Hotel Data Breaches: Can You Protect Business Travelers?

Many hotels continue to struggle with the question of whether or not they will be the next company to be hit with a data breach. Sometimes, even the best defenses fail; however, securing your system with multiple layers of security, the defense-in-depth concept, may be the very components you need to protect  your PC’s rather than depending on any one approach to technology to block them.  Business Travel News, Julie Sickel, discusses why and how hotels are hit with data breaches.

 

 

The avalanche began with Starwood.

On Nov. 20, 2015, Starwood Hotels & Resorts Worldwide announced that malware had infected point-of-sale systems at 54 of its North American hotels, including 26 Westins, 18 Sheratons and seven W-branded hotels. The malware targeted cardholder names, card numbers, security codes and expiration dates.

Then, five days later, Hilton released a statement that it, too, had been the victim of malware attacks on POS systems at an undisclosed number of its properties and that payment card information had been accessed.

Two days before Christmas, it was Hyatt’s turn to disclose that cybercriminals going after payment card information had targeted its hotels. In that breach, POS systems at restaurants, spas, golf shops, parking facilities and a “limited number” of front desks were affected.

Within the span of 34 days, three of the most recognized companies in the hotel industry announced major breaches of customer payment data. But they weren’t the first to make such an announcement in 2015. In July, the Trump Hotel Collection announced it appeared to have been the victim of malware attacks on POS systems, later confirming seven properties were affected.

In April, previous hacking victim White Lodging Hotel Services Corp. announced POS systems at 10 of its franchised hotels had again been compromised. The month prior, Mandarin Oriental Hotel Group disclosed hacks at “an isolated number” of hotels in the United States and Europe.

Hilton’s Jim Holthouser during a November data-breach disclosure,

 “You have my personal assurance that we take this matter very seriously, and we immediately launched an investigation and further strengthened our systems.”

Why Hotels?

Cybercrime threats to the lodging industry are nothing new, but the volume of attacks going after guest card payment information raises the question, why does this keep happening to hotels? But that question is, perhaps, a flawed one. Chris Zoladz, founder of Navigate LLC, an information protection and privacy consultancy, suggests POS systems are the larger target, and those exist well beyond the hospitality industry.

According to Privacy Rights Clearinghouse, a nonprofit group that keeps a chronology of all manner of data breaches disclosed to the public through company releases and media reports, there were 111 breaches related to hacking or malware on POS systems during 2015. Of that total, only seven of the breached entities were hotel companies. Others on that 2015 list included Sabre, United Airlines, American Airlines, Uber, Starbucks and Chick-fil-A.

“POS systems are often the weak link in the chain and the choice of malware,” said Mark Bower, HPE Security global director of product management for enterprise data security. “They should be isolated from other networks but often are connected. A check-out terminal in constant use is usually less frequently patched and updated and is thus vulnerable to all manner of malware compromising the system to gain access to the cardholder data.”

Chip cards add security within the point-of-sale environment, but card-not-present transactions and holding card numbers on file remain risk.

Instead of why hotels, a better question is what is it about hotels. What makes their POS systems particularly vulnerable and valuable to hackers?

Bower suggests the type of POS systems used at hotels are part of the problem. “These are often integrated POS environments   running applications in an environment that is not as secure as modern hardened payment terminals designed to capture payment data and implement encryption independent  from the  POS  itself.”

With integrated POS systems, multiple POS feeds converge in the back-office system or electronic cash register, whereas a semi­ integrated or “hardened” system sends encrypted data directly to the payment processor. The extra stop in integrated systems creates a weakness that cybercriminals are quick to  tap.

In addition, hotels deal with a high volume of payment card transactions-between restaurants, on-site shops, spas, parking facilities and front-desk billing-and card information is stored with the hotel in the run-up to, and duration of, a single stay.

“If you call a hotel to make a reservation, they manually type in your card information and leave your credit card on file,” said Shaun Murphy, founder and CEO of SNDR, a message- and file­ sharing app, who specializes in cybersecurity. “Your personal details are stored in so many different systems, there are so many more ways for malware to have access to them.”

The hospitality industry, too, suffers from a high turnover of employees and staff members. The overall turnover rate in the restaurant-and-accommodations sector was 66.3 percent in 2014, according to the U.S. Bureau of Labor Statistics’ most recent figures. If a hotel is regularly losing staff members and hiring new ones, it can be difficult to ensure each is well trained in handling guest data.

Individuals who work in a hotel restaurant or behind the front desk are rarely IT people, meaning staff members are often completely dependent on a POS system installer to make sure everything is programmed correctly. Think of a POS system like a garden hose. It doesn’t matter how good the hose is, Zoladz said, if it’s improperly installed, there are going to be some leaks.

Murphy said after such software is installed, “a lot of times [hotels] don’t have mobile IT systems to make sure the systems are monitored.”

Basically, if the hose becomes defective, it may take a while for anyone to notice.

In the Hilton breaches, hotels were hit between Nov. 18 and Dec. 5, 2014, then once more from April 21 to July 27, 2015. According to security blog Krebs on Security, that breach wasn’t discovered until August, when Visa confidentially alerted multiple financial institutions that cards used at a brick-and-mortar entity were compromised.

“You have my personal assurance that we take this matter very seriously, and we immediately launched an investigation and further strengthened our systems,” executive vice president of global brands Jim Holthouser said in a statement during Hilton’s November  disclosure.

A Hilton spokesperson told Travel Procurement the company had no further information to share about the number of hotels affected by the incident or the type of malware found  by forensic  experts. Timelines for other breaches, from when the attacks occurred to when an investigation was launched, are less clear in the other hotel incidents disclosed in 2015.

“The malware frameworks that the point-of-sale operators are … infected with is very, very sophisticated,” Murphy said. “These hackers go out and they find a top point-of-sale operation system and they figure out how to breach it.”

Last year, global cyber-threat intelligence company, iSight Partners made a concerted effort to educate companies within the retail, healthcare, food services and hospitality sectors about the newest and most sophisticated POS system malware, ModPOS. Stephen Ward, senior director and spokesperson for iSight, said the company doesn’t believe ModPOS is the  malware behind the  recent hotel malware attacks. But the module, which is customized to its targeted environment and is extremely difficult to detect, demonstrates how such attack systems are evolving.

What Is The Legal Responsibility Of Hotels?

The structure of the hotel industry is complicated and fragmented . With big hoteliers making their money mostly through franchise agreements with owners and separate companies managing hotels on behalf of franchisees, it’s not always clear which party is responsible for what at any single branded property. The legal landscape around customer payment and privacy can be similarly difficult to navigate.

“There are a lot of places where regulation of data-security conduct can come from in the hotel industry,” said Sandy Garfinkel, chair of law firm Eckert Seamans’ data security and privacy practice  group.The first place, Garfinkel said, is through the Payment Card  Industry  Data Security Standard, a set of requirements “designed to ensure that all companies that process, store or transmit credit card information maintain a secure environment,” according to the PCI compliance guide. It’s not law, Garfinkel said, but it helps the credit card industry avoid liability.

Contracts also tell hotel companies and franchisees how to handle cybersecurity. “More and more you have hotels, especially franchised hotels, having their data-security practices controlled or regulated through contracts with franchisors-or on a lower level it may be a contract between a manager and an owner-that imposes data-security standards of conduct and policies on whoever operates the hotel,” Garfinkel said. “Those wouldn’t be case law, statutes or regulations, but they would be contractual, legally binding provisions that say you must handle data in a certain way.”

Garfinkel said the growing practice of regulating data security through contracts is a direct result of the best-known hotel data breach, at Wyndham Worldwide, in which hackers infiltrated the corporate computer system and the systems of individual properties between 2008 and early 2010, stealing payment card information from hundreds of thousands of guests. The U.S. Federal Trade Commission sued Wyndham in 2012, alleging Wyndham failed to take proper cybersecurity measures to protect customer information. The FTC settled the suit with Wyndham in early December 2015, and the hotel company must comply with several orders, including establishing a data-security program to protect cardholder data processed in the United States.

“Wyndham has woken up the hotel industry to be more aware and proactive about data breaches and data security,” Garfinkel said. “Not that it’s where it should be, but there’s been much more attention.” Though the contracts can seem like nothing more than legal finger-pointing, he said the heightened fears of liability and damage to a company’s reputation have brought the industry along.

After a breach occurs, things can get even more complicated.   The United States doesn’t have a comprehensive federal data-security law. Instead, that power is handed over to the states. “Right now, there are 47 different states with 47 different data-breach response laws, which have a lot of consistencies but some of which are wildly inconsistent,” Garfinkel said.

These state laws vary in how customers should be notified of a breach, how soon they need to be notified and whether a hotel should have a written information security plan prior to any breach. Complicating matters further, when a breach does occur, a hotel is not beholden to the laws of the state in which it’s headquartered or even to the laws of the state in which breaches occurred. Instead, hotels must follow the notification laws of the state in which each individual guest resides. “If a hotel has a data breach and people  from 25 different states have stayed at the hotel during the time of  the breach and are affected by the breach,” Garfinkel said, “the  hotel, by statute, must comply with all 25 of those state’s laws when  it comes to responding to the  breach.”

 

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