Security Experts:

Michaels Stores Investigating Attack Targeting Payment Cards

Arts and crafts retailer Michaels Stores said Saturday that it was investigating a possible data breach, making it the latest to suffer what is likely to be another attack targeting point of sale (POS) systems.

In an awkwardly worded disclosure, the company said in a press release that it “may have experienced a data security attack”.

The company said it was notified of possible fraudulent activity connected with payment cards that had been used at its stores, indicating that the retailer may be the common point of use and that it had experienced a data breach.

“We are concerned there may have been a data security attack on Michaels that may have affected our customers’ payment card information and we are taking aggressive action to determine the nature and scope of the issue,” said Chuck Rubin, CEO of Michaels Stores.

While the company has not yet confirmed that its systems have been compromised, it is issuing a warning and it’s likely the company has experience a data breach similar to the recent attacks that compromised Target and Neiman Marcus.

“Although the investigation is ongoing, based on the information the Company has received and in light of the widely-reported criminal efforts to penetrate the data systems of U.S. retailers, Michaels believes it is appropriate to let its customers know a potential issue may have occurred,” the company said.

The Company said that it is working closely with federal law enforcement and is conducting an investigation with the help of third-party data security experts to establish the facts.

This is not the first time the company has had its payment systems targeted in an attack. In May 2011, Michaels Stores reported that 90 PIN pads across some of its 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.

Irving, Texas-based Michaels Stores, Inc. currently operates more than 1,105 stores across the United States and Canada.

Following disclosure of the massive data breach by Target in late December, high-end department store Neiman Marcus warned on Jan. 23, that between July 16 and October 30, 2013, hackers using sneaky point-of-sale malware were able to obtain details of roughly 1,100,000 customer payment cards. 

“Michaels may be the latest breach, but it’s not going to be the last or the biggest," Chris Fedde, President at Hexis Cyber Solutions, told SecurityWeek in an emailed statement. "What these companies have in common is that they are high value targets due to the amount of financial information they process, and a determined attacker got past their perimeter defenses. No amount of technology applied at the network’s edge, nor adherence to compliance, is going to guarantee protection against these sophisticated threats."

Last week, Reuters reported that the FBI had issued a warning to U.S. retailers, saying they should prepare for more cyber attacks after discovering about 20 cases over the past year that involved point of sale malware. 

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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.