Credit Cards Safe Despite Hack, Egghead Says

Computer products e-tailer Egghead.com (Nasdaq: EGGS) said Monday that no credit card data was breached when its systems were broken into last month.

Egghead did concede that some credit card accounts that appear in its system had shown questionable activity, but that it was unrelated to the December hacking.

"Reports from the credit card companies we work with suggest that fewer than 7,500 credit card accounts that appear in our system have shown suspected fraudulent activity," Egghead chief executive officer Jeff Sheahan said. "This number represents only about two-tenths of 1 percent of the approximately 3 million credit card numbers in our database at the time of the attack."

Added Sheahan: "It is possible that this activity may be related to credit card theft elsewhere. The evidence Kroll Associates and our team have gathered to date suggests that neither these, nor any other credit card numbers, were obtained from our site."

Hacker Defense

On December 22nd, Egghead revealed that its systems had been breached and that a hacker had possibly gained access to credit card information belonging to the Menlo Park, California-based company's customers.

However, Sheahan said that after spending two weeks "working around-the-clock" with investigators from forensic security firm Kroll Associates, representatives from the major credit card companies, and agents from the U.S. Federal Bureau of Investigation (FBI), it was concluded that no credit card information had been stolen.

Sheahan added that the company's internal investigation has "uncovered evidence which suggests that Egghead's existing security systems interrupted this intrusion while it was in progress."

As a result of the hack attack, Egghead said that it has "taken additional steps to reduce the possibility of any further incidents by increasing security measures."

FBI Involvement

Egghead said that all information it has gathered has been turned over to the FBI, which is conducting an ongoing investigation into the incident.

As part of its continued crackdown on cybercrime, the FBI said Friday that it has partnered with more than 500 private businesses in a program to share information about computer crime and how to thwart it.

The program, called InfraGard, is available through all 56 FBI field offices and provides members with access to a secure Web site and an encrypted e-mail system that allows companies to exchange information about new threats, protection systems and incidents.

Credit Card Heist

A week before Egghead acknowledged that its servers had been compromised, credit card processor Creditcards.com confirmed that its security was breached and that over 55,000 credit card numbers were taken from its servers and posted on the Web.

The FBI has been investigating that incident as well, including claims that mysterious charges of US$10 to $18 have been made on some of the cards by a Moscow-based firm.

Egghead stock was trading between 71 and 79 cents per share Monday morning.