Published in News
Hannaford to invest millions after data breach
by David Stellmack on23 April 2008
Once bitten, twice shy
Grocery store chain Hannaford Brothers Company announced today that it will invest “million of dollars” to improve and upgrade its IT security after a damaging network intrusion resulted in the theft of as many as 4.2 million credit and debit card numbers from its systems.
Upgrades will include installation of new intrusion-prevention systems that will monitor activities on Hannaford's network and the individual systems at its stores. Additionally, the store will deploy PIN pad devices with Triple DES encryption support at store checkout aisles.
Hannaford also said that it has signed an agreement with IBM through a managed security services deal during which IBM will perform around-the-clock network monitoring under a managed security services deal. Hannaford said it has also replaced all of its servers in its stores to make sure that the malware that was planted on its network has been completely eliminated.
The implanted malware intercepted card data as it was being transmitted from point-of-sale systems to authorize transactions, and then forwarded the information in batches to a server located overseas that was connected to the malware.
The Hannaford intrusion and a similar incident at the Okemo Mountain Ski Resort in Vermont show that cybercrooks are getting more sophisticated. The Hannaford and Okemo data breaches occurred while the data was in transit between systems verifying the transaction and the authorization and deduction of funds from an account.
Hannaford is doing these upgrades partially to mitigate its damages to its customers and to banking institutions. A larger data compromise that occurred by TJX Corporation resulted in liability to TJX of about $250 million so far to cover costs related to the data breach.
TJX was sued by banks and credit unions seeking reimbursement for the cost of issuing new payment cards to its customers. Hannaford has had at least two class-action lawsuits filed against it, charging it with negligence and breach of promise for not preventing the data theft and intrusions.