Michaels says breach at its stores affected nearly 3M payment cards

Another 400,000 cards at subsidiary Aaron Brothers may have been affected

About 2.6 million payment cards at Michaels Stores and another 400,000 at subsidiary Aaron Brothers may have been affected in a card skimming attack that compromised its point-of-sale systems, the retailer said Thursday.

Michaels said it had found evidence confirming that its systems and those of Aaron were attacked using sophisticated malware that had not been encountered previously by either of the security firms it had retained to investigate a suspected breach. It did not provide details of the malware.

The arts and crafts supplier in Irving, Texas, said in January it was investigating a possible data security attack after it learned of suspicious activity on some U.S. payment cards that had been used at its stores.

The attack on Michaels was one of several attempts to penetrate the point-of-sale systems of U.S. retailers.

Department store Target also alerted customers in December of unauthorized access to payment card data of customers who had shopped at its stores. It said in January that data from about 40 million credit and debit cards may have been stolen at its stores between Nov. 27 and Dec. 15. through malware on its point-of-sale systems. Information including names, mailing addresses, phone numbers or email addresses of an additional 70 million individuals were also likely to have been compromised, it said.

Michaels said the affected systems contained certain information such as payment card number and expiry date about both Michaels and Aaron Brothers customers. But there was no evidence that other customer personal information, such as name, address or PIN, was at risk in connection with the breach, the company said.

The attacks at Michaels stores targeted a limited part of the point-of-sale systems at a varying number of stores between May 8, 2013 and Jan. 27 this year. The cards likely impacted accounted for only 7 percent of payment cards used at Michaels stores in the U.S. during the period. 54 Aaron Brothers stores were affected by the malware between June 26, 2013 and Feb. 27 this year.

The malware no longer presents a threat while shopping at Michaels or Aaron Brothers, Michaels said in a statement on its website. The company said that apart from the two security firms, it had also has been working with law enforcement authorities, banks and payment processors to determine the facts.

"In an era where very sophisticated and determined criminals have proven capable of successfully attacking a wide range of computer networks, we must all increase our level of vigilance," Michaels CEO Chuck Rubin said in a statement. He added that the company was committed to working with other parties to improve the security of payment card transactions.

In a separate incident in May 2011, Michaels had alerted that customer credit and debit card information may have been compromised after it was found that PIN pad tampering may have occurred at its stores in the Chicago area.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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