SCDOR security breach will 'severely harm' taxpayers

Security breach will be a 'long term and chronic problem'
Published: Oct. 31, 2012 at 4:01 AM EDT|Updated: Nov. 1, 2012 at 5:07 PM EDT
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COLUMBIA, SC (WCSC) - Hundreds of thousands of credit card numbers and 3.6 million social security numbers have been taken by hackers from the South Carolina Department of Revenue's online files. Tuesday, the Senate Finance Committee held a meeting to get answers from the SCDOR Director, but still weren't satisfied.

"The bottom line is our taxpayers, millions of them have been exposed, and the state has had to incur an expense of $12 million minimum," said Senate Finance Committee Chairman Hugh K. Leatherman, Sr. "The unpleasant question is this... is anybody going to lose their job over this thing?"

Leatherman's questions were directed toward Jim Etter, Director of the SCDOR.

Although Etter didn't answer Leatherman's rhetorical question he handled two straight hours of questions just like it on how the DOR's online systems were breached.

A breach that lead to 3.6 million social security numbers and almost 400 thousand credit cards to be compromised.

Etter revealed that the breach may also effect businesses in the state.

Wednesday, Gov. Haley said up to 657,000 business could be affected.

"I can't impress on you enough at this time just how important this is," said another Finance Committee member.

Etter, who was appointed under Governor Nikki Haley in 2011, didn't have many answers to the Committee's questions but he promised them in time. The Director did say that the "holes" in the online systems have been closed.

"We have taken a very proactive role right now to close the hole," said Etter. "The tax files as we know today are well protected and we've gone the extra mile to try and provide coverage and protection for all of our tax payers moving forward."

However, Etter's words didn't sit well with the man sitting right in front of him, state Senator Larry Grooms.

"This is going to be a long term and chronic problem," said Grooms over the telephone Tuesday night. "There will be tax payers in the state that will be harmed and severely harmed because of the breach."

Grooms says the committee meeting won't be the last time they hear from the SCDOR Director because they need more answers for the people they represent.

"We're now at the intersection of anger and fear," said Grooms. "Neither is good by itself but together it's devastating. The state should move forward as quickly as we can to calm the fears and anger of the taxpayer. We have to make sure this never happens again."

Tuesday morning, Governor Nikki Haley told the media the state has negotiated a deal capped at $12 million with Experian, a credit monitoring company and lifetime fraud protection to those who have been affected.

The state has already paid $125,000 to Mandiant, which is investigating how the breach of the Department of Revenue's servers happened and how to protect the state's online systems in the future.

Governor Haley also mentioned, "not one single, active credit card was taken."

Less than a week after first word of the hack, an Upstate law firm filed a class action lawsuit against Gov. Haley and the SCDOR.

The lawsuit claims Haley and the SCDOR failed to protect the citizens of South Carolina from the hacking.

To set-up the free one-year credit monitoring system through the Dept. of Revenue call: (866) 578-5422. You can also go through the process online here: by using the code: SCDOR123.

Residents who have filed taxes with the state of South Carolina since 1998 are eligible for one year of free credit monitoring and, if compromised, fraud resolution for life.

Copyright 2012 WCSC. All rights reserved.