05Sep Data Theft on the rise

If you’re the owner of a retail-store chain or a financial-services company, it is your responsibility to keep your customer’s credit card number or social security number safe. But how can you control what goes on outside your company’s doors? Your credit card machine’s vendor could overlook a software vulnerability. Or an employee at the call center handling your customer-service calls could turn sour on his employer.

Data breaches involving trusted third parties—business partners, vendors, suppliers, and contractors—are alarmingly on the rise, according to a recent investigation by the security team at Verizon Business. While studying about 500 incidents worldwide between 2004 and 2007, the RISK Team found that cases involving partner organizations, willing or unwitting, went up fivefold, reaching 44 percent in 2007. Hackers and other outsiders, meanwhile, were directly responsible for close to 80 percent of the breaches. (There was some overlap among the cases.)

The market for stolen data has exploded in recent years, says Bryan Sartin, director of the investigative response team at Verizon Business. In early August, the U.S. Federal Bureau of Investigation cracked down on one of the largest identity-theft cases involving an organized international ring of criminals. This “information black market” is fueling the increase in partner breaches, Sartin says.

For example, he says, criminals can find out the make and model of the cash registers used by a restaurant chain. With this information they can hunt down the company that supports the software system for that cash register model. They could then try to hack into the software system or bribe disgruntled employees at that support company’s call centers.

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