Weekly Cyber Risk Roundup: More W-2 Breaches and Upcoming GDPR Challenges Organizations

Stolen W-2 information was back in the news this week due to reports of another W-2 breach as well as new data from IRS officials on the threat. The latest breach involves TALX, an Equifax subsidiary that provides online payroll, HR and tax services. KrebsOnSecurity reported that an undisclosed number of customers were affected when malicious actors were able to gain access to employee accounts containing sensitive data.

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“TALX believes that the unauthorized third-party(ies) gained access to the accounts primarily by successfully answering personal questions about the affected employees in order to reset the employees’ pins (the password to the online account portal),” wrote an attorney in one breach notification letter. “Because the accesses generally appear legitimate (e.g., successful use of login credentials), TALX cannot confirm forensically exactly which accounts were, in fact, accessed without authorization, although TALX believes that only a small percentage of these potentially affected accounts were actually affected.”

The extent of the fraud perpetrated with the help of hacked TALX accounts is unclear, but that at least five organizations have received letters from Equifax about a series of incidents over the past year, Krebs reported. Those included defense contractor giant Northrop Grumman, staffing firm Allegis Group, Saint-Gobain Corp., Erickson Living, and the University of Louisville. In addition to those companies, an IRS official said that 870 organizations reported receiving a W-2 phishing email over the first four months of 2017, and about 200 of those companies lost data as a result. That was a significant rise from 2016’s numbers, which included about 100 reports and 50 confirmed breaches. The official said that the increase was driven by progress made against identity theft, which has pushed cybercriminals to need more personal data to able to impersonate taxpayers. As a result, there has been a shift towards targeting those in the payroll industry.

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Other trending cybercrime events from the week include:

  • Men plead guilty to trade secret theft: A Chinese national has pleaded guilty to economic espionage and theft of a trade secret in relation to the theft of proprietary source code from his former employer, an unnamed U.S. company. As a developer, the man had access to a clustered file system developed and marketed by his employer as well as its underlying source code, the DOJ wrote. The man attempted to use the stolen source code to start a large-data storage technology company, according to communication he had with undercover officers. An engineer at a defense contractor has pleaded guilty to selling sensitive satellite information stolen from his employer to a person he believed to be an agent of a Russian intelligence service. In a series of meetings between February and July of 2016, the man sought and received thousands of dollars in cash payments for the trade secrets.
  • New data breaches announced: Williamson County Schools in Tennessee said that approximately 33,000 current and former WCS students had their usernames, encrypted passwords, and email addresses compromised due to a breach at third-party vendor Edmodo, a free classroom tool that allows students and teachers to share files and assignments. A data breach at the Florida Department of Agriculture and Consumer Services has exposed the names of 16,190 concealed weapon licensees as well as the Social Security numbers of 469 individuals. Approximately 3,000 individuals had their information compromised due to unauthorized access to a city computer in Stillwater, Oklahoma. UW Health said that 2,036 patients had their personal information compromised due to an unauthorized individual gaining access to an employee’s email account. The Canada Revenue Agency has fired an employee for improperly accessing the accounts of 1,302 taxpayers. A breach at Blackburn High School led to the theft of personal information of families, and that information was then used to send phishing emails to parents asking them to provide their payment card details.
  • Russia targeted Pentagon employees’ Twitter accounts: Russia sent more than 10,000 phishing messages to Defense Department officials with the goal of getting the officials to click a malicious link and, ultimately, gain control of their devices and Twitter accounts. The efforts took place after the 2016 presidential election and were disclosed in in a March report to U.S. counterintelligence officials investigating Russian interference efforts. The compromised accounts could have been used to spread false information, as has been done in the past by Russian hacking groups.
  • Hacking groups arrested: Twenty members of the Russian hacking group behind the Android Trojan “Cron” have been arrested. The group managed to infect over one million mobile devices and stole approximately $800,000 from Russian banks. Twenty-seven individuals tied to a series of ATM “Black Box” attacks across Europe have been arrested. A “Black Box” attack is a method of ATM jackpotting where criminals gain access to the ATM Top Box usually by drilling holes or melting in order to physically connect an unauthorized device that sends commands directly to the ATM cash dispenser in order to “cash-out” the ATM. Sixteen individuals have been arrested related to the theft of a copy of Baahubali 2 and subsequent ransom attempt from the movie’s producers, Arka Mediaworks Entertainment Ltd.

SurfWatch Labs collected data on many different companies tied to cybercrime over the past week. Some of those “newly seen” targets, meaning they either appeared in SurfWatch Labs’ data for the first time or else reappeared after being absent for several weeks, are shown in the chart below.

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Cyber Risk Trends From the Past Week

2017-05-26_RiskScoresIt is now less than one year until the EU General Data Protection Regulation (GDPR) goes into effect, yet some organizations are either unaware of the upcoming privacy changes or believe they will have issues meeting next year’s deadline, according to recent research.

The GDPR was approved by the EU parliament in April 2016, and the new regulation will be fully enforceable on May 25, 2018. Among the most talked about changes from the upcoming regulation is the increase in potential fines for data breaches. Breached organizations can be fined as much as 4% of their annual global turnover or €20 million, whichever is greater, when it comes to serious violations. Lesser violations are subject to half the maximum penalty — up to €10 million or 2% of turnover. As the NCC Group noted, those new numbers mean that last year’s ICO fines could have been 79 times higher: £69m rather than £880,500 in total.

“TalkTalk’s 2016 fine of £400,000 for security failings that allowed hackers to access customer data would rocket to £59m under GDPR,” The Register noted last month. “Fines given to small and medium-sized enterprises could have been catastrophic. For example, Pharmacy2U’s fine of £130,000 would balloon to £4.4m – a significant proportion of its revenues and potentially enough to put it out of business.”

It is important to note that the new regulations generally apply to any organization that offer of goods or services to individuals in the EU, so the GDPR has global implications. However, a recent study of 500 organizations in the UK, Germany, France, and the U.S. found that 75% of organizations indicated they will struggle to be ready for next year’s deadline. According to the Varonis survey, the top three challenges facing organizations around GDPR include:

  • Article 17 (“Right to be forgotten”), where they must discover and target specific data and automate removal when requested by the consumer
  • Article 30 (Records of processing activities), including identifying personal information on their systems, understanding who has access to it and who is accessing it, and knowing when this data can and should be deleted
  • Article 32 (Security of processing), which means ensuring least privilege access, implementing accountability via data owners, and providing reports that policies and processes

For organizations looking to learn more about preparing for GDPR, ICO has a 12-step guide available.

Author: Jeff Peters

SurfWatch Labs editor and host of SurfWatch Labs Cyber Chat podcast. Focused on using threat intelligence and data visualization in order to bring cybercrime to life and help make organizations safer.

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