Information stolen from the systems of massive retailer TJX was being used fraudulently in November 2006 in an $8 million gift card scheme, one month before TJX officials said they learned of the breach, according to Florida law enforcement officials.
The significance of this new TJX detail—discovered as Florida authorities issued arrest warrants for 10 suspects and took six of them into custody—is not clear, but it might yield clues as to how TJX learned of the breach.
The $16 billion retail chain has officially said that a huge amount of information was accessed as early as 2005 (with some of the captured data dating back to 2003), but that TJX officials didnt learn of the breach until December 2006. The company didnt announce the breach until mid-January 2007 due to—according to one credit-card source—a request from the Secret Service because it was actively pursuing a suspect.
The Florida information raises the possibility that whoever took the data had decided to start using it late last year. Law enforcement pursuing those cases would have found TJX as the common link, potentially prompting TJX to more closely examine its systems.
In the Florida case, a group used TJX credit- and debit-card information to do a low-tech clone scam to the tune of about $8 million. The group is accused of taking credit cards and applying new magstripes containing the stolen data. It is not clear if the credit cards displayed the same numbers in plastic embossing that were in the magstripe, said Dominick Pape, the special agent in charge for the Florida Department of Law Enforcement.
Florida officials released the names of the six suspects who were arrested: Irving Escobar, 18; Reinier Camaraza Alvarez, 27; Julio Oscar Alberti, 33; Dianelly Hernandez, 19; Nair Zuleima Alvarez, 40; and Zenia Mercedes Llorente, 23. Four others are still at large, Pape said.
The group has been charged with an organized scheme to defraud, and they are also being investigated by the Secret Service, which participated in the arrests.
Florida officials said the group used the increasingly common tactic of using the bogus credit cards to purchase gift cards and then cashing them at Wal-Mart and Sams Club stores. The group usually purchased $400 gift cards because when the gift cards were valued at $500 or more, they were required to go to customer service and show identification, Pape said.
The gift card float technique is attractive to thieves because it buys them more time. When a credit card is stolen and detected by the victim, its only a matter of hours before the card will be invalidated.
But if the thief immediately uses the card to purchase gift cards, it buys the thief a significant amount of time. Once the credit card is deactivated, it may take days or weeks before authorities learn what was purchased—down to the exact identification number of those gift cards—and then start invalidating those gift cards.
Florida authorities have video of their suspects from both inside the store and outside. Videotape captured the license plate of a rented vehicle one of the suspects was driving. Items purchased included computers, gaming devices and big-screen televisions, police said.
At this stage, authorities are hoping to press the group to identify where they got the card data, in hopes that it will ultimately lead them to the cyberthieves who struck TJX. Pape said it is unlikely that the 10 suspects are the ones who attacked TJX. “We do not have information today that they were at the high end of the compromise,” he said.
In other TJX news this week, a TJX shareholder—the Arkansas Carpenters Pension Fund—is suing TJX to access records showing how TJX handled data security.
Retail Center Editor Evan Schuman can be reached at [email protected].