One Guilty Plea In TJX Data Breach Case, As More Victims Emerge

Written by Evan Schuman
September 12th, 2008

As one of the 11 defendants in the federal data breach charges involving TJX and others pleaded guilty Thursday (Sept. 11), federal officials confirmed that there are quite a few other victims of the breach that have yet to be publicly identified.

The retailers identified publically are TJX, BJ’s Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW.

It’s already known that one of the unidentified chains (which is one of the nation’s largest retailers) was the first to detect the cyberthieves.

In a filing on Thursday, U.S. Attorney Michael Sullivan told U.S. District Court Judge William G. Young that "There is forensic and/or testimonial evidence that the defendant and his co-conspirators hacked into numerous other businesses, which have not yet been publicly identified." The filing did not specify how many of those businesses are retailers.

The filing added that "hundreds of banks were victimized and potentially victimized as stolen credit card information was fraudulently used. As of this juncture, the government has not identified that list of banking institutions by name."

The defendant who pled guilty is Damon Patrick Toey, 23, of Miami. He agreed to accusations of wire fraud, credit card fraud and aggravated identity theft. He was said to have aided Albert Gonzalez in running the crime ring. Gonzalez pleaded not guilty the same day.

According to a Boston Globe story, when Young asked him why he was pleading guilty, Toey said that federal prosecutors "have enough, other than what I’m pleading guilty to," on him, "that would make it a lot worse, in my opinion."


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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...

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