Security Experts:

Zappos Hacked: Internal Systems Breached in Cyber Attack

24 Million Customers Potentially Exposed After Attackers Breach Internal Systems at Internet Retailer

Zappos.Com, best-known for selling shoes and clothing online and its top-notch customer service and corporate culture, appears to be the latest victim of a cyber attack resulting in a data breach.

In an internal email to Zappos employees on Sunday, CEO Tony Hsie asked employees to set aside 20 minutes of their time to read about the breach and what communications would be sent to its over 24 million customers.

24 Million Customers Exposed in Zappos Cyber AttackWhile Hsieh, who said the attack occured through one of the company's servers in Kentucky, said that credit card data was not compromised, he did say that "one or more" of the following pieces of personal information has been accessed by the attacker(s):  customer names, e-mail addresses, billing and shipping addresses, phone numbers, the last four digits of credit card numbers. User passwords were "cryptographically scrambled," Hsieh said, suggesting that they were likely "hashed," a good security practice but still not a method that makes passwords (especially weak passwords) impervious to hackers.

Hsie also voiced concern over how the company would handle the volume of calls resulting from customer inquiries. "We have made the hard decision to temporarily turn off our phones and direct customers to contact us by email because our phone systems simply aren't capable of handling so much volume," Hsieh explained.  He elaborated that even if 5% of its customers called in, it would result in 1 million phone calls, most of which would not even make it into the companys phone system.

Zappos was scooped up by Amazon in 2009 for approximately $880 million. For those interested, Zappos is hiring an Application Security Engineer, the only opening listed in the Information Security categeory.

The full email from Hsie sent to Zappos employees, and the one set to go out to customers reads:

Date: Sun, 15 Jan 2012

From: Tony Hsieh (CEO - Zappos.com)

To: Zappos Employees Subject: Important - Security

Dear Zappos Employees - Please set aside 20 minutes to carefully read this entire email.

We were recently the victim of a cyber attack by a criminal who gained access to parts of our internal network and systems through one of our servers in Kentucky. We are cooperating with the FBI to undergo an exhaustive investigation.

Because of the nature of the investigation, the information in this email is being sent a bit more formally, and unfortunately we are not able to provide any more details about specifics of the attack beyond what is in this email and the link at the end of this email, but we can say that THE SECURE DATABASE THAT STORES OUR CUSTOMERS' CRITICAL CREDIT CARD AND OTHER PAYMENT DATA WAS NOT AFFECTED OR ACCESSED.

The most important focus for us is the safety and security of our customers' information. Within the next hour, to ensure a greater level of security, we will begin the process of notifying the 24+ million customer accounts in our database about the incident and help step them through the process of choosing a new password for their accounts. (We've already reset and expired their existing passwords.)

Here is the email that our customers will be receiving:

-------------------------------------------------------------------------

Subject: Information on the Zappos.com site - please create a new password

First, the bad news:

We are writing to let you know that there may have been illegal and unauthorized access to some of your customer account information on Zappos.com, including one or more of the following: your name, e-mail address, billing and shipping addresses, phone number, the last four digits of your credit card number (the standard information you find on receipts), and/or your cryptographically scrambled password (but not your actual password).

THE BETTER NEWS:

The secure database that stores your critical credit card and other payment data was NOT affected or accessed.

SECURITY PRECAUTIONS:

For your protection and to prevent unauthorized access, we have expired and reset your password so you can create a new password. Please follow the instructions below to create a new password.

We also recommend that you change your password on any other web site where you use the same or a similar password. As always, please remember that Zappos.com will never ask you for personal or account information in an e-mail. Please exercise caution if you receive any emails or phone calls that ask for personal information or direct you to a web site where you are asked to provide personal information.

PLEASE CREATE A NEW PASSWORD:

We have expired and reset your password so you can create a new password. Please create a new password by visiting Zappos.com and clicking on the "Create a New Password" link in the upper right corner of the web site and follow the steps from there.

We sincerely apologize for any inconvenience this may cause. If you have any additional questions about this process, please email us at passwordchange@zappos.com

-------------------------------------------------------------------------

We have also created a web page that we will continue to update as we learn more about what questions customers have:

http://www.zappos.com/passwordchange

In order to service as many customer inquiries as possible, we will be asking all employees at our headquarters, regardless of department, to help with assisting customers. Due to the volume of inquiries we are expecting, we realized that we could serve the most customers by answering their questions by email. We have made the hard decision to temporarily turn off our phones and direct customers to contact us by email because our phone systems simply aren't capable of handling so much volume. (If 5% of our customers call, that would be over 1 million phone calls, most of which would not even make it into our phone system in the first place.)

We've spent over 12 years building our reputation, brand, and trust with our customers. It's painful to see us take so many steps back due to a single incident. I suppose the one saving grace is that the database that stores our customers' critical credit card and other payment data was not affected or accessed.

Over the next day or so, we will be training everyone on the specifics of how to best help our customers through their password change process now that their passwords have been reset and expired. We need all hands on deck to help get through this. 

Thanks everyone.

Tony Hsieh

CEO - Zappos.com

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