WASHINGTON - Home improvement retailer Home Depot (HD) has been in contact with the U.S. Secret Service about an alleged major breach of customer and credit card data that came to light this week, a law enforcement source told Reuters on Thursday.
Any investigation by the Secret Service appears to be at a very early stage, the source said.
The Secret Service, which declined comment, usually is the lead agency in federal criminal investigations into complex breaches of credit card and other consumer data.
Another law enforcement source said the FBI, which also sometimes participates in such investigations, doesn't appear to be involved. It is unclear whether the U.S. Department of Justice is playing any role.
Home Depot hasn't confirmed that a breach occurred and it remains unclear whether or how many customers were impacted.
If confirmed, the Home Depot incident could be among the most widespread in the string of security breaches at U.S. retailers in the recent past.
Spokeswoman Paula Drake said Wednesday that the retailer is working with IT security firms, including Symantec (SYMC) and FishNet Security, to investigate whether there has been a data breach.
A Symantec spokeswoman confirmed that Symantec was assisting with the investigation but didn't elaborate.
Home Depot sought to comfort its consumers, promising free identity-protection services, including credit monitoring, to any potentially impacted customers and reassuring that the retailer or the banks that issued the cards will be responsible for any fraudulent charges.
Home Depot shares were up 1.6 percent at $90.39 Thursday morning on the New York Stock Exchange.
Concerns about a potential Home Depot data theft follow a major breach at retailer Target (TGT), where hackers late last year stole at least 40 million payment card numbers and 70 million other pieces of customer data.
-With additional reporting by Alina Selyukh in Washington, Nandita Bose in Chicago and Subrat Patnaik in Bangalore, India.
Why Your Bank Thinks Someone Stole Your Credit Card
Home Depot Said to Contact Secret Service Over Alleged Breach
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.