Evan Schuman's StorefrontBacktalk

Back in June 2005, right around the time that several major retailers (including TJX, BJ’s Wholesale Club, Boston Market and DSW) were being attacked by Albert Gonzalez’s cyber thief gang, Wal-Mart was quietly experiencing its own data breach. In Wal-Mart’s case, though, the breach began in June 2005 and wasn’t discovered by the chain until some 17 months later.

These new details of Wal-Mart’s data breach—which saw POS source code grabbed and zapped to parties unknown in Eastern Europe—are shedding more light on the early days of such retail assaults and how various chains learned of them and dealt with them.

The specifics, most of which are being confirmed by Wal-Mart, are coming from a series of documents the chain had prepared at the time. Wired first reported the existence of these files. Indeed, that Wired story has some wonderfully explicit details, along with E-mail excerpts from Wal-Mart IT discussions at the time.

Wal-Mart described the files as “4-year-old documents that were preliminary” but didn’t disagree with any of the details. The breach apparently began when someone used a Nortel VPN connection from a Canadian Wal-Mart employee to gain access to key systems. To be precise, it was the connection of a former Wal-Mart Canada employee–an account that IT had neglected to shut down after the employee left.

After some 17 months of rummaging through the system, the intruder/intruders ran into a bit of bad luck. When trying to install a password-cracking tool, a glitch brought the whole server down. When Wal-Mart went to repair the server, it discovered the tool and realized the chain had been breached. That attacker tried again with a different VPN account number and then tried a third time.

When we get into the log analysis of what actually happened, this story gets even more intriguing. On the one hand, Wal-Mart maintains that no data—as opposed to source code, for example—was taken. “We do not believe that any customer or associate data was compromised,” said Wal-Mart spokesperson Daphne Moore.

To support that position, the chain points to the reports, which said that only unsuccessful entry attempts were logged. But one of the reports cited by Wired expressed concerns about “the level of logging enabled on these systems, which did not capture much information” at Wal-Mart unit Sam’s Club and further noted that “it was not possible to determine if any of these vulnerabilities were attacked.”

This point raises a question of whether the logs were capturing enough information to be able to know if any customer data had been grabbed. It also presupposes that the logs are accurate, even though it’s common practice for cyber thieves to erase and otherwise alter their tracks. In addition, the attackers in this case spent all of their time focusing on information about POS systems. Does it truly stand to reason that those thieves would have had secret access to the systems from the world’s largest retailer for 17 months and not taken any names or card data?

This question raises suspicions that data would have been taken. But there’s a very good reason to believe that, in fact, none was. These kinds of professional cyber thieves don’t just take a few names.

To make a living, cyber thieves need to scoop up millions of names or more data. Had that occurred, wouldn’t consumers and, consequently, the brands have detected the fraud? And wouldn’t that have gotten back to Wal-Mart as a likely common point of purchase? The absence of such evidence does suggest—as unlikely as it may seem—that no names or credit card data were taken.

If true, that raises even more gnawing questions. Wal-Mart’s systems in June 2005—just like every other major retailer at that time—were hardly fortresses, with generous doses of unencrypted card data in all kinds of pockets of various systems. Maybe encryption and VPN administrative management were a bit loose—and the source code might not have been protected all that well. But is it possible that Wal-Mart’s data protection mechanisms were strong enough to continually thwart cyber thieves’ unrestricted efforts for 17 months?

One security vendor, Michael Argast of Sophos Security, said his favorite part of the Wal-Mart situation was how the world’s largest retailer learned of the breach.

“One aspect of this story which is particularly interesting is that Wal-Mart didn’t discover this intrusion because of monitoring or logs. They essentially stumbled across it,” Argast said. “This is similar to the Heartland event announced earlier this year, in that they only became aware of the attack because of a pattern of card fraud that led back to them, not because of security systems or processes.”

Argast also raised his eyebrow over the Wal-Mart statement that said no names had been taken. “In this case, Wal-Mart states that no customer data was compromised, and that the intruder focused on infiltrating their payment infrastructure—very scary in itself—but also mentions that they don’t have records of successful logins. So how do they know? Unless you can prove otherwise through logs or other audits, you have to assume your data has been compromised.”