Block, formerly known as Square, Confirms Cash App Data Breach

On April 4, 2022, Block, Inc. (the “Company”) announced that it recently determined that a former employee downloaded certain reports of its subsidiary Cash App Investing LLC (“Cash App Investing”) on December 10, 2021 that contained some U.S. customer information. While this employee had regular access to these reports as part of their past job responsibilities, in this instance these reports were accessed without permission after their employment ended.

The information in the reports included full name and brokerage account number (this is the unique identification number associated with a customer’s stock activity on Cash App Investing), and for some customers also included brokerage portfolio value, brokerage portfolio holdings and/or stock trading activity for one trading day.

The reports did not include usernames or passwords, Social Security numbers, date of birth, payment card information, addresses, bank account information, or any other personally identifiable information. They also did not include any security code, access code, or password used to access Cash App accounts. Other Cash App products and features (other than stock activity) and customers outside of the United States were not impacted.

Upon discovery, the Company and its outside counsel launched an investigation with the help of a leading forensics firm. Cash App Investing is contacting approximately 8.2 million current and former customers to provide them with information about this incident and sharing resources with them to answer their questions. The Company is also notifying the applicable regulatory authorities and has notified law enforcement.

The Company takes the security of information belonging to its customers very seriously and continues to review and strengthen administrative and technical safeguards to protect the information of its customers. Future costs associated with this incident are difficult to predict. Although the Company has not yet completed its investigation of the incident, based on its preliminary assessment and on the information currently known, the Company does not currently believe the incident will have a material impact on its business, operations, or financial results.

SEC event filing of Cash App data breachhttps://www.sec.gov/ix?doc=/Archives/edgar/data/0001512673/000119312522095215/d343042d8k.htm

FTC Takes Action Against CafePress for Data Breach Cover Up

March 15, 2022- Commission orders e-commerce platform to bolster data security and provide redress to small businesses.

The Federal Trade Commission today took action against online customized merchandise platform CafePress over allegations that it failed to secure consumers’ sensitive personal data and covered up a major breach. The FTC alleges that CafePress failed to implement reasonable security measures to protect sensitive information stored on its network, including plain text Social Security numbers, inadequately encrypted passwords, and answers to password reset questions. The Commission’s proposed order requires the company to bolster its data security and requires its former owner to pay a half million dollars to compensate small businesses.

“CafePress employed careless security practices and concealed multiple breaches from consumers,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “These orders dial up accountability for lax security practices, requiring redress for small businesses that were harmed, and specific controls, like multi-factor authentication, to better safeguard personal information.”

In a complaint filed against Residual Pumpkin Entity, LLC, the former owner of CafePress, and PlanetArt, LLC, which bought CafePress in 2020, the FTC alleged that CafePress failed to implement reasonable security measures to protect the sensitive information of buyers and sellers stored on its network. In addition to storing Social Security numbers and password reset answers in clear, readable text, CafePress retained the data longer than was necessary. The company also failed to apply readily available protections against well-known threats and adequately respond to security incidents, the complaint alleged. As a result of its shoddy security practices, CafePress’ network was breached multiple times.

According to the complaint, a hacker exploited the company’s security failures in February 2019 to access millions of email addresses and passwords with weak encryption; millions of unencrypted names, physical addresses, and security questions and answers; more than 180,000 unencrypted Social Security numbers; and tens of thousands of partial payment card numbers and expiration dates. Some of the information was later found for sale on the Dark Web.

After being notified a month later that it had a security vulnerability and that hackers had obtained consumer data, CafePress patched the vulnerability but failed to properly investigate the breach for several months despite additional warnings, the complaint alleged. This included a warning in April 2019 from a foreign government, which notified the company that a hacker had illegally obtained CafePress customer account information and urged the company to notify affected customers. The company, however, withheld this essential information, and instead only told customers to reset their passwords as part of an update to its password policy.

The complaint alleges CafePress did not inform affected customers until September 2019—one month after the breach was reported widely. The company’s lax security practices, however, still left many consumers at risk. For example, the company continued to allow people to reset their passwords on the website by answering security questions associated with customer email addresses—the same information that had been previously stolen by hackers.

According to the complaint, CafePress was aware of problems with its data security prior to the 2019 data breach. Through at least January 2018, when CafePress determined that certain accounts of shopkeepers had been hacked, CafePress closed the accounts and charged the victims a $25 account closure fee. The company also experienced several malware infections to its network prior to the 2019 hack but failed to investigate the source of such attacks.

In addition to its security failures, the FTC alleged the company misled users by using consumer email addresses for marketing despite its promises that such information would only be used to fulfill orders consumers had placed.

As part of the proposed settlement, Residual Pumpkin and PlanetArt will be required to implement comprehensive information security programs that will address the problems that led to the data breaches at CafePress. This includes replacing inadequate authentication measures such as security questions with multi-factor authentication methods; minimizing the amount of data they collect and retain; and encrypting Social Security numbers.

In addition, the proposed settlement requires Residual Pumpkin to pay $500,000 in redress to victims of the data breaches. PlanetArt will be required to notify consumers whose personal information was accessed as a result of CafePress’s data breaches and provide specific information about how consumers can protect themselves. Both companies will be required to have a third party assess their information security programs and provide the Commission with a redacted copy of that assessment suitable for public disclosure.

The Commission voted 4-0 to issue the proposed administrative complaint and to accept the consent agreement with the companies.

The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.

https://www.ftc.gov/news-events/news/press-releases/2022/03/ftc-takes-action-against-cafepress-data-breach-cover

Chinese PAX payment terminal manufacturer raided by FBI in Florida

PAX Technology Warehouse in Jacksonville Florida was the subject of a search and investigation October 26, 2021 by the Federal Bureau of Investigation, the Department of Homeland Security, and several other agencies. PAX is a Chinese credit card terminal provider that significantly grew it’s global reach, including the US, during the transition to EMV chip terminals.

Brian Krebs, a cybersecurity investigative journalist, reported a major US payment processor noticed that PAX terminals were being used both as a malware “dropper” — a repository for malicious files — and as “command-and-control” locations for staging attacks and collecting information. Something didn’t add up and PAX didn’t give any good answers.

FBI Statement: “The FBI Jacksonville Division, in partnership with Homeland Security Investigations, Customs and Border Protection, Department of Commerce, and Naval Criminal Investigative Services, and with the support of the Jacksonville Sheriff’s Office, is executing a court-authorized search at this location in furtherance of a federal investigation. We are not aware of any physical threat to the surrounding community related to this search. The investigation remains active and ongoing and no additional information can be confirmed at this time.”

US vendors in the payments ecosystem were quick to respond. The sale and installation of PAX terminals has already been prohibited by some.

Fresno Woman Pleads Guilty to Committing $100,000 in Credit Card Fraud

FRESNO, Calif. — Alena Nicole George, 43, of Fresno, pleaded guilty today to access device fraud, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, from February through April 2019, George used a credit card that was fraudulently opened in the identity of a victim with a name similar to her own name to make $100,000 in purchases at national retailers and cash advances at a national bank.

This case is the product of an investigation by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. Assistant U.S. Attorneys Vincente Tennerelli and Joseph Barton are prosecuting the case.

George is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on Jan. 21, 2022. George faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

https://www.justice.gov/usao-edca/pr/fresno-woman-pleads-guilty-committing-100000-credit-card-fraud

U.S. data breaches Q3 2021

Identity Theft Resource Center to Share Latest Data Breach Analysis with U.S. Senate Commerce Committee; Number of Data Breaches in 2021 Surpasses all of 2020

The number of data breach victims dramatically increased in Q3 2021 due to a series of data exposures during the quarter 

SAN DIEGO, October 6, 2021 – Today, the Identity Theft Resource Center® (ITRC), a nationally recognized nonprofit organization established to support victims of identity crime, released its U.S. data breach findings for the third quarter?(Q3)?of 2021. According to the data breach analysis,?the number of data breaches publicly-reported in the U.S. decreased nine (9) percent in Q3 2021 (446 breaches) compared to Q2 2021 (491 breaches). However, the number of data breaches through September 30, 2021 has exceeded the total number of events in Full-Year (FY) 2020 by 17 percent (1,291 breaches in 2021 compared to 1,108 breaches in 2020). The trendline continues to point to a record-breaking year for data compromises (the all-time high of 1,529 breaches was set in 2017). 

For Q3 2021, the number of data compromise victims (160 million) is higher than Q1 and Q2 2021 combined (121 million). The dramatic rise in victims is primarily due to a series of unsecured cloud databases, not data breaches. Also, the total number of cyberattack-related data compromises year-to-date (YTD) is up 27 percent compared to FY 2020. Phishing and Ransomware continue to be, far and away, the primary attack vectors. 

Download the ITRC’s 2021 Q3 Data Breach Analysis and Key Takeaways 

“While the total number of data breaches dropped slightly in Q3, we are only 238 data breaches away from tying the all-time record for data compromises in a single year,” said Eva Velasquez, President and CEO of the Identity Theft Resource Center. “It’s also interesting to note that the 1,111 data breaches from cyberattacks so far this year exceeds the total number of data compromises from all causes in 2020. Everyone needs to continue to practice good cyber-hygiene to protect themselves and their loved ones as these crimes continue to increase.” 

Other findings in the analysis include: 

  • There have been no publicly-reported data breaches to date in 2021 attributed to payment card skimming services.  
  • Some organizations and state agencies are not including specifics about data compromises or reporting them on a timely basis. One state has not posted a data breach notice since September 2020. 

Enhancing Data Security – U.S. Senate Committee Hearing – Oct. 6, 2021

The ITRC will testify before the U.S. Senate Committee on Commerce, Science & Transportation today to present the findings from our Q3 Data Breach Analysis. Watch the hearing on enhancing data security live at 10 a.m. EST/7 a.m. PST.  ITRC COO, James E. Lee, issued a written statement for the record as part of a hearing with the U.S. Senate Committee. 

For more information about recent data breaches, or?the increase in the number of?data breaches discussed in?the?latest?trend analysis, consumers and businesses should visit the ITRC’s data breach tracking tool,?notified.??? 

Anyone?can receive free support and guidance from a knowledgeable live-advisor by calling 888.400.5530 or visiting ?www.idtheftcenter.org to live-chat.?? 

About the Identity Theft Resource Center

Founded in 1999, the Identity Theft Resource Center® (ITRC)?is a?national?nonprofit organization established to empower and guide consumers, victims, business and government to minimize risk and mitigate the impact of identity compromise and crime.?Through public and private support, the ITRC provides no-cost victim assistance and consumer education through?its website?live-chat?idtheftcenter.org?and?toll-free phone number 888.400.5530.?The ITRC also?equips?consumers and businesses?with?information about recent data breaches through its data breach tracking tool,?notified.?The ITRC offers help to specific?populations, including?the?deaf/hard of?hearing and?blind/low?vision?communities.?