Hackers find a new target in payroll processing

Hackers broke into a Ceridian payroll account, but the fraud was thwarted

Depression-era bank robber Slick Willie Sutton is famous for saying that he robbed banks "because that's where the money is." If he were around today, he'd have other options.

In what may be a troubling sign of things to come, criminals recently hacked into a desktop computer belonging to Regeneron Pharmaceuticals and tried to steal money by redirecting funds using Regeneron's account on the company's third-party payroll system, operated by Ceridian.

The attack didn't work, but it shows that criminals, who have been making millions of dollars by hacking into computers and initiating fraudulent bank transfers, may have found a new target.

The hacking happened sometime around June 18, said Ross Grossman, vice president of human resources with Regeneron, a 1,200-employee drugmaker based in Tarrytown, New York. "Someone using some kind of malware was able to hack in and get the user name and password of one of our employees and use the Ceridian system," he said in an interview.

In some bank fraud cases, the scammers will add dozens of new payees to a company's payroll and try to pay them off immediately.

With the Regeneron hack, things went a little differently. The hacker found nine employees who were receiving direct deposit payments and tried to redirect their payments to fraudulent accounts.

"Regeneron immediately informed the nine affected employees and cancelled the fraudulent direct deposit accounts before any payroll funds were diverted," Grossman said in a July 26 letter (PDF) to New Hampshire Deputy Attorney General Budd Fitch, notifying his office of the incident.

"It appeared they didn't know enough about what they were doing," Grossman said in an interview.

Because the hackers could have logged the bank account numbers of current and former employees, Regeneron is sending out breach notification letters to all employees and all of the former employees whose data was in the Ceridian system, Grossman said.

Regeneron has also taken steps to prevent further incidents, he said.

This isn't the first time hackers have accessed the Ceridian payroll system. Last December, someone broke into the company's Powerpay Web-based portal and got access to 27,000 customer records, including names, birth dates, Social Security numbers and bank account information. According to news reports, 1,900 companies were affected by that breach.

Reached Thursday, a Ceridian spokesman declined to comment on this type of fraud, writing in an e-mail message, "Ceridian employs security and information privacy professionals who work with our clients and others to identify and prevent problems in this subject area."

This type of payroll system attack may actually be more widespread than most people realize, said Avivah Litan, a Gartner analyst who covers financial fraud. Investigators know that hackers are somehow corrupting payroll files, used by banks to process employee payments. Companies like Ceridian prepare these files for their customers, so breaking into accounts operated by third-party payroll processors could be one way that this fraud is done. "What we do know is that payroll files are getting corrupted," she said. "We don't have enough evidence from companies telling us how it happened."

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com

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Tags Regeneron PharmaceuticalssecuritylegalfinanceCeridianindustry verticalspayrollcybercrimehacking

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