, how the breach was detected or when the breach is believed to have begun. But we do know that the tampering was physical, only involved PIN pads and didn’t affect the stores’ POS software. This wasn’t a network attack or a virus, and the fact that the stores were so widespread means it is unlikely that associates were involved.

It really does sound like this summer’s sequel to Michaels, Aldi and Hancock.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.