Was Dairy Queen Hacked?

Even ice cream isn’t safe from hackers.

Security watchdog Brian Krebs reported late Tuesday night that venerable summer-fun brand Dairy Queen may have been victimized by credit card thieves using techniques vaguely similar to the criminals who attacked Target stores last year.

The news comes just days after the Secret Service issued a bulletin warning U.S. retail outlets that hackers have become very efficient at stealing cards from stores that allow remote access of credit card processing computers. Using malicious software called “Backoff,” criminal gangs have compromised stores of all sizes. The impact is huge.

“The Secret Service currently estimates that over 1,000 U.S. business are affected,” the advisory says.

The memo says the Backoff software has been used to attack store computers since October 2013, but wasn’t detected by antivirus software until August of this year, giving criminals an incredibly long window to rampage through networks holding credit card data.

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It’s not clear that Backoff was used in the alleged Dairy Queen attack, but Krebs speculates the two could be connected. He quotes an anonymous fraud manager at a credit union in the Midwest who said he’d seen 50 cases of fraud involving cards used at a Dairy Queen in recent days.

“We’re just getting all kinds of fraud cases coming in from members having counterfeit copies of their cards being used at dollar stores and grocery stores,” the fraud expert is quoted as saying.

Krebs said he’s heard similar stories from other bank officials about fraud from cards used at Dairy Queen stores in Florida, Alabama, Indiana, Illinois, Kentucky, Ohio, Tennessee and Texas.

Officials at Dairy Queen’s corporate headquarters told CNBC that they had not heard of fraud problems, but they wouldn’t necessarily know — most DQs are privately-owned franchises, and are not required to inform headquarters about security issues, according to Krebs.

“In a world where getting your information stolen in a data breach has become the third certainty in life, it is quite worrisome to me that a major national franchiser would not, among its myriad rules of conduct and practice for franchisees, require franchisees to follow standard data breach protocols in order to protect customers, franchisees and the goodwill of the mothership,” says Adam Levin, who is the chairman and co-founder of Credit.com and Identity Theft 911.

“This raises the question: What other national franchisers have no breach notification policy for their franchisees?” Levin adds.

It’s quite possible the hack involves a small number of local stores — similar to the UPS Store hack revealed last week — but it may be some time before the extent of the reported DQ attack is understood, given the lack of centralized reporting.

Other recently-reported card hacks include Jimmy John’s sandwich shops and car washes. In each case, cards weren’t skimmed with hardware, but rather stolen remotely with software.

“The investigators I spoke with … all of the breached locations had one thing in common: They were all relying on point-of-sale systems that had remote access with weak passwords enabled,” Krebs wrote.

Hackers who steal bulk card data in this manner sell it online to other criminals, who sometimes use it to create “clone” cards by encoding the stolen data on new credit card plastic; then the clone cards are used at gas stations and other shops where close inspection is unlikely.

If you’ve ever had a sales clerk ask to see your card, and then manually enter the last four digits of the card into the cash register, that small check is designed to stop some versions of card cloning.

Consumers who’ve indulged in DQ desserts this summer shouldn’t over-react. As usual, they are not responsible for fraud that appears on their card, as long as they report it in a timely manner. Note, however, that criminals in this case used the stolen data at dollar stores. Consumers are much less likely to spot low-value fraud; so watch those bills carefully. If you don’t report it, you’ll pay for it.

In addition to keeping an eye on bank and credit card statements, monitoring your credit scores can help you detect potential fraud if you see a big, unexpected drop in your scores. If this happens, check your credit reports for accounts and unpaid debts that don’t belong to you. You can check your credit scores for free every month through Credit.com, and you can get your credit reports for free once a year through AnnualCreditReport.com.

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Image: Jim Corsair 

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