MasterCard scandal: Worst data theft ever?

In what could be the largest data security breach to date, MasterCard International on Friday said information on more than 40 million credit cards may have been stolen.

Of those exposed accounts, about 13.9 million are for MasterCard-branded cards, the company said in a statement. Some 20 million Visa-branded cards may have been affected and the remaining accounts were other brands, including American Express and Discover.

MasterCard and Visa both say they have notified their member banks of the specific accounts involved so the banks can take action to protect cardholders.

James Van Dyke, principal analyst at Javelin Strategy & Research in Pleasanton, California, said: "In sheer numbers, this is probably one of the largest data security breaches."

The breach occurred at CardSystems Solutions in Tucson, Arizona, a third-party processor of payment data, according to a MasterCard statement. An intruder was able to use security vulnerabilities to infiltrate the CardSystems network and access the cardholder data, MasterCard said.

CardSystems is one of several companies that process transactions for banks and merchants. The security breach at the company was discovered using tools that monitor for credit card fraud, MasterCard said.

Though credit card numbers were compromised, the cards themselves do not hold social security numbers or dates of birth, MasterCard said. This information could be used for credit card fraud but not to steal identities.

A spokeswoman for credit card company Discover said the company is aware of the security breach and is working with law enforcement to investigate it. She noted that Discover Card holders would not be liable for any fraudulent transactions, should they occur.

Visa issued a statement saying it knows of the data security breach and is working with authorities and banks to monitor and prevent fraud. As with MasterCard and Discover, Visa noted that card users are not responsible for fraudulent transactions.

American Express could not immediately be reached for comment.

The credit card theft possibly occurred late last month, according to CardSystems. In a statement issued late on Friday, the company said that it identified a "potential security incident" on Sunday, 22 May and called in the FBI the next day. Visa and MasterCard were notified as well, CardSystems said.

Since the breach, CardSystems has undergone a security audit and is changing its security procedures as a result, it said.

The breach follows several high-profile data loss incidents that potentially exposed US consumers to identity theft. Last week, CitiFinancial said tapes containing unencrypted information on 3.9 million customers were lost by the United Parcel Service while in transit to a credit bureau. CitiFinancial is the consumer finance subsidiary of Citigroup.

In past months, data leaks have been reported by Bank of America and Wachovia, data brokers ChoicePoint and LexisNexis, and the University of California at Berkeley and Stanford University.

Joris Evers writes for CNET News.com