Latest Known Credit Card Data Breaches Target Big Hotels

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Hotels Latest Victims of Credit Card Hacks

By Karen Jacobs

ATLANTA -- A credit card data breach has been detected that exposed guests at certain Marriott, Holiday Inn, Sheraton and other hotel properties to theft, hotel management firm White Lodging Services said Monday.

The breach occurred at food and beverage outlets at 14 hotels, including some operated under the Westin, Renaissance and Radisson names, between March 20 and Dec. 16 last year, White Lodging said in a statement.

The company said information subject to potential theft by cybercriminals included names and numbers on consumers' debit or credit cards, security codes and card expiration dates.

Customers who used their cards at the affected outlets should review all statements from the time in question and consider placing fraud alerts on their credit files, White Lodging said.

White Lodging wouldn't estimate how many card numbers might have been taken. Krebs on Security, the cybersecurity blog that first reported the breach Friday, said thousands of accounts had been compromised.

The latest data breach comes after the FBI warned retailers last month to prepare for more cyber attacks after discovering about 20 hacking cases in the past year involving the same kind of malicious software used against Target (TGT) over the holiday shopping season.

The incident involving Target, the No. 3 U.S. retailer, was one of the biggest retail cyber attacks in history.

In a confidential, three-page report to retail companies the FBI described the risks posed by "memory-parsing" malware that infects point-of-sale systems, %VIRTUAL-article-sponsoredlinks%which include cash registers and credit-card swiping machines in checkout aisles.

Restaurants and lounges affected by the White Lodging breach were at hotels in Chicago; Austin, Texas; Richmond, Va.; Plantation, Fla.; Denver; Boulder and Broomfield, Colo.; Louisville, Ky.; Erie, Pa.; Indianapolis; and Merrillville, Ind., the company said.

White Lodging, which manages 169 hotels that include brands of Marriott International (MAR), Starwood Hotels and Resorts (HOT) and InterContinental Hotels Group (IHG), said it planned to offer affected consumers one year of identity protection services.

The company, based in Merrillville, Ind., said it notified federal authorities of the suspected breach and had begun a review of other properties it manages.

A spokeswoman for White Lodging declined to comment beyond the company's statement.

Marriott said one of its franchise management companies had "unusual fraud patterns" with payment systems, according to a statement from spokesman Jeff Flaherty. He added that Marriott was working with the company in the probe.

"Because the suspected breach did not impact any systems that Marriott owns or controls, we do not have additional information to provide," Flaherty added.

Why Your Bank Thinks Someone Stole Your Credit Card
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Latest Known Credit Card Data Breaches Target Big Hotels

One reason why Marquis' gas purchases might have triggered a fraud lockdown? Filling their tank is a common first move for credit card thieves.

"Some of the things they look at are small-dollar transactions at gas stations, followed by an attempt to make a larger purchase," explains Adam Levin of Identity Theft 911.

The idea is that thieves want to confirm that the card actually works before going on a buying spree, so they'll make a small purchase that wouldn't catch the attention of the cardholder. Popular methods include buying gas or making a small donation to charity, so banks have started scrutinizing those transactions.

Of course, it's not a simple matter of buying gas or giving to charity -- if those tasks triggered alerts constantly, no one would do either with a credit card. But Levin points to another possible explanation: Purchases made in a high-crime area are going to be held to a higher standard by the bank.

"It's almost a form of redlining," he says. "If there are certain [neighborhoods] where they've experienced an enormous amount of fraud, then anytime they see a transaction in the neighborhood, it sends an alert."

(Indeed, Erin tells me that one of the gas purchases that triggered an alert took place in a rough part of Detroit, which she visited specifically for the cheap gas.)

People who steal credit cards and credit card numbers usually aren't doing it so they can outfit their home with electronics and appliances. They don't want the actual products they're fraudulently buying; they're just in it to make money. So banks are always on the lookout for purchases of items that can easily be re-sold.

"Anytime a product can be turned around quickly for cash value, those are going to be the items that you would probably assume that, if you were a thief, you would want to get to first," says Karisse Hendrick of the Merchant Risk Council, which helps online merchants cut down on fraud. Levin says electronics are common choices for fraudsters, as are precious metals and jewelry.

Many thieves don't want to go through the rigmarole of buying laptops and jewelry, then selling them online or at pawnshops. They'd much prefer to just turn your stolen card directly into cold, hard cash.

There are a few ways that they can do that, and all of them will raise red flags at your bank or credit union. Using a credit card to buy a pricey gift card or load a bunch of money on a prepaid debit card is a fast way to attract the suspicions of your credit card issuer. Levin adds that some identity thieves also use stolen or cloned credit cards to buy chips at a casino, which they can then cash out (or, if they're feeling lucky, gamble away).

When assessing whether a purchase might be fraudulent, banks aren't just looking at what you bought and where you bought it. They're also asking if it's something you usually buy.

"The issuers know the buying patterns of a cardholder," says Hendrick. "They know the typical dollar amount of transaction and the type of purchase they put on a credit card."

Your bank sees a fairly high percentage of your purchases, so it knows if one is out of character for you. A thrifty individual who suddenly drops $500 on designer clothes should expect to get a call -- or have to make one when the bank flags the transaction. If you rarely travel and your card is suddenly used to purchase a flight to Europe, that's going to raise some red flags.

Speaking of Europe, the other big factor in banks' risk equations is whether you're making a purchase in a new area. I bought a computer just days after moving from Boston to New York, and had to confirm to the bank that I was indeed trying to make the purchase. Levin likewise says that making purchases in two different cities over a short period of time raises suspicions.

"I go from New York to California a lot, and invariably someone will call me [from the bank], " he says. Since one person can't go shopping in New York and California at the same time, any time a bank sees multiple purchases in multiple locations in a short period, it's going to be suspicious.

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