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Banks Scramble in Wake of Heartland Breach

Several have begun reporting fraud associated with exposed cards

By Jaikumar Vijayan, Computerworld

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Boston-based Sovereign Bank has posted a notice on its Web site alerting account holders of the breach and informing them that the bank's cards had been affected by it as well. The bank said it was still determining the number of compromised cards.

The Platte Valley Bank of Scottsbluff, NE issued an alert saying that 433 of its debit and credit card customers had been affected by the breach. The statement stressed that the bank's own systems had not been hacked into, and called out that the compromise was the result of the intrusion at Heartland. First State Bank also of Scottsbluff, NE said 200 of its customers had been impacted. "This could possibly be a bigger breach than TJ Maxx and has affected customers of every bank in the area," the alert noted.

The Association of Vermont Credit Unions said that as of last Friday the breach had affected about 6,000 ATM check cards and thousands of credit cards at credit unions across the state. In a statement the association said it had learned of the breach on Friday January 9 or more than 10 days before it was disclosed by Heartland.

Jenny Reynolds, vice president of marketing at CU Community Credit Union in Springfield, Mo. said that so far the breach has resulted in about 16 compromised cards belonging to the credit union being used to commit about $11,000 worth of fraudulent transactions. In total the credit union has ended up blocking 350 Visa cards after the breach disclosure Reynolds said. The fraud itself occurred last November even before the breach was disclosed by Heartland, she said. Many of the fraudulent transactions involved purchases at gas stations and small merchandize, she said. "I haven't spoken to one financial institution that hasn't been affected by the breach," she said.

The Washington Credit Union League noted that some the state's financial institutions have reported that more than half of their card base as being affected by the breach, Most credit union leaders believe that the effect during the initial days is just the "tip of the iceberg," the association warned.

Representatives from the Maine Credit Union League, the California Credit Union League and the Massachusetts Bankers Association told Computerworld they reported their members as having been affected by the breach, though all said it was still too soon to determine the full scope of the compromise.

Meanwhile, CUNA Mutual Group, a firm that insures credit unions, said its risk management analysts had noticed an unsual increase in fraudulent payment card activity as early as October last year and had forwarded the information to MasterCard and Visa.