Wendy’s Data Breach: Forget the beef, where’s the cyber security?

The scope of the recent Wendy’s data breach, which has already resulted in a class-action lawsuit against the fast-food giant, is about to get much bigger. Krebs on Security reports having received information from “a number of sources in the fraud and banking community” alleging that “that there was no way the Wendy’s breach only affected five percent of stores [as Wendy’s originally reported] — given the volume of fraud that the banks have traced back to Wendy’s customers.” Even worse, these same sources allege that “the breach was still ongoing well after Wendy’s made the five percent claim in May.”

Backed into a corner, Wendy’s finally released a statement to Krebs on Security admitting that the number of locations affected was expected to be “considerably higher” than the approximately 300 originally reported. However, Wendy’s declined to estimate how many locations were involved, citing an ongoing investigation. Interestingly, the company emphasized that the breaches affected only independently owned franchise restaurants, not company-owned locations, and claimed that the breach was the fault of third-party service providers hired by franchisees to service and maintain their POS systems.

If that sounds like Wendy’s is passing the buck, it’s because they are. Rather than taking responsibility for the cyber security shenanigans going on under the Wendy’s banner, Wendy’s is choosing to place the blame on its franchisees and their third-party vendors: “They’re independently owned and operated, so we have no control over what they do!” It remains to be seen whether the courts will side with Wendy’s on this legal hairsplitting, but it’s unlikely that consumers will see things Wendy’s way. To a consumer, a Wendy’s location is a Wendy’s location, regardless of whether the corporation owns it or has franchised it out, and if consumers do not trust that their payment card data is safe at Wendy’s, they’ll stop patronizing their restaurants.

How Could the Wendy’s Data Breach Have Been Prevented?

Wendy’s claims that its POS systems were compromised using credentials stolen from POS service providers; these credentials allowed hackers to remotely access the POS systems. As discussed in a previous blog, there are numerous measures that restaurants and retailers can take to secure their POS systems, including monitoring the system for suspicious activity, such as someone logging in from an unusual location or accessing parts of the system they would have no legitimate reason to. The Wendy’s data breach could have been prevented had the company taken its cyber security seriously and implemented proactive security measures, but the company chose not to. Instead, it chose to pass the buck on its POS security, and then attempt to deflect responsibility onto its franchisees instead of getting out in front of the problem.

This begs the question, is the Wendy’s data breach a harbinger of things to come as the fast-food industry transitions from human clerks to automated ordering kiosks and touch screens? Consumers and the government are not yet asking this question, but if incidents like the Wendy’s data breach multiply, it’s certain they will be.

The core competency of a restaurant is food preparation, not information security, which is why restaurants should partner with a professional cyber security firm such as Lazarus Alliance. The cyber security experts at Lazarus Alliance have deep knowledge of the cyber security field, are continually monitoring the latest information security threats, and are committed to protecting retail and restaurant POS systems from security breaches. We offer full-service risk assessment services and Continuum GRC software to protect companies from data breaches, spear phishing attacks, and other cyber threats, as well as help them get and remain PCI DSS compliant.

Lazarus Alliance is proactive cyber security®. Call 1-888-896-7580 to discuss your organization’s cyber security needs and find out how we can help your restaurant protect its POS data and ensure compliance with PCI DSS.

When contracting with a service provider, such as a data center, it is important for companies to ensure that their provider possesses the cyber security-related certifications and compliance standards that are applicable to the company’s industry. Data centers, as well as service providers who contract with data centers, sometimes claim to be “SSAE 16” certified. In an effort to cut through the noise and clear up some of the confusion regarding SSAE 16 compliance, Lazarus Alliance would like to clarify what SSAE 16 compliance is—and isn’t.

What is SSAE 16?

SSAE 16 is an internationally recognized auditing standard for service organizations. It was developed by the American Institute of Certified Public Accountants (AICPA) and replaces the previous standard, SAS 70. SSAE 16 reporting helps service organizations comply with the requirements of Sarbanes Oxley (section 404) to demonstrate effective internal controls covering financial reporting. SSAE 16 applies to data centers that host systems that are involved in their clients’ financial reporting, as well as web hosting providers, ASPs, and ISPs who perform services that are relevant to their clients’ financial reporting.

There are three types of reports that can be issued: an SOC 1, an SOC 2, or an SOC 3, all of which address different controls. Performing an SSAE 16 audit and issuing an SOC report demonstrates a service provider’s commitment to maintaining a sound control environment that protects their clients’ data and confidential information.

Some service providers who use SSAE 16-compliant data centers imply that they are, somehow, SSAE 16 compliant by proxy. This is not the case; just because you use a provider who is SSAE 16 compliant does not mean that your company is SSAE compliant, and to imply such is black-hat marketing.

There is No Such Thing as SSAE 16 “Certification”

A Google search on “SSAE 16” reveals numerous instances of companies claiming to be “SSAE 16 Certified.” Organizations are compliant with SSAE 16; there is no such thing as becoming “SSAE certified.” SSAE 16 has to do with issuing SOC reports; no “certification” is awarded to anyone. Beware of any service provider that claims to possess an SSAE 16 “certification” or purports to be working towards getting one.

Need SSAE 16 Compliance Auditing Services?

If you have questions about SSAE 16, or if your company needs SSAE 16 auditing services, Lazarus Alliance can help! Depending on your team’s availability, our SSAE 16 audit process initially takes just a few weeks from start to completion. We realize that our clients have full-time, everyday obligations in addition to dealing with auditors, so we will be happy to work around your schedule and provide a quality audit and report in the time frame you desire.

Lazarus Alliance’s primary purpose is to help organizations attain, maintain, and demonstrate compliance and information security excellence in all jurisdictions. Lazarus Alliance specializes in IT security, risk, privacy, governance, cyberspace law, and compliance leadership solutions and is fully dedicated to global success in these disciplines. Learn more about Lazarus Alliance and why Lazarus Alliance is Proactive Cyber Security™!

POS Data Security?

The next time you buy a burger at McDonald’s or Wendy’s, a computer may be the one asking, “Would you like fries with that?” After decades of depending on human workers to take orders – and payments – American fast food chains are finally moving into the computer age, driven by rising minimum wages, a tightening labor market, a push for efficiency, and a growing number of internet-savvy consumers who prefer to interact with computers than human clerks.

Discussion of this “Rise of the Machines” in the media has largely centered around the minimum wage and the displacement of low-skilled labor. Missing from the conversation has been any mention of point-of-sale (or POS) system security in these automated ordering systems – even though Wendy’s, which recently announced it will be rolling out ordering kiosks en masse, suffered a POS data security breach earlier this year. The breach compromised approximately 300 locations, went on for several months, and has resulted in a class-action lawsuit accusing the fast-food chain of inadequate data security procedures.

Automated ordering systems are not new. Regional convenience stores Wawa (headquartered near Philadelphia) and Sheetz (a Pittsburgh-area chain), both of which have extensive custom deli and hot foods menus, installed ordering touch screens over a decade ago. However, these systems, unlike the ones Wendy’s and other fast-food restaurants intend to install, only take food orders and do not process customer payments; customers get printed order slips to take to a cashier for payment. And, of course, gas stations, supermarkets, and some retailers have had self-checkout lanes for years.

The surprising thing is that large fast-food chains have taken so long to automate customer ordering and payments – and this is where the concern over POS data security lies.

In some ways, automation in the fast-food industry is similar to automation in the healthcare industry. As mentioned in previous blogs, among the reasons why the healthcare industry is so prone to cyber attacks is that it clung to paper records for years, and when it finally did automate, it did so practically overnight, without any employee training. Similarly, the majority of fast-food companies continued to use human workers long past the time they needed to. The push to automate fast-food ordering is fairly new but very strong; at least one major chain has expressed that it is in a hurry to implement automation in the wake of minimum wage increases on city and state levels.

Since the fast-food industry is known for razor-thin profit margins and aggressive cost-cutting, and making burgers – not POS data security – is its core competency, whether fast-food chains will take cyber security seriously or repeat the mistakes of the healthcare industry remains to be seen.

However, as the ransomware attacks and data breaches that have plagued the healthcare industry have proven, no industry can afford to take a laissez faire attitude toward cyber security, especially when installing completely new systems. The fast-food industry needs to be proactive as it makes the leap from human clerks to self-serve kiosks. Among the measures restaurants can take are:

1. Do a review of your security policies and procedures to ensure PCI DSS compliance. Compliance with the PCI DSS is mandatory for any company that accepts payment cards, and procedures should always be reviewed when a new system is installed to ensure PCI DSS compliance is maintained. Here is a helpful primer on PCI DSS compliance basics.
2. Be sure to purchase your new system from a reputable dealer. Since fast-food ordering kiosks are an industry that is about to explode, inevitably, shady dealers will pop up offering what appear to be fantastic deals on new systems – that turn out to have multiple security vulnerabilities. Make sure you’re buying your equipment from a known, reputable company.
3. Make sure your new POS system can handle EMV technology, or “chip-enabled” cards. One of the ways hackers attack POS systems is by installing card skimmers that steal data off of the magnetic stripe old-style payment cards use. Chip-enabled cards eliminate this problem. However, not all payment cards are chip-enabled at this time, so it’s important not to leave self-serve kiosks completely unattended. Have at least some on-site staff available who are trained to spot card skimmers.
4. If you offer free WiFi to your customers, do not set your POS terminals to access it. Otherwise, a hacker can come into your store and use the WiFi to get into your system.
5. Monitor your POS terminals for suspicious activity. Are your terminals being accessed by or communicating with unknown external sources? Just like any other network, POS systems should be monitored for suspicious activity; had Wendy’s monitored its systems, the breach the company suffered may not have gone on for so long undetected.
6. Have a comprehensive cyber security plan in place, to include training on POS data security for any employees who access the restaurant’s computers. Protecting your customers’ payment card data is as important as adhering to food safety and sanitary practices.

POS Data Security Doesn’t Have to Be a Stomachache!

Because the fast-food industry has depended on manual ordering processes for so long, the transition to automation may seem confusing or even overwhelming for restaurant owners. That’s why it’s a good idea for restaurants to enlist the services of a professional cyber security firm such as Lazarus Alliance. The cyber security experts at Lazarus Alliance have deep knowledge of the cyber security field, are continually monitoring the latest information security threats, and are committed to protecting your POS system from security breaches.

We offer full-service risk assessment services and Continuum GRC software to protect companies from data breaches, spear phishing attacks, and other cyber threats, as well as help them get and remain PCI DSS compliant. Lazarus Alliance is proactive cyber security®. Call 1-888-896-7580 to discuss your organization’s cyber security needs and find out how we can help your restaurant protect its POS data and ensure compliance with PCI DSS.