The hack, which may be the largest reported incident of data theft to date, is focusing attention on lax security at CardSystems Solutions Inc. and other third-party processors, which are not tightly monitored, despite processing millions of sensitive credit card transactions each year.
MasterCard on Friday said it was notifying its member financial institutions of a data breach at CardSystems after the company, working with forensic investigators from MasterCard, identified a potential security incident on May 22.
More than 200,000 credit card accounts, out of 40 million, are believed to have been exposed in the theft. CardSystems acknowledged in published reports that it was improperly storing the accounts on its network for research purposes.
In a statement Friday, CardSystems said it is installing additional security procedures recommended by a security assessor involved with the investigation.
MasterCard said that about 68,000 of its customers accounts were put at "high risk" by the compromise, out of 13.9 million MasterCard cardholders who had transactions processed by CardSystems.
The company is working with member banks of specific accounts exposed in the attacks, according to Linda Locke, vice president of global communications at MasterCard International.
But spokespeople for Visa and American Express declined to provide information on how many of their customers were affected, citing the ongoing investigation into the breach and insufficient information.
In an e-mail statement, Visa said it has not yet detected any unusual fraud patterns on Visa cards resulting from the security breach at CardSystems, but that it is respecting the request of law enforcement to keep information regarding the investigation confidential.
American Express said it is continuing to "monitor" the CardSystems situation and is not ready to disclose how many cardholder accounts might have been exposed, according to Christine Elliott, a company spokeswoman.
Only a small number of its merchants used CardSystems, and only one half of one percent of the companys traffic goes through CardSystems, she said. But Elliott did not discount that American Express accounts may have been compromised, given the size of the attack.
Locke, of MasterCard, said she couldnt speculate on why hers was the only credit card company to go public with information on the breach, but said she wasnt aware of any request by law enforcement to keep information on the number of exposed accounts secret.
"We havent released anything that we believe would compromise any investigation," she said "We work carefully with the FBI, and I think theyve said publicly that they think consumers should be warned."
The FBI declined to comment on the case, citing the ongoing investigation.
Regardless of when, or whether, consumers find out about their accounts, more scrutiny needs to be given to companies such as CardSystems, according to Mike Gibbons, vice president of federal security services at Unisys.
"The question is, Has this happened in the past? Are businesses learning from these events?" he said.
While companies that handle sensitive data may have shored up their own network defenses, they often fail to follow the data trail and consider the security of third-party companies they partner with, Gibbons said.
"My sense is that companies havent thought this through from a protection point of view—they havent done real clear thinking about how to protect sensitive data and what do when incidents occur," he said.
MasterCard said it intends to take a "close look" at third-party processors and is recommending that the U.S. government expand the reach of data privacy laws such as Gramm-Leach-Bliley to cover third-party processors that deal directly with consumers, Locke said.
While the current breach appears to be limited to CardSystems, Gibbons said the types of data security lapses that were revealed at that company are common, and he wouldnt be surprised if revelations about similar incidents at other companies follow.
"The question isnt whether the sky is falling. The sky has already fallen. The question is whether or not a piece of it hits you in the head," he said.