Michaels Replaces All Of Its PIN Pads, Following 20-State Coordinated Attack

Written by Frank Hayes and Evan Schuman
May 12th, 2011

The 1,045-store Michaels chain confirmed Wednesday (May 11) that it had been hit with an unusually geographically widespread physical attack on its PIN pads. As a result, the chain replaced all of its PIN pads—some 7,200 units—after having confirmed breaches in 80 stores spread across 20 states.

The fact that it impacted stores in 20 states is frightening. But of even greater concern is that the impacted stores crisscrossed the nation, from Delaware and Georgia to Colorado and Oregon.

Typically, such a PIN pad attack is done physically. However, with this many stores, a network attack from pad to pad is also possible—as is employees being involved in the breach.

The chain said it found fewer than 90 individual PIN pads in its U.S. stores “that showed signs of tampering,” but it wouldn’t specify a number. “Suspicious PIN pads were disabled and quarantined immediately. Out of an abundance of caution, Michaels has also removed approximately 7,200 additional PIN pads from its U.S. stores.”

Michaels would not comment on whether that number reflected all PIN pads being removed. However, a store that was not on the breached list confirmed it has already replaced all of its PIN pads following—and because of—this breach.

The chain pledged to have all such pads replaced “within the next 15 days. Until the new upgraded PIN pads are installed, customers may have their credit and signature debit transactions processed on the store register.”

The probe began when Michaels was identified as the common point of purchase after some fraudulent debit card transactions were reported the weekend of April 30 and May 1. The Chicago Tribune reported that “many customers had money stolen directly from their accounts via ATM withdrawals. Customers have reported having money taken from their bank accounts, often in the amount of $503 at cash machines in California. Marquette Bank, with 24 branches in the Chicago region, said 1,900, or 3 percent, of its customers were identified as potential victims, meaning they made a PIN-based debit-card transaction at a Michaels store over the past six months.”

The attack certainly raises the possibility that many chains beyond Michaels have either been impacted or will be. However, without more specifics about the means of attack or which PIN pads are being replaced, it’s hard to know what retailers can do about it.


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