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FTC Sues Hotel Operator Wyndham Worldwide Over Data Breaches

The Federal Trade Commission (FTC) is suing hotel company Wyndham Worldwide and three of its subsidiaries for security failures that resulted in three data breaches in less than two years.

According to the FTC, those failures led to fraudulent charges on consumers' accounts, millions of dollars in fraud losses and the theft of hundreds of thousands of consumer payment card account details to an Internet domain address registered in Russia.  According to the FTC’s complaint, Wyndham and its subsidiaries failed to utilize measures such as complex user IDs and passwords, firewalls and network segmentation between the hotels and the corporate network.  In addition, improper software configurations resulted in the storage of sensitive payment card information in clear readable text, the agency alleged.

The defendants in the case are:  Wyndham Worldwide Corporation; its subsidiary, Wyndham Hotel Group, LLC; and two subsidiaries of Wyndham Hotel Group – Wyndham Hotels and Resorts, LLC and Wyndham Hotel Management, Inc.

According to the FTC, in the first breach in April 2008, intruders gained access to a Phoenix, Arizona Wyndham-branded hotel's local computer network that was connected to the Internet and the corporate network of Wyndham Hotels and Resorts. As a result of the breach, intruders got access to the corporate network of Wyndham's Hotels and Resorts subsidiary as well as the property management system servers of 41 Wyndham-branded hotels, the FTC said. With that access, the attackers were able to install malware and access company files.

Ultimately, the breach led to the compromise of more than 500,000 payment card accounts and the theft of hundreds of thousands of consumers’ payment card account numbers to a domain registered in Russia. The second incident occurred in March 2009, when intruders gained access to Wyndham Hotels and Resorts' network using similar techniques as were observed in previous attack. In addition to using memory-scrapping malware, they also reconfigured software at the Wyndham hotels to obtain clear text files with the payment card account numbers of guests. The intruders were able to access data at 39 Wyndham hotels in this incident and obtain payment card information on 50,000 consumers.

The final incident came later in 2009, when intruders once again compromised Wyndham Hotels and Resorts' network. The attackers also compromised the property management system servers of 28 Wyndham hotels as well. Ultimately, the attackers made off with information on roughly 69,000 consumer payment card accounts.

Wyndham Worldwide Spokesperson Micahel Valentino told SecurityWeek that the company cooperated fully with the FTC's investigation, and the accusations being levied are without merit.

"At the time of these incidents, we made prompt efforts to notify the hotel customers whose information may have been compromised, and offered them credit monitoring services," he said in a statement. "To date, we have not received any indication that any hotel customer experienced a financial loss as a result of these attacks. Since these events, we have made significant enhancements to our information security, and have assisted franchised and managed Wyndham Hotels and Resorts-brand hotels in enhancing their information security."

The FTC complaint can be found here.

*This story has been updated with a statement from Wyndham Worldwide.