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Security / Fraud

Visa To Pull Back On Mobile/Online Verification For Low-Risk Transactions

November 28th, 2012
With a goal of trying to get mobile transactions moving, Visa on Monday (Nov. 26) floated a way to let shoppers not be bothered by password or other authentication for transactions the brand considers low-risk. The approach, dubbed the Visa Consumer Authentication Service, is designed for traditional E-Commerce transactions but will also work for any in-store mobile transactions that use the Internet (meaning it won't work for direct mobile-to-POS transactions, such as those fueled by NFC).

One new element here is Visa's use of various phone and tablet attributes to try and authenticate the device being used. (Sign of the times: In Visa parlance, laptops are no longer considered mobile.) "There are more than 100 different fields that we can get back from a particular device," including frequency, operating system version, the existence of antivirus software and physical location, said Mark Nelsen, Visa's head of risk and authentication product development.Read more...


Must PCI Compliance Conflict With Customer Service?

November 27th, 2012
PCI Columnist Walter Conway recently had a client ask: "Why is PCI making me stupid?" By that the client meant she was considering reversing a number of technology innovations her company had implemented over the last couple of years. Basically, those innovations had the unintended consequence of expanding her company's PCI scope, and the resulting cost of compliance was too much.

The issue is not unique to PCI. Innovations in retail technology happen everyday, but standards adapt to these changes much more slowly. Every retailer lives in this situation. A mobile app works great, but it is not PCI compliant. Web orders get outsourced nicely, but processing mail order and telephone order (MOTO) transactions on a workstation either means lots of network reengineering, separate devices or lots of increased PCI scope (or all of the above). Sometimes, PCI compliance and security even seem to be at odds with each other. What is a merchant to do?Read more...


Forget Fancy Hacking, Card-Data Theft Is Now All About PIN Pads

November 15th, 2012
A ring of Canadian thieves who were caught with 30,700 stolen payment-card numbers is providing a view inside the process of tampering with PIN pads—and it's not pretty. On November 9, Toronto police said a five-man gang arrested in September had tens of thousands of stolen card numbers on PCs and USB thumb-drives, along with at least a dozen stolen POS devices.

It's the PIN pads that are disturbing. They make it clear this gang was regularly swapping compromised PIN pads for the legitimate versions on retailers' counters. Even more disturbing: It wasn't the PIN pads that got these thieves caught.Read more...


The Digital Way To Kill EAS Tags And Keep ‘Em Dead

November 15th, 2012
EAS tags have an annoying tendency to come back to life after being deactivated. That's embarrassing for the shopper who sets off the alarm, but it's far more embarrassing for the LP executive whose people grow tired of the false alarms and start ignoring them—especially at peak times. One EAS vendor on Tuesday (Nov. 13) tried to end the LP Frankenstein monsters by switching to a digital—rather than a mechanical—tag mechanism, one that can be fully fried by the typical 10-volt deactivation pad jolt. "We make this happen at the nano level, leveraging very very small geometries," said Amir Mashkoori, CEO of EAS vendor Kovio.

The tags are soft tags and Kovio's approach is to try and get manufacturers to embed them deep within shoes and other clothing so they are not visible to the shopper, which makes the removal of the devices almost impossible without severely damaging the product. Mashkoori argues that this could change many standard retail tactics, such as having only one shoe on the floor and forcing the associate to go to the backroom to get the mate.Read more...


Will MasterCard’s New NFC Trial Give M-Commerce Transactions Chip-And-PIN Rates?

November 7th, 2012

If paying with a mobile phone isn’t any easier than just using a card in-store, maybe it can at least improve the mobile-commerce buying process. That seems to be the idea behind a trial MasterCard announced on Wednesday (Nov. 7). In the Netherlands-based test (which actually began in mid-October and runs through March 2013), an NFC-equipped phone can be used to make M-Commerce purchases, with the phone sending an EMV-compliant cryptogram to complete the transaction after the customer selects a payment card and keys in a PIN. In effect, it’s Chip-and-PIN over the phone.

That’s slightly easier for customers than having to key in the whole card number and slightly safer than the merchant storing the number. But the real value to retailers will show up if MasterCard declares that its own EMV solution qualifies M-Commerce transactions for card-present interchange rates (or at least for the EMV-based liability shift). In that case, online merchants may suddenly be very interested in offering customers that option. If not—well, there’s always room for yet another NFC payments approach that retailers have no reason to adopt, right?…

What If South Carolina Were A Retailer?

November 7th, 2012
The recent theft of cardholder data from the State of South Carolina's computer systems presents an interesting question: What would happen if South Carolina were a retailer? What would the state do, asks PCI Columnist Walter Conway, and what would be the reaction of the state's acquirer and the card brands to the data breach?

To recap briefly, the state announced in early November that hackers had stolen 387,000 payment-card numbers from the state's tax office. Some 16,000 of those payment-card numbers were not encrypted. As a result of the loss of the card data—together with the 3.6 million Social Security Numbers and the tax records of 657,000 businesses, none of which was presumably encrypted—the state is looking at a $12 million bill to provide one year's worth of credit monitoring and identity theft protection to those affected. Read more...

Google Joins The Same-Day Delivery Crowd, But It’s Still Not Fast Enough

October 31st, 2012
Now Google is testing same-day delivery, too. That isn't likely to have Amazon, ebay, Walmart or any other quick-delivery wannabes quaking in their boots, because Google's trial looks pretty much like all the rest. But there's a question overshadowing all these efforts: How quickly do either E-tailers or brick-and-mortar chains have to do those deliveries?

For those few critical days before Christmas, any same-day delivery for last-minute orders could be a high-margin bonanza for retailers. But for the rest of the year, the customers already know what they expect when they order something for quick delivery. And the benchmark to beat isn't Amazon. It's Domino's.Read more...

Are Risky Transactions Masquerading As Card-Present?

October 31st, 2012
At a panel last week, a Best Buy finance exec questioned whether card-not-present rules make sense—and she's hardly the first. It's not just NFC, which may or may not end up having a major impact on mobile payments, at issue. Rather, it's various other mobile payment methods, including stored-and-accessed card data systems such as iTunes and PayPal.

The original idea of card-not-present was simply a way to justify a higher interchange rate for less-secure transactions. The premise was that fraud is less likely when a magstripe card is swiped and potentially examined by an associate than it is when a shopper types numbers into a browser or tells them to a call center rep on the phone. But what happens when the card data is authenticated and used repeatedly—a la iTunes, PayPal and many mobile apps? What if the card is physically swiped and that data is then stored on the phone? Card-not-present is only meaningful today in one respect: In a few years, mobile payments will indeed likely make almost all cards not present.Read more...

Kroger’s Geolocation Glitch: That Local Store Really Isn’t Very Local

October 31st, 2012

At the Web site for $85 billion grocer Kroger, the site makes its best guess for the customer’s location. But this week it identified a New Jersey customer as being in Missouri and located an Oregon visitor in Texas—off by more than 1,000 miles each time.

Was that a storm-related glitch? We’re still waiting for an answer from Kroger, and we know that location feature has worked fine for at least some shoppers in the past. But considering how critical geolocation is in merged-channel retail (where’s the closest store? What’s on sale right now?) and the fact that IP addresses can often be tied to other CRM data, this may be a good reminder of how tricky outsourcing location services can get. Even if your datacenter is safely out of harm’s way, an outside location provider can still be inside a disaster zone and may need its own third-party help—and end up scattering your E-Commerce credibility all over the map. So many other things can impact location accuracy: A VPN can throw it off, and an ISP’s own disaster plans can alter where others think your customers are. Then again, it’s not especially onerous for customers to fix their location, as long as the site makes that at an easy fix.…

Visa Stats Show A Huge Flip In U.S. Data Breaches Versus The Rest Of The World

October 31st, 2012
The fact that U.S. retailers have been the world's top fraud targets is nothing new, but recent Visa stats show a startling new reversal. In 2009, the U.S. accounted for 38 percent of the world's data breaches, with the rest of the world the victim of the remaining 62 percent. But by the next year—2010—those numbers did an almost full 180-degree flip. The U.S. suddenly accounted for 61 percent of all incidents globally, with the total of all other countries' breaches delivering the remaining 39 percent.

That pattern continued—mildly—last year (2011), with the U.S. inching up to 67 percent of all breaches globally. But it's the huge flip in 2010 that's fascinating. What happened then? Jennifer Fischer, Visa's head of payment system security and acceptance risk, said her people saw it as a combination of factors.Read more...

Monthlies And A Shout-Out To Kindle Users

October 29th, 2012

A little late October housecleaning here at StorefrontBacktalk. First, a quick reminder: StorefrontBacktalk now has five free Monthly newsletters, each one focusing on a different key area for you: E-Commerce, Mobile, PCI/Security, In-Store and CRM. The Monthlies—see the descriptions here—are available to anyone via a quick E-mail sign up and the November monthlies will publish next week.

The Monthlies are a great way to catch up on all the news in a given area. So before you miss the November Monthlies, sign up for your free copy—and remember, you can sign up for multiple topics. Finally, a quick thought for Kindle users. For those of you who have not yet subscribed to our Kindle feed, it’s not bad for convenience while traveling. You’ll get the latest on retail tech, E-Commerce, mobile and security beamed into your Kindle when you’re not looking. …

How Much Does Amazon Still Own What It Sells?

October 29th, 2012
A grocery chain was not happy with the profitability of products purchased by certain customers, so it had someone slip into their homes overnight and steal their refrigerators with all of the low-profit food. Three houses away, a national sports chain suspected one of its high-school athlete customers of buying some items from a direct rival, so it activated heater-equipped active RFID tags that melted or set on fire all of the disloyal customer's athletic gear. Sound absurd? Well, it's apparently not, if you work for Amazon. That is, in essence, what the world’s largest e-tailer has done with one European customer.

In this age of digital content, Amazon is acting as though it has the right to deal with one dispute on one piece of content as license to steal back all of that customer's paid-for content. With the newness of digital rights issues, it's frighteningly possible that Amazon may be right—for now, pens Legal Columnist Mark Rasch.Read more...

Amazon Cross-Border Pricing Quirk Means Prices Jump Right After Customers Log In

October 24th, 2012

Amazon insists that it doesn’t do differential pricing, but on October 18 a high-profile tech blogger went ballistic because the E-tail giant apparently did just that. Tim Bray, who also happens to be a Google engineer, fumed that had a $9.48 price on an e-book he wanted, but when he logged in to buy it, the price immediately jumped by more than $5—to $15.17. “Maybe there’s an explanation,” Bray wrote. “I don’t care what it is, it’s not good enough and it’s not reasonable

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and I’m not paying that price and maybe you shouldn’t be either.” Whew!

The likely problem: Bray, a Canadian, was visiting Amazon’s U.S. site, where Amazon sets its own e-book prices under terms of a price-fixing settlement. Once Bray logged in, Amazon spotted him as Canadian and gave him Amazon Canada’s price, which is set by the publisher. (The fact that publishers also run their own sale prices may be why e-book prices also seemed to drop for Bray as soon as he bought books.) But it’s still aggravating to customers. And that cross-border quirk means Amazon does differential pricing after all—no matter how much it tries not to.…

Is the Barnes & Noble Breach By The Same Gang That Hit Michaels, Aldi and Hancock Fabrics?

October 24th, 2012
Barnes & Noble's announcement on Wednesday (Oct. 24) of PIN pad breaches in 63 stores sounds eerily like last year's breach at Michaels, the 2010 Aldi breach and the 2009 Hancock Fabrics breach.

In each case, PIN pads were physically compromised, one per store, in dozens of stores clustered in specific geographic areas. The PIN pads were apparently tampered with during the spring and summer months, and tampering was limited to the countertop devices. How likely is all this to be coincidental? Not very.Read more...

Major French Chains Testing Biometrics On Top Of A Contactless Smartcard, All Riding On EMV

October 24th, 2012
American retailers have never been able to make biometric payment authentication work, but it has been years since anyone has attempted it. Is the time now ripe? Was the efficiency and speed of biometrics the right idea at the wrong time? Two major French chains—Leroy Merlin, with more than 300 home improvement stores in 13 countries, and the Auchan Group, with 639 hypermarkets and 2,412 supermarkets—are betting that shoppers are now ready.

But the six-month French trial that has just started is taking the efficiency goal one step further, by marrying a contactless smartcard—which holds the biometric data—with the POS-affixed biometric scanner. The retailers estimate that the contactless card's transmission will be intercepted by the POS authentication element from two meters away, which is about 79 inches or about 6.6 feet.Read more...

Merged Channel Is A Wonderful Thing, If The Transition Doesn’t Destroy Your Chain

October 24th, 2012

As more chains struggle with fully embracing merged-channel operations, we have a delicious contradiction. The benefits of such a merged-channel approach are definite and intense. However, the risk of damage being inflicted by a less than precise execution is equally certain. Hence, it’s a path that needs to be traveled—but oh so carefully.

StorefrontBacktalk and ChainLink Research have collaborated on a report that looks at some of the less-covered pitfalls and opportunities of this approach. Take a peek.…

Retailers To Find Tough Sledding With New iPads

October 24th, 2012
Apple's highly unsurprising iPad Mini announcement on Tuesday (Oct. 23) came with a side order of something retailers actually will care about: a full-size iPad that replaces the model introduced just six months ago. The differences: It's faster and has the new (and incompatible) "Lightning" power/data connector. The problem: That's the port most payment-card sleds attach to.

Yes, Apple sells a $30 adapter for plugging old-style peripherals into the Lightning port. But such adapters won't work well with card sleds, so stores could end up needing two types of iPads and two types of sleds. And that's the type of thing that drives central IT support crazy, because the sled that just broke is always the one you're out of.Read more...

This Year, DDoS Attacks Are Shorter, Hit Harder And Aim At Things Like Shopping Carts

October 18th, 2012
With the big holiday distributed denial-of-service season coming up quickly for retailers' E-Commerce sites ("Merry SYN flood to all!"), here's a little bit of cheery news: Brute-force DDoS attacks are getting shorter in duration than in years past—even though the actual blast during a brute-force DDoS can get as high as 65 Gbps. And although last year attackers were starting to target routers instead of Web servers, this year they're aiming lower—and much more often going after things like the lowly shopping cart.

Unfortunately, with those so-called "low and slow" attacks—which require a lot less firepower from attackers but can still crash your site—brute-force DDoS defenses won't work. Your E-Commerce and network security teams may need to take a lesson from associates and loss prevention in thinking about online defense.Read more...

The PCI Scoping Discussion Is Over. Now It’s On To SAQ Roulette

October 16th, 2012
Any discussion of whether a particular system or device is or is not in scope ended at the recent PCI Community Meeting. The PCI Council made it clear that any device "connected to" the cardholder data environment (CDE) is in scope, and that includes what the Council termed any "connected to connected to" system.

Given that the PCI Council's guidance is final in all matters related to PCI scoping, pens PCI Columnist Walter Conway, it is time to shift the discussion to helping merchants that qualify to use a self-assessment questionnaire (SAQ) and pick the right one. We can do this by posing a question: When is a merchant that has just validated its PCI DSS compliance not compliant?Read more...

FTC Slaps Down Retail Use Of Tracking Software

October 15th, 2012
In a case that has potentially significant consequences for NFC and RFID applications, the U.S. Federal Trade Commission is cracking down on so-called "phone home" technologies being used by computer rental companies to monitor consumer behavior. When contemplating the use of any technology that provides use, location or other information about a product, retailers should be careful to ensure consumers know—or are at least able to know—exactly what the product is doing.

Don't be so quick to conclude that your people aren't doing this, though, as it extends way beyond rent-to-own. Many current—and many more future—devices will have technology that enables post-purchase information capture. For example, RFID tags that aren't disabled before the customer leaves the store might enable retailers, marketers or others to capture data from those devices without the consumer's knowledge or effective consent. And don't get Legal Columnist Mark Rasch started on mobile.Read more...

How Risky Is Updating Digital Signs With Apps, Anyway?

October 10th, 2012
Is updating your digital signage with a mobile device really such a good idea? That's the question raised by the announcement on October 2 that Swedish retail giant ICA will begin using mobile apps next month for making changes to its in-store signs.

The advantage seems pretty obvious: Using an app on a phone or tablet means a store manager or associate can see what changes look like as they're made, avoiding embarrassing differences between what appears on a PC's screen and the display. The equally obvious downside: You're trusting your public face to the security of a smartphone.Read more...

Surprise Security Testing? Welcome To Worst Practices

October 10th, 2012
The CIO for Tulsa, Okla., was put on administrative leave on October 1, after a security company hired by the city ran an unannounced penetration test, and no one in the IT department realized it was a test. The usual tut-tutting aside ("How could he forget he hired this outfit?"), we're wondering whether it's time to dump the security "best practice" of doing surprise pen tests.

Yes, those tests should be a surprise to the security and ops people. But to the CIO? In today's legal environment, with PCI and personal information on the line? That's crazy. For a retailer, it's even crazier.Read more...

The Legal Perils Of Cyber-Insurance For Retailers

October 9th, 2012
In the aftermath of the hack of DSW's computer systems by uber-hacker Alberto Gonzalez, the Columbus, Ohio, shoe chain attempted to recover some of its $6.89 million in losses by filing an insurance claim for the theft, using the computer fraud insurance it had paid big bucks for.

The insurance company denied the claim—it took a judge to force the insurer to pay—arguing that cyberthieves hadn't actually stolen the data, so much as they made a copy of it. The insurance company also tried denying payment because the information was excluded for coverage, because it was proprietary, pens Legal Columnist Mark Rasch, who strongly encourages readers to start reading their policy exclusions right now.Read more...

Do Merchants Need P2PE?

October 2nd, 2012
Point-to-point encryption (P2PE) is a technology that promises to reduce a merchant's PCI scope significantly. Ideally, with an approved P2PE approach, a merchant's only PCI scope will be the point-of-interaction (POI) device itself. But do merchants really need to wait for a P2PE-approved package to get the benefits?

The answer to that question, in some cases, might be "No." Instead, writes PCI Columnist Walter Conway, based on the PCI Security Standards Council's revised guidance on when encrypted cardholder data may be considered out of scope, it might be possible that existing vendor offerings could potentially bring some merchants the same benefits with less work and without waiting—and paying—for the first P2PE products to hit the market.Read more...

Walmart China: Always The Low Price Last Week

September 26th, 2012

This is just not Walmart’s week for price management. On Tuesday (Sept. 25), a Walmart store in China was slapped with almost $16,000 in fines for a “discount hoax,” according to China Daily. In May, the Walmart in Wuhan changed its price for a bottle of liquid soap from 47.6 to 48.8 yuan (a 19-cent increase), but called it a discount price. Not so, according to the local government price watchdog: “When the promotion price is higher than the traceable lowest price of the period of seven days before the campaign, it is a price fraud,” said Zhang Jianmin, vice head of the Hubei Provincial Bureau of

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Commodity Price.

It may be true that what the Chinese call a hoax, everyone else calls marketing. But with 370 stores in China, Walmart should know how this game is

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played. And with its fanatical tracking of its own and …


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