The corporate hacks keep coming. The latest target, according to cybersecurity blogger Brian Krebs, is the beauty supply chain Sally Beauty (SBH), a retailer that draws customers from salons and other stylists.
A new batch of 282,000 stolen debit and credit cards were posted for sale this week on underground marketplaces, and Krebs believes they have been used at one of Sally Beauty's 2,600 stores. It's the latest scoop from Krebs, who has managed to penetrate the criminal underground to break major stories, including the Target (TGT) and Neiman Marcus hacks.
He used a similar technique to help triangulate the source of the Sally Beauty data breach, working with banks to buy back some of their compromised cards and analyze which stores had transactions on each account. %VIRTUAL-article-sponsoredlinks%Krebs says the underground marketplaces offering the stolen Sally Beauty card data were also affiliated with the same young Ukrainian man whom he has linked to sales of data purloined from Target.
Sally Beauty's spokeswoman Karen Fugate walked Krebs through the company's efforts to investigate a possible breach. She said the retailer first noticed suspicious activity around Feb. 24, but so far investigators, including Verizon (VZ) Enterprise Solutions, have been unable to detect any hacks.
The highly publicized Target breach, coming in the middle of the key holiday shopping season, helped drag down store traffic this winter. But investors have rallied behind the company recently as Target moves to repair the damage caused by the hack. On Wednesday, Target announced an overhaul of its security operations, bringing in a new high-level executive to replace the outgoing head of information security, Beth Jacob, who resigned Wednesday.
The rash of retail-related breaches has intensified the battle between banks and retailers over who should be responsible when a store is hacked. Just minutes before the Sally Beauty news broke, the National Retail Federation submitted a statement to the House asking Congress to resolve the feud in a "holistic fashion."
Weise is a reporter for Bloomberg Businessweek in New York. Follow her on Twitter @kyweise.
Why Your Bank Thinks Someone Stole Your Credit Card
Another Day, Another Retailer in a Massive Credit Card 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.