AT&T Fined for Breaches in Mexico, Colombia and the Philippines Exposing 279,000 U.S. Customers’ Names and Full or Partial SSNs
The Federal Communications Commission reported that more than forty employees at three contract call centers in Mexico, Colombia and the Philippines sold customer information to criminals who used it to unlock stolen smartphones.
In Grant Gross’s story on computerworld.com, he interviewed a number of security professionals who thought the punishment did not fit the “crime” including an attorney who questioned why the FCC, rather than the FTC (Federal Trade Commission), didn’t set the fine. The following has been excerpted from Gross’s article and edited to fit our format. You may find the full article by clicking on this link.
Fine not enough
“If you really want companies to think about security you need to do something that makes the decision makers sit up and listen,” [Chris Conacher, director of security research and development at Tripwire.] “If all you are doing is making tiny deductions against the bottom line, businesses are going to keep on doing what they do and consumers will keep on suffering.”
The negative publicity from the FCC settlement may have little impact, according to Conacher. Other companies reporting data breaches, including Target and Sony Pictures, haven’t seen their stock prices fall significantly, he said.
“As long as the companies appear to be managing the issue professionally then investors will also accept major breaches as the cost of doing business,” he said. “Is [the settlement] a warning to other companies? No.”
Done with call center vendors
AT&T said it has ended its relationship with some call center vendors because of the breaches and will notify affected customers. There’s no evidence the breached data has been used for ID theft, the company said in a statement.
In the Colombia call center, full Social Security numbers were accessible by three of [the] managers whose login credentials were used to access the customer accounts, according to the FCC complaint.
Cheap could be expensive for customers
Using overseas call centers opens AT&T to criticisms of “penny pinching,” added Richard Blech, CEO and co-founder of encryption vendor Secure Channels.
“By outsourcing their call center to foreign countries to save money, AT&T has exposed Americans’ sensitive data to peril,” he added by email. If AT&T had encrypted the data, it would have been protected, he said.
It’s “alarming” that AT&T allowed contractor workers to have access to unencrypted customer records, Blech added. “There should no longer be any debate as to whether sensitive customer data should be encrypted or not,” he said.
Why not the FTC?
It’s interesting that the data breach settlement came through the FCC, when the U.S. Federal Trade Commission has been the agency that often pursues companies for data breaches, said Robert Cattanach, a partner at law firm Dorsey & Whitney, focusing on cybersecurity and other regulatory litigation.
The FCC settlement, the largest in agency history for a data breach, “ups the ante” for penalties, but the FCC may still have been a better option for AT&T, Cattanach said.
“It’s no secret that the regulated community — especially a large player — enjoys, relatively speaking, a much more cozy relationship with the FCC than is the case with FTC,” he said by email. “The FCC is not a push-over to be sure, but it does not project the attack dog mentality that the FTC prides itself in conveying.”
Protection still less costly than settlement
Companies should consider that the cost of protecting the data at the three contract call centers would be a fraction of the cost of the settlement, said Philip Lieberman, president of Lieberman Software, another cybersecurity vendor.
New protections, however, would require a change in process, “which is generally harder than the purchase of any technology,” he added by email. “The C-level staff will have to explain this to the board as to why they did not implement a control when the cost would be trivial.”
ThreatMetrix builds trust on the Internet by offering market-leading advanced fraud prevention and frictionless context-based security solutions leveraging a global shared digital identity network and real time customer driven analytics platform. These solutions help customers differentiate between trusted users and potential fraud resulting in reduced friction, incremental revenue and lower fraud and operational costs.
ThreatMetrix secures customers against account takeover, payment fraud, fraudulent account registrations resulting from malware, and data breaches. Underpinning the solution is the ThreatMetrix® Global Trust Intelligence Network, which analyzes over one billion monthly transactions and protects more than 250 million active user accounts across 3,000 customers and 15,000 websites and mobile applications. ThreatMetrix is deployed by industry leaders across financial services, e-commerce, payments, social networks, government and insurance.
For more information, visit www.threatmetrix.com or call 1-408-200-5755.