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Thieves Get All Your Credit


Security breach exposes cardholders to fraud.

Got an inconvenient truth you want to bury? Simple! Release the bad news on President Barack Obama's Inauguration Day.

Heartland Payment Systems (HPY) apparently used this clever tactic in announcing what may be the largest data breach in geekdom.

The Washington Post reports that Heartland, which processes payments for about 250,000 businesses nationwide, began receiving reports of fraudulent activity in late 2008 from holders of Visa (V) and MasterCard (MA).

Tens of millions of debit and credit transactions may be affected. About 40% of the transactions the company handles are from small to mid-sized companies. Heartland declined to name its clients.

Heartland called in computer snoops who tracked the problem to "malicious software" planted in its system that recorded debit and credit card numbers, cardholders' names and expiration dates - the basic information recorded on a card's magnetic strip. It's not known how long the spy software was attached to Heartland's computer system.

But no Social Security numbers, personal identification numbers or home addresses were stolen, so the breach probably won't become a major case of identity theft. It may be difficult for thieves to use the information to place Internet orders without the personal information.

Still, it's a major inconvenience for those affected. Customers won't be liable for fraudulent charges if promptly reported, but they've got to go through the hassle of getting a new card.

Breaking into computer systems to steal credit information is becoming increasingly common, suggesting that thieves are always at least one step ahead of security software developers.

On December 23, 2008, RBS WorldPay, a division of Citizens Financial Group, said a breach of its system may affect about 1.5 million customers. In March 2008, Hannaford Brothers said a security breach may hit about 4.2 million credit and debit accounts. In 2007, TJX Companies said security breaches over 3 years may have hit about 45 million accounts. In 2005, hackers put at risk about 40 million accounts handled by CardSystems Solutions, the Washington Post reports.

It's almost enough to make you long for the good old days of cash. Oh wait - that means hitting up an ATM machine. Barter, anyone?
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