Marriott/SPG Database Hack Affecting 500,000,000 Guests (Or Reservation Records)

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Marriott today announced that it had identified unauthorized access to one of its database that contained information for guest reservations at Starwood properties.

Marriott CEO Hack U

The unauthorized access had begun in 2014 and went until 2018. Potentially there are 500,000,000 guest reservations affected by this hack. Leaked information included names, email addresses, passport information, dates of birth and arrival/departure information. Payment card information of some members may also have been compromised.

You can access Marriott here.

Here’s the press release from Marriott:

Marriott has taken measures to investigate and address a data security incident involving the Starwood guest reservation database. On November 19, 2018, the investigation determined that there was unauthorized access to the database, which contained guest information relating to reservations at Starwood properties* on or before September 10, 2018.

On September 8, 2018, Marriott received an alert from an internal security tool regarding an attempt to access the Starwood guest reservation database in the United States. Marriott quickly engaged leading security experts to help determine what occurred. Marriott learned during the investigation that there had been unauthorized access to the Starwood network since 2014. The company recently discovered that an unauthorized party had copied and encrypted information, and took steps towards removing it. On November 19, 2018, Marriott was able to decrypt the information and determined that the contents were from the Starwood guest reservation database.

The company has not finished identifying duplicate information in the database, but believes it contains information on up to approximately 500 million guests who made a reservation at a Starwood property. For approximately 327 million of these guests, the information includes some combination of name, mailing address, phone number, email address, passport number, Starwood Preferred Guest (“SPG”) account information, date of birth, gender, arrival and departure information, reservation date, and communication preferences. For some, the information also includes payment card numbers and payment card expiration dates, but the payment card numbers were encrypted using Advanced Encryption Standard encryption (AES-128). There are two components needed to decrypt the payment card numbers, and at this point, Marriott has not been able to rule out the possibility that both were taken. For the remaining guests, the information was limited to name and sometimes other data such as mailing address, email address, or other information.

Marriott reported this incident to law enforcement and continues to support their investigation. The company has already begun notifying regulatory authorities.

“We deeply regret this incident happened,” said Arne Sorenson, Marriott’s President and Chief Executive Officer. “We fell short of what our guests deserve and what we expect of ourselves. We are doing everything we can to support our guests, and using lessons learned to be better moving forward.”

“Today, Marriott is reaffirming our commitment to our guests around the world.  We are working hard to ensure our guests have answers to questions about their personal information, with a dedicated website and call center. We will also continue to support the efforts of law enforcement and to work with leading security experts to improve. Finally, we are devoting the resources necessary to phase out Starwood systems and accelerate the ongoing security enhancements to our network,” Mr. Sorenson continued.

Guest Support

Marriott has taken the following steps to help guests monitor and protect their information:

Dedicated Website and Call Center

We have established a dedicated website (info.starwoodhotels.com) and call center to answer questions you may have about this incident. The frequently-asked questions on info.starwoodhotels.com may be supplemented from time to time.  The call center is open seven days a week and is available in multiple languages.  Call volume may be high, and we appreciate your patience.

Email Notification

Marriott will begin sending emails on a rolling basis starting today, November 30, 2018, to affected guests whose email addresses are in the Starwood guest reservation database.

Free WebWatcher Enrollment

Marriott is providing guests the opportunity to enroll in WebWatcher free of charge for one year. WebWatcher monitors internet sites where personal information is shared and generates an alert to the consumer if evidence of the consumer’s personal information is found. Due to regulatory and other reasons, WebWatcher or similar products are not available in all countries. Guests from the United States who activate WebWatcher will also be provided fraud consultation services and reimbursement coverage for free.  To activate WebWatcher, go to info.starwoodhotels.com and click on your country, if listed, for enrollment.

Marriott is furnishing a Form 8-K with the SEC attaching a copy of this press release and presenting certain other information with respect to the incident.

Here’s the financial disclosure information 8-K that Marriott released:

On November 30, 2018, Marriott International, Inc. (the “Company”) issued a press release providing important information regarding a cybersecurity incident. A copy of the press release is attached hereto as Exhibit 99 and is incorporated by reference herein.

Answers to certain frequently asked questions related to the cybersecurity incident follow.

  1. What will be the financial impact to the Company from this cybersecurity incident?

It is premature to estimate the financial impact to the Company. The Company carries insurance, including cyber insurance, commensurate with its size and the nature of its operations.  The Company is working with its insurance carriers to assess coverage.

2. How will the Company disclose the costs related to this incident in its financial statements and public filings?

The Company expects it will separately disclose costs specifically related to this incident, as well as any corresponding insurance reimbursements. The timing of recognition of related costs may differ from the timing of recognition of any insurance reimbursement.

3. What will be the impact to the Company’s long-term financial health from this incident?

The Company does not believe this incident will impact its long-term financial health. As a manager and franchisor of leading lodging brands, the Company generates meaningful cash flow each year with only modest capital investment needed to grow the business. The Company remains committed to maintaining its investment grade credit rating.

The information in this Form 8-K, including Exhibit 99, is being furnished and shall not be deemed incorporated by reference into any other filing with the Securities and Exchange

Conclusion

Marriott should have informed the public about this hack within seven days after being made aware of it as per European Union legislation, and they failed. This database leak predates Marriott’s acquisition of Starwood.

I have always predicted that the records held by the hotel chains are the next step that the hackers target for personal information because they include payment card information. The revealing of this breach is not surprising to me.

I cannot believe that SPG would have had half a billion guests. I would believe that they must be referring to the number of reservations that Starwood has had.  What I do believe is that there will be another class action lawsuit from this and justifiably so.

The Marriott website has been unstable ever since the program merger on the August 18th (it was down for most of the day yesterday – again) and to certain extent when their rolled the update back in 2017. I would imagine that their internal IT is in similar chaos.

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