Payment data stolen in Chipotle breach

Hackers used malware to steal customer payment data from most of Chipotle Mexican Grill's restaurants over a span of three weeks, the chain has revealed.

It adds more woes for a company whose sales had just started recovering from a string of food safety lapses in 2015.

Chipotle said it did not know how many payment cards or customers were affected by the breach that struck most of its roughly 2250 restaurants for varying amounts of time between March 24 and April 18 this year.

A handful of Canadian restaurants were also hit in the breach, which the company first disclosed on April 25.

Stolen data included account numbers and internal verification codes. The point-of-sale malware has since been removed.

The information could be used to drain debit card-linked bank accounts, make "clone" credit cards, or to buy items on certain less-secure online sites, said Paul Stephens, director of policy and advocacy at the non-profit Privacy Rights Clearinghouse.

An investigation into the breach found the malware searched for data from the magnetic stripe of payment cards.

Arnold said Chipotle could not alert customers directly as it did not collect their names and mailing addresses at the time of purchase.

The company posted notifications on the Chipotle and Pizzeria Locale websites and issued a news release to make customers aware of the incident.

Linn Freedman, an attorney at Robinson & Cole LLP specialising in data breach response, said Chipotle was putting the burden on the consumer to discover possible fraudulent transactions by notifying them through the websites.

"I don't think you will get to all of the customers who might have been affected," she said.

Security analysts said Chipotle would likely face a fine based on the size of the breach and the number of records compromised.

"If your data was stolen through a data breach that means you were somewhere out of compliance" with payment industry data security standards, Julie Conroy, research director at Aite Group, a research and advisory firm.

"In this case, the card companies will fine Chipotle and also hold them liable for any fraud that results directly from their breach," said Avivah Litan, a vice president at Gartner specialising in security and privacy.

Chipotle did not immediately comment on the prospect of a fine.

US retailer Target recently agreed to pay US$18.5 million to settle claims stemming from a massive data breach in late 2013.

Shares in Chipotle Mexican Grill ended marginally lower at US$480.15 on Friday following the announcement.