WASHINGTON -- A data breach that left some 40 million customer accounts vulnerable to hackers will lead to tighter security measures to protect millions of credit and debit card users, Federal Trade Commission officials said yesterday.
CardSystems Solutions Inc. has settled charges it broke the law by failing to ensure adequate safeguards, resulting in millions of dollars in fraudulent purchases, the commission said.
The settlement calls for better safeguards. The FTC could not seek civil penalties under the law it said CardSystems violated.
Atlanta-based CardSystems processed credit card and other payments for banks and merchants. Last summer, it was disclosed that tens of millions of mostly MasterCard and Visa accounts were exposed to possible fraud after a hacker broke into the company's computer system.
''CardSystems kept information it had no reason to keep and then stored it in a way that put consumers' financial information at risk," said FTC chairwoman Deborah Platt Majoras.
The company stored information from the magnetic strip of credit and debit cards -- account numbers, expiration dates, and security codes. The commission also said CardSystems had insufficient passwords to keep a hacker from taking control of its computers.
CardSystems' assets have since been bought by San Francisco-based Pay By Touch. The settlement requires Pay By Touch to implement a comprehensive security program and get independent audits every other year for 20 years.
According to evidence gathered in a California case, the hacker was able to grab enough account information to defraud at least 264,000 customers. Visa and MasterCard maintain that there is little financial risk to vulnerable accountholders because of their ''zero liability" policies.