Michaels Hit With Another Lawsuit For Card Skimming Problem
CHICAGO (CBS) -- The Michaels craft store chain is facing more trouble, now having been hit with a second lawsuit after disclosing its checkout line pin pads were subjected to tampering.
The latest lawsuit against the retailer was one by Mary Allen of Libertyville, who said she made an $18 purchase, but lost more than $1,000 thanks to thieves who "skimmed" her credit card information through a rigged card reader and racked up ATM withdrawals.
Allen filed the lawsuit Friday against Texas-based Michaels, and is seeking class-action status. Michaels announced in May that PIN pad tampering at some of its stores may have led to fraudulent transactions against some customers.
Brandi F. Ramundo, of West Chicago, filed a similar lawsuit in May, claiming $1,300 was withdrawn from her bank account at ATMs in California about three weeks after she shopped at a Michaels store in Bloomingdale.
The store first notified customers of the security breach in early May after a bank told the store it suspected Michaels was a common link in several fraudulent transactions, according to a release from Michaels.
Store PIN pads were part of a "skimming scheme," the lawsuit claims. In skimming, thieves use a device to capture unauthorized card information, then create duplicate cards with the same information in order to withdraw money from the accounts linked to the cards, according to the suit.
The craft chain has discovered and quarantined 90 suspicious PIN pads in stores in 20 states -- including 11 stores in the Chicago suburbs -- that showed signs of tampering, according to a listing and news release on the Web site for the retailer. More than 7,200 other similar PIN pads were also replaced out of "an abundance of caution," according to a Michaels release.
The tampering happened between Feb. 8 and May 6, WCBS 880-New York reported.
Friday's lawsuit claims Michaels failed to secure checkout line terminals or inspect payment processing equipment at stores, enabling "cyber pickpockets" to steal customer's financial data and loot their bank accounts from remote ATMs.
Allen claims two unauthorized withdrawals of $503 each were made from California ATMs after she shopped at a Michaels in Vernon Hills, according to the suit.
The suit also claims the company sent out a "belated" customer security alert to some of its customers via e-mail but didn't send the information to all of its customers and did not pursue other ways to notify its customers about the security breach.
The suit is seeking more than $5 million in damages for Allen and others whose credit and debit accounts were hacked. It also asks Michaels to pay for three years of credit card fraud monitoring services for affected customers.
The Irving, Texas-based company is North America' s largest specialty arts and crafts retailer with more than 964 stores located in the U.S.
The five-count suit claims violation of the Federal Stored Communications Act, violation of the Illinois Consumer Fraud and Deceptive Practices Act and two counts of negligence.
The Chicago area stores that were affected by the PIN tampering are located at:
• 402 W. Army Trail Dr. in Bloomingdale;
• 7600 S. Cicero Ave., Suite B, in Burbank;
• 9680 S. Ridgeland Ave. in Chicago Ridge;
• 1206 75th St. in Downers Grove;
• 2231 Willow Rd. in Glenview;
• 1050 Mount Prospect Plaza in Mount Prospect;
• 2768 Aurora Ave. in Naperville;
• 7225 W. Dempster St. in Niles;
• 7055 Central Ave. in Skokie;
• 701 N. Milwaukee Ave., Suite 164, in Vernon Hills;
• 7155 S. Kingery Highway in Willowbrook.
For a complete list of affected stores, click here.
The Sun-Times Media Wire contributed to this report.
