Security Experts:

Malware Infects Payment Systems at More Than 100 Zaxby's Locations

Zaxby's Franchising, the restaurant chain best known for high calorie meals like fried chicken and Texas toast, is the latest company to have computers associated with its point-of-sale (POS) systems to be compromised by malware.

(Clarification: This article originally suggested that the point-of-sale terminals themselves were compromised. According to the company, the malware was not directly on the point-of-sale systems, but on computers connected to them in locations that were affected. The infected systems do appear to be part of the overall "Point of Sale System" but not necessarily the swipe terminals themselves.

The Georgia-based franchising eatery said that after being alerted by credit card processing companies that a number of Zaxby’s locations were common points of purchase for some fraudulent credit card activity, the company discovered malware on the licensees’ computer systems at a large number of its locations.

Malware Infects Point of Sale Systems at Zaxby'sThe list of affected restaurants at the time of publication included 109 locations. Zaxby's has 560 locations across 13 states, mainly in the South.

“During the course of its forensic investigation, Zaxby's Franchising, Inc. identified some suspicious files, including malware, on the licensees' computer systems at certain Zaxby's locations,” the company said in a statement.

While the forensic investigation has not determined whether credit or debit card data left the processing systems of any of the affected locations, the company did say that it was concerned that an attacker(s) may have accessed data, including credit and debit card data.

"This breach represents the kind of high-tech crime that even brick and mortar retail establishments face as their processes become more computerized,” Tom Cross, Director of Security Research, Lancope told SecurityWeek in an emailed statement.

“A computer at a business used to process large numbers of credit card transactions is a gold mine for such an attacker,” Cross continued. “While the payment card industry has responded to this threat with compliance programs intended to ensure that card processing systems are protected, those compliance processes are not fool-proof and breaches are still possible.”

In another payment system related incident, in October 2012, bookseller Barnes & Noble warned customers of a data breach that came as a result of result a compromise to the payment terminals where customers would swipe their credit or debit cards.

Similar to the Barnes & Noble incident, In May 2011, craft chain Michaels Stores reported that 90 PIN pads across some of its 995 stores nationwide had been compromised. Those attacks resulted in victims reporting fraudulent withdrawals of up to $500 made from ATMs from credit and debit card accounts. Following the incident, Michaels removed approximately 7,200 comparable PIN pads from all its US stores. 

In more recent news, late last year researchers from Seculert discovered malware they called “Dexter” that targets Point-of-Sale systems, and captures card data as it is transmitted through the payment process. According to Seculert, the Dexter malware has been spotted at well-known retail outlets, hotels, and eateries. At the time, Seculert said that 42% of the Dexter infections were in North America.

Zaxby's said that it has notified law enforcement of the incident, which is believed to have originated from external sources, and that it is working to implement additional security measures to prevent further intrusions.

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For more than 10 years, Mike Lennon has been closely monitoring the threat landscape and analyzing trends in the National Security and enterprise cybersecurity space. In his role at SecurityWeek, he oversees the editorial direction of the publication and is the Director of several leading security industry conferences around the world.