Sonic Drive-In, a fast-food chain with nearly 3,600 locations across 45 U.S. states, has acknowledged a breach affecting an unknown number of store payment systems. The ongoing breach may have led to a fire sale on millions of stolen credit and debit card accounts that are now being peddled in shadowy underground cybercrime stores.
The first hints of a breach at Oklahoma City-based Sonic came last week when I began hearing from sources at multiple financial institutions who noticed a recent pattern of fraudulent transactions on cards that had all previously been used at Sonic.
The accounts apparently stolen from Sonic are part of a batch of cards that Joker’s Stash is calling “Firetigerrr,” and they are indexed by city, state and ZIP code. This geographic specificity allows potential buyers to purchase only cards that were stolen from Sonic customers who live near them, thus avoiding a common anti-fraud defense in which a financial institution might block out-of-state transactions from a known compromised card.
Malicious hackers typically steal credit card data from organizations that accept cards by hacking into point-of-sale systems remotely and seeding those systems with malicious software that can copy account data stored on a card’s magnetic stripe. Thieves can use that data to clone the cards and then use the counterfeits to buy high-priced merchandise from electronics stores and big box retailers.
The last known major card breach involving a large nationwide fast-food chain impacted more than a thousand Wendy’s locations and persisted for almost nine months after it was first disclosed here. The Wendy’s breach was extremely costly for card-issuing banks and credit unions, which were forced to continuously re-issue customer cards that kept getting re-compromised every time their customers went back to eat at another Wendy’s.
Part of the reason Wendy’s corporate offices had trouble getting a handle on the situation was that most of the breached locations were not corporate-owned but instead independently-owned franchises whose payment card systems were managed by third-party point-of-sale vendors.
Financial institutions also bear some of the blame for the current state of affairs. The United States is embarrassingly the last of the G20 nations to make the shift to more secure chip-based cards, which are far more expensive and difficult for criminals to counterfeit. But many financial institutions still haven’t gotten around to replacing traditional magnetic stripe cards with chip-based cards. According to Visa, 58 percent of the more than 421 million Visa cards issued by U.S. financial institutions were chip-based as of March 2017.
Likewise, retailers that accept chip cards may present a less attractive target to hackers than those that don’t. In March 2017, Visa said the number of chip-enabled merchant locations in the country reached two million, representing 44 percent of stores that accept Visa.