In 2023, Ace Hardware, a prominent hardware store retailer-owned cooperative with a vast network of 5,700 shops, faced a significant cyberattack that severely disrupted its operations. The incident came to light when reports surfaced on Reddit, revealing that the company had detected a cybersecurity breach on Sunday morning. This attack compromised a staggering 1,202 of its 1,400 servers and networked devices, impacting critical systems such as ACENET, Warehouse Management, and the Ace Retailer Mobile Assistant. As a result, local stores and customers were unable to place orders, and scheduled deliveries were adversely affected. Despite the swift engagement of IT experts to restore functionality, the situation escalated, with the company warning retailers of ongoing phishing attempts by cybercriminals looking to exploit the chaos. With 196 servers still in the restoration process, Ace Hardware found itself embroiled in a tense battle against unseen adversaries, striving to reclaim its operational integrity.

• Quantified Impact: 1,202 devices impacted, including 196 servers currently being restored.

• Impacted Assets:

  • Key operating systems (ACENET, Warehouse Management Systems, Ace Retailer Mobile Assistant) interrupted or suspended.
  • Internal corporate systems down, preventing product orders from warehouses or dropship points.
  • Online ordering functionality disabled, limiting customer purchasing capabilities.

• Organizational Effects:

  • Disruption of scheduled deliveries and inability to process new orders, severely affecting retail operations.
  • In-store POS and credit card processing remain operational, but overall sales and service efficiency diminished.
  • Threat actors exploiting the incident with phishing emails and fraudulent calls, increasing risk and complicating recovery efforts.
  • Potential financial costs include lost sales revenue (estimated in the millions) and expenses related to cyber recovery efforts and IT consulting.

The cyberattack on Ace Hardware likely occurred due to vulnerabilities in their IT infrastructure, which consists of 1,400 servers and 3,500 networked devices. Cybercriminals often exploit weaknesses in software or hardware, such as outdated systems, misconfigurations, or insufficient security protocols. These vulnerabilities can be targeted through methods like phishing, malware, or unauthorized access.

In this case, attackers may have gained initial access via phishing emails or social engineering tactics, tricking employees into revealing sensitive information or clicking on malicious links. Once inside the network, they could install malware to disrupt key operating systems, including Warehouse Management Systems and customer order processing systems.

The rapid nature of the attack suggests a well-planned operation, possibly leveraging known exploits or leveraging unpatched software. Furthermore, the subsequent phishing attacks targeting Ace retailers indicate that threat actors are actively seeking to capitalize on the confusion and disruption caused by the initial incident, demonstrating the ongoing risks associated with such cybersecurity breaches.

Ace Hardware's initial response to the cyberattack involved quickly identifying the incident as it impacted the majority of their IT systems. Upon detection, the company issued a notice to retailers, outlining the disruption of key operating systems such as ACENET and Warehouse Management Systems. The IT team began triaging the malware by engaging a group of IT experts to assist in the restoration process. They prioritized the restoration of 196 servers, with ongoing assessments of 1,202 affected devices.

To prevent further damage, Ace Hardware advised retailers to refrain from placing additional orders, as the systems that processed these orders were down. They also alerted stores to ignore phishing attempts from cybercriminals posing as company representatives. The company maintained transparency by regularly updating retailers about the status of the recovery and the nature of the threat, reinforcing the importance of vigilance during this period.