Posts Tagged: Starbucks


10
Dec 15

The Role of Phony Returns in Gift Card Fraud

On any given day, there are thousands of gift cards from top retailers for sale online that can be had for a fraction of their face value. Some of these are exactly what they appear to be: legitimate gift cards sold through third-party sites that specialize in reselling used or unwanted cards. But many of the more steeply discounted gift cards for sale online are in fact the product of merchandise return fraud, meaning consumers who purchase them unwittingly help thieves rob the stores that issued the cards.

giftcardsThis type of scam mainly impacts brick-and-mortar retailers that issue gift cards when consumers return merchandise at a store without presenting a receipt. Last week I heard from KrebsOnSecurity reader Lisa who recently went online to purchase a bunch of steeply discounted gift cards issued by pet supply chain Petco.

Lisa owns two Rottweilers that both eat a good chunk of their weight each month in dog food, so Lisa said she felt like she’d really hit on a bargain when she found a $165 Petco gift card for sale at a popular online gift card retailer for $120 (a nearly 30 percent discount on the value).

“When I went to Petco to get my monthly supply of dog food and snacks for my Rotties, I used my merchandise card and the manager shared with me that folks are stealing merchandise from one Petco store and returning the items to another without a receipt and then selling the cards to places like raise.com and cardpool.com at a discounted price,” Lisa recounted.

Petco’s official policy is that for returns more than 60 days after the purchase — or if the receipt is unavailable — the value of the goods returned will be refunded to a merchandise card. Lisa said she bought the Petco card from raise.com, but she said the company never disclosed that the card was a merchandise return card — a fact that was printed on the front of the card she received.

“I feel really bad now because my purchase of these cards may have contributed to unlawful activities,” Lisa said. “Even though I saved $40+, Petco actually lost money as a result.”

Neither Raise nor Petco responded to requests for comment. But a look at the available Petco cards for sale via one gift card tracking site — giftcardgranny.com — shows Petco cards routinely sell for at least 25 percent off their value.

In any case, this fraud scheme is hardly specific to Petco. Cards from Petsmart, a competitor that also offers merchandise return cards, generally sell at 20 percent off their value. Clothier H&M’s cards average about 30 percent off.

Contrast these discounts with those for gift cards from restaurants, fuel stations and other businesses that generally don’t have to deal with customer returns and you’ll notice two interesting patterns: For starters, the face value of the cards from merchants that don’t take customer returns are far more likely to be even amounts, such as $50, $25 and $40. The percentage off the face value also tends to be much lower — between 3 and 15 percent. For example, see the discount percentage and value of cards from Starbucks and Chevron.

“Twenty-five percent off is really high, and there aren’t many that offer that high of a discount,” said Damon McCoy, an assistant professor of computer science at New York University and an expert on fraud involving stored value cards. “Normally, it is around 5 percent to 15 percent.” Continue reading →


18
May 15

Starbucks Hacked? No, But You Might Be

When it comes to reporting on breaches involving customer accounts at major brands, the news media overall deserves an F-minus. Hardly a week goes by when I don’t hear from readers about a breathless story proclaiming that yet another household brand name company has been hacked. Upon closer inspection, the stories usually are based on little more than anecdotal evidence from customers who had their online loyalty or points accounts hijacked and then drained of value.

javamessThe latest example of this came last week from a story that was responsibly reported by Bob Sullivan, a former MSNBC journalist who’s since struck out on his own. Sullivan spoke with multiple consumers who’d seen their Starbucks card balances emptied and then topped up again.

Those customers had all chosen to tie their debit accounts to their Starbucks cards and mobile phones. Sullivan allowed in his story one logical explanation for the activity: These consumers had re-used their Starbucks account password at another site that got hacked, and attackers simply tried those account credentials en masse at other popular sites — knowing that a fair number of consumers use the same email address and password across multiple sites.

Following up on Sullivan’s story, the media pounced, suggesting that Starbucks had been compromised. In a written statement, Starbucks denied the unauthorized activity was the result of a hack or intrusion into its servers or mobile applications.

“Occasionally, Starbucks receives reports from customers of unauthorized activity on their online account,” the company wrote. “This is primarily caused when criminals obtain reused names and passwords from other sites and attempt to apply that information to Starbucks. To protect their security, customers are encouraged to use different user names and passwords for different sites, especially those that keep financial information.”

In most cases, a flurry of fraudulent account activity targeting a major brand is preceded by postings on noob-friendly hacker forums about large numbers of compromised accounts for sale, and the publication of teachable “methods” for extracting value from said hacked accounts.

crackedstarbucks

Unsurprisingly, we saw large numbers of compromised Starbucks accounts for sale in the days leading up to the initial story about the Starbucks fraud, as well as the usual “methods” explaining to clueless ne’er-do-wells about how to perpetrate fraud against hacked accounts. Here’s another noob-friendly thread explaining how to cash out compromised Subway accounts; how long until we read media reports shouting that Subway has been hacked? Continue reading →


22
Apr 13

Sources: Tea Leaves Say Breach at Teavana

Multiple sources in law enforcement and the financial community are warning about a possible credit and debit card breach at Teavana, a nationwide tea products retailer. Seattle-based coffee giant Starbucks, which acquired Teavana late last year, declined to confirm a breach at Teavana, saying only that the company is currently responding to inquiries from card-issuing banks and credit card brands.

teabreachOver the weekend, KrebsOnSecurity received a tip from an anonymous reader who said Teavana had suffered a data breach that exposed credit and debit card information. A source at a major U.S. credit card issuer confirmed that the card brand has seen fraud rates indicative of a breach emanating from virtually the entire Teavana franchise, which spans more than 280 stores nationwide. Separately, a federal law enforcement official who asked not to be named said agents were indeed investigating a possible breach at Teavana.

On Sunday, I sent an inquiry to Teavana’s public relations folks.  Today, I heard back from Starbucks spokeswoman Jaime Riley, who said Starbucks “takes its obligation to protect customers’ financial information very seriously,” and that the company “has safeguards in place to constantly monitor for any suspicious activity.” But she said the company doesn’t comment on ongoing investigations.

“In the normal course of business, we are contacted by card brands and bank partners to participate in requests to ensure the integrity of all systems, and we participate fully in these requests,” Riley said. “If and when issues are ever substantiated, we will take action to notify and support customers in the most appropriate way possible.”

A source at yet another big debit and credit card issuer said his fraud team became aware of the problem in early March 2013, when the financial institution  began seeing a spike in fraudulent charges via counterfeit cards that were being used to buy high-dollar gift cards at Target retail locations.

Continue reading →