This is the latest in a series of physical POS attacks, with victims ranging from Michaels (one of the largest), Barnes & Noble (NYSE:BKS) and Aldi to Stop & Shop and Hancock Fabrics (OTC:HKFI). And these attacks, law enforcement is discovering, are becoming much more sophisticated.
The Sprouts incident very closely followed those earlier attacks. "Certain credit card and debit card numbers (but not PINs) used at those locations only may have been acquired by unauthorized third parties," said a Sprouts statement. (Isn't "unauthorized third party" a much nicer name than thief?)
The statement included this wonderfully comforting line for Sprouts' shoppers: "After an investigation conducted by Sprouts along with FishNet Security, a nationally recognized data security firm, Sprouts is unable to confirm with certainty at this time whether any accounts were compromised."
That's a rather perplexing utterance. Given that the chain said data-capturing software was found in the POS systems of some 19 stores, it's pretty easy to declare the security of every card used in those machines during that timeframe was compromised. That's not to say that the thieves successfully captured that data in a usable form or that they have actually tried to use that data yet. But in terms of the data being compromised, that debate was pretty much over when the software was found.
The statement then added: Although Sprouts "cannot confirm whether the unauthorized parties were successful in obtaining account information, Sprouts believes fewer than 2 percent of its card transactions in January 2013 were potentially compromised."
But 2 percent of which transactions? Well, remember all of the POS units in those 19 stores? If it just so happens that the transactions from those 19 stores happen to be 2 percent of chain-wide revenue, then this statement makes sense. But that seems unlikely, given that whole chain is only 151 stores. (If we assume that every store delivers the exact same amount of revenue, those 19 stores should represent 12.6 percent of all revenue. Two percent seems a stretch.) No need for "potentially" compromised. It had the eavesdropping code in the swipe; everything swiped during that time was compromised.
Sprouts also said it had properly completed post-discovery cleanup: "Within hours of discovering the intrusion Sprouts prevented the illegal software from functioning. Sprouts quickly replaced all of the card terminals in question and has worked with the data security firm to strengthen its point of sale procedures in all 151 stores."
One thing to remember on a breach notification like this: American consumers are the same folk who are wild about lottery drawings. In a data breach, if a chain says only 2 percent were impacted, every shopper (who shopped in stores in those regions during those dates) will assume that 2 percent includes them. Such phrasing—intended to provide most shoppers comfort, that they probably were not impacted—is much more likely to have the opposite impact.