Michael’s Latest Retailer Hit With Data Breach

Michael’s, the largest crafts and decor retailer in the U.S., announced late Sunday that its customers’ credit cards may have been compromised in a data breach. The Texas-based company says it is working closely with federal law enforcement agencies to determine the source and scope of the hack.

Michael’s recently became aware of a potential data breach when customers began reporting a spate of fraudulent activity on their credit card accounts.  

“We are concerned there may have been a data security attack on Michaels that may have affected our customers' payment card information,” Michaels CEO Chuck Rubin said in a statement over the weekend. “We are taking aggressive action to determine the nature and scope of the issue.”

Michael’s becomes the third retailer in a little over a month to announce a major breach of its payment systems. Upscale retailer Neiman Marcus reported in January that over 1.1 million customers had their data stolen in a hack which began last July. The Neiman data breach was dwarfed, however, by Target Corp's announcement in December that 110 million customers had their data stolen in a similar hack.

Making matters even worse for Michael’s is the fact that it has already been the victim of data breach. In 2011, hackers stole 94,000 payment card numbers from the retailer. At the time, Michael’s said it was taking steps to boost security, assuring customers their payment information would be safe in the future.

“This is devastating for them because this is the second time in a row,” says Gartner security analyst Avivah Litan. “The public and the credit card companies are going to slap their wrist twice as hard because they'll say they haven't learned their lesson and that they can't be trusted.”

Security experts says other retailers will also likely report data breaches in the coming weeks as they screen their payment systems for malware. In the meantime, shoppers should keep a close eye on their accounts and avoid giving out personal information over the phone.