Hackers Breach Discount eTailer

Fred’s Inc., which operates more than 650 discount merchandise stores, disclosed on Monday (Aug. 10) that the company discovered incidents of unauthorized access to two of its servers on which payment card data is routed.

“Upon learning that banks had identified a pattern of unauthorized charges on payment cards after those cards were used in some of our stores, Fred’s immediately launched an investigation, notified law enforcement and engaged a leading cybersecurity firm to identify the issue and prevent it from continuing,” the company said in a statement about the payment card security incident.

The third-party cybersecurity firm’s investigation uncovered malware designed to search for and retrieve “Track 2” data, which contains the card number, expiration date and verification code on the magnetic stripe of payment cards, the company’s regulatory filing explained.

The malware began operating on each server on March 23, and operated on one server until April 8 and the other server until April 24.

While the third-party cybersecurity firm found no evidence the Track 2 data was actually removed from the company’s system, the information was still considered to be at risk during the time period the malware was running on the servers.

Fred’s confirmed the malware has since been removed from its systems, but did not provide any estimates related to the costs or range of costs related to the security breach.

In a message to customers about the security incident, the company said: “We want to assure our customers that protecting their information is one of our top priorities and we are taking this potential incident very seriously. Until this investigation is completed, it will be difficult to determine with certainty the scope or nature of any potential incident, but we will continue to work vigilantly to address any potential issues that may affect our customers.”

The company advised its customers to closely review payment card account statements and alert banks that issued the cards to any fraudulent charges.

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