Eastern Iowa “Michaels” Stores Effected in Stolen Credit Card Numbers Hack

April 17, 2014

Dear Valued Customers:

In January, we notified you that we might have experienced a data security incident. We wanted you to know quickly so you could take steps to monitor activity on your payment card account.

Since that time, we have continued our extensive investigation with the help of two independent, expert security firms. We have also been working closely with law enforcement authorities and coordinating with banks and payment processors to determine the facts.

After weeks of analysis, we have discovered evidence confirming that systems of Michaels stores in the United States and our subsidiary, Aaron Brothers, were attacked by criminals using highly sophisticated malware that had not been encountered previously by either of the security firms.

We want you to know we have identified and fully contained the incident, and we can assure you the malware no longer presents a threat to customers while shopping at Michaels or Aaron Brothers.

Here are additional facts we have determined from our continuing investigation:

• The affected systems contained certain payment card information, such as payment card number and expiration date, about both Michaels and Aaron Brothers customers. There is no evidence that other customer personal information, such as name, address or PIN, was at risk in connection with this issue.
• Regarding Michaels stores, the attack targeted a limited portion of the point-of-sale systems at a varying number of stores between May 8, 2013 and January 27, 2014. Only a small percentage of payment cards used in the affected stores during the times of exposure were impacted by this issue. The analysis conducted by the security firms and the Company shows that approximately 2.6 million cards may have been impacted, which represents about 7% of payment cards used at Michaels stores in the U.S. during the relevant time period. The locations and potential dates of exposure for each affected Michaels store are listed on www.michaels.com.
• Regarding Aaron Brothers, the Company has confirmed that between June 26, 2013 and February 27, 2014, 54 Aaron Brothers stores were affected by this malware. The Company estimates that approximately 400,000 cards were potentially impacted during this period. The locations for each affected Aaron Brothers store are listed on www.aaronbrothers.com.
• The Company has received a limited number of reports from the payment card brands and banks of fraudulent use of payment cards potentially connected to Michaels or Aaron Brothers.

We are truly sorry and deeply regret any inconvenience this may cause. Our customers are always our number one priority and we are committed to retaining your trust and loyalty.

While we have received limited reports of fraud, we are offering identity protection and credit monitoring services to affected Michaels and Aaron Brothers customers in the U.S. for 12 months at no cost to them. We also are offering these customers a fraud assistance service for 12 months at no cost to them. This service provides customers with a trained representative to assist them in the event they experience a fraud-related issue resulting from this incident. Information on the services can be found here.

We encourage you to actively monitor all of your payment card account activity and immediately contact your bank or card issuer if you notice any suspicious activity. You can find more security tips and information on this website.

In an era where very sophisticated and determined criminals have proven capable of successfully attacking a wide range of computer networks, we must all increase our level of vigilance. We are committed to working with other parties to improve the security of payment card transactions for all consumers.

If you have any questions or would like more information, please call us toll-free at 1-877-412-7145. Representatives are available to answer your questions Monday through Saturday from 8:00 a.m. CT to 8:00 p.m. CT.

We appreciate your patience and sincerely apologize again for any inconvenience this may have caused you. Thank you for your continued support.

Sincerely,

Chuck Rubin
CEO, Michaels Stores, Inc.