Security Experts:

Dairy Queen Says PoS Systems Were Hit by Malware

Following an investigation triggered by fraudulent activity on some customer payment cards, Dairy Queen has determined that cybercriminals managed to plant point-of-sale (PoS) malware at hundreds of stores.

According to a statement published on Thursday by International Dairy Queen President and CEO John Gainor, the data breach affects mostly DQ locations from across the United States, but one Orange Julius store was also hit. The malware, a variant of the notorious Backoff, is said to have infected systems containing customer names, credit and debit card numbers, and expiration dates.

The company says there is no evidence that Social Security numbers, PINs, email addresses or other personal information was compromised as a result of the malware infection.

A total of 395 of Dairy Queen's 4,500 stores were affected by the incident. The malware was present at some locations since as early as August 1, the company said. While in most cases the infection was cleaned up by the end of August, there is one store in Florida where the threat was removed only on October 6. The company now says it's confident that the malware has been contained.

Dean Peters, a spokesman for Dairy Queen, told SecurityWeek that less than 600,000 cards are affected.

The investigation, in which Dairy Queen worked with franchise owners, law enforcement and payment card companies, revealed that the cybercriminals accessed systems after obtaining account credentials from a third-party vendor.

This attack vector was also used in the recent data breach that hit the non-profit organization Goodwill Industries International.

"We are committed to working with and supporting our affected DQ and Orange Julius franchise owners to address this incident," stated John Gainor, president and CEO of International Dairy Queen. "Our customers continue to be our top priority."

Dairy Queen is offering free identity repair services for a period of one year to customers who used their payment cards at the affected stores.

“This has a similar fingerprint to the Target breach: malware in the POS (in this case “BackOff”) across stores and third party credential breach," Mark Bower, VP of product marketing at Voltage Security, told SecurityWeek. "No matter what a merchant does to achieve basic PCI compliance, unless the data is secured before it enter the POS itself, such as in a secure card reading terminal, it will be most likely be compromised."

"Attackers have access to a range of custom POS malware these days designed to specifically steal card and magnetic track data from POS memory, which bypasses traditional data-at-rest encryption and perimeter controls," Bower continued. "Malware into the POS might come from direct network intrusion, or by subverting the POS software update and patch management system with an infected update. Once in, attackers can syphon off every transaction that customers swipe until its detected and removed."

The Backoff PoS malware is highly popular among cybercriminals. The United States Department of Homeland Security (DHS) reported in August that over 1,000 businesses have been infected with the threat, with many of them not being aware that their systems have been compromised. It is believed that Backoff is the piece of malware used in the attacks against UPS and Supervalu.

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Eduard Kovacs (@EduardKovacs) is a contributing editor at SecurityWeek. He worked as a high school IT teacher for two years before starting a career in journalism as Softpedia’s security news reporter. Eduard holds a bachelor’s degree in industrial informatics and a master’s degree in computer techniques applied in electrical engineering.