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Dunkin' Donuts settles data breach lawsuit

New York Attorney General Letitia James announced a settlement with Dunkin’ Brands, Inc. (Dunkin’) — franchisor of Dunkin’ Donuts — resolving a lawsuit over the company’s failure to respond to successful cyberattacks that compromised tens of thousands of customers’ online accounts. The settlement requires the company to notify customers impacted in the attacks, reset those customers’ passwords, and provide refunds for unauthorized use of customers’ stored value cards. Dunkin’ will also be required to maintain safeguards to protect against similar attacks in the future, follow incident response procedures when an attack occurs, and pay $650,000 in penalties and costs to the state of New York.

Beginning in early 2015, Dunkin’ customers’ online accounts were targeted in a series of “credential stuffing attacks” — repeated, automated attempts to gain access to accounts using usernames and passwords stolen through security breaches of other unrelated websites or online services. In a matter of months, tens of thousands of customer accounts were compromised. Many of these accounts held Dunkin’-branded stored value cards — known as “DD cards” — which could be used to make purchases at Dunkin’ stores. An attacker that gained access to one of these accounts would have been able to use the DD card to make purchases, or remove the card from the account and sell it online. As a result of these attacks, tens of thousands of dollars on customers’ DD cards were stolen.

According to NY AG Letitia James, Dunkin’ was repeatedly alerted to attackers’ ongoing attempts to log in to customer accounts by a third-party app developer. The app developer even provided Dunkin’ with a list of nearly 20,000 accounts that had been compromised by attackers over just a sample five-day period. "Yet, Dunkin’ failed to conduct an investigation into the attacks to identify other customer accounts that had been compromised, determine what customer information had been acquired, or whether customer funds had been stolen. Moreover, Dunkin’ did nothing to protect the nearly 20,000 customers that it knew had been impacted in the attacks or the potentially thousands more they did not know about. Among other missteps, Dunkin’ failed to notify these customers of unauthorized access to their accounts, reset their account passwords to prevent further unauthorized access, or freeze their DD cards," says a release.

Fausto Oliveira, Principal Security Architect at Acceptto, notes, “The fact that the attacks went unaddressed for a few years causes some surprise. The executive management team should have understood that accruing risk is not an economical solution. Sooner or later, the costs of having a breach become a reality. When that happens, the damages from both a financial and reputational point of view are much higher than any perceived savings obtained by offsetting the need to take action and address the breach. In my opinion, the result of this litigation doesn't really reflect the actual costs that this event has had for customers. If this would have happened in Europe, the penalties and legal costs would have been at least an order of magnitude higher."

"There are a few main takeaways from this. First, employ secure authentication mechanisms. Username and passwords are not an effective security solution," adds Oliveira. "This shouldn't have happened if Dunkin’ Donuts was using Multi-Factor Authentication (MFA), preferably MFA that uses the consumer bio-behavioral habits to monitor accounts against fraud. Secondly, when evidence of a breach is identified, organizations must take action and address the threat surface immediately. Threat actors share information, and often once a breach has taken hold of an organization, there are more than one cybergang taking advantage of it. A quick turnaround to address vulnerabilities is essential to contain costs and avoid the reputational impact that this type of events have on organizations.”