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Did Retailers Learn Any Lessons From Gonzalez?

April 29th, 2010

Had the group, for example, chosen to use codewords instead of the retailers’ names, it would have had to share those codewords amongst its members. In that case, the codewords would have been irrelevant. The confiscated laptops and passwords would likely have revealed the codewords, making their use silly. It would be like encrypted data that is captured together with the encryption key: The encryption won’t do much good.

Had the operation been much smaller—with just a couple of people and much less lofty goals in the number of payment card numbers to be stolen—it might have fared better, from a “not getting caught” perspective. But with the anti-fraud systems in place today at Visa and other brands, cyberthieves really need to grab huge quantities of card numbers to have enough survive to make a profit.

The trick, Peretti suggests, is to take few enough card numbers from any one victim to not make it worth the efforts of a major law enforcement agency. The Gonzalez investigations took a lot of Secret Service hours—along with untold time by at least three U.S. Attorney Offices, the Justice Department and quite a few overseas law enforcement groups.

If the number of card numbers stolen was much lower, it’s unlikely anyone could have justified spending so much time chasing the thieves. To quote the title character from Butch Cassidy and the Sundance Kid, that law enforcement effort “has got to cost him more than we ever took. If he’d just pay me what he’s spending to make me stop robbing him, I’d stop robbing him.”

But what could retailers have done to prevent Gonzalez’s crew from penetrating their systems? The SQL Injection attacks used were well known, and those holes could have been plugged. The bigger issue, though, was the lack of thorough event log monitoring.

Is that situation better or worse today? Frustratingly, it’s probably both. The problem has always been that this type of monitoring is hard for some retail IT folk to justify when profit-oriented projects—such as getting new site functionality in place before the holidays hit—are backlogged. Do you start cutting back the time spent reviewing logs?

On the plus side, the Gonzalez attacks have given retailers a strict reminder of why such logs needs to be carefully examined every day, no matter what.

On the down side, part of what amazed prosecutors in this case was how the thieves could divert so much data out of a system without it being noticed. That particular problem is getting even more complicated by the soaring number of outsourced services that are constantly grabbing data off of retail servers.

The plethora of data departures include updated information leaving to fuel mobile sites and services that handle customer comments, product shipments and purchases being processed locally on social sites. One side effect of all of those communications is that improper data transfers are obscured. Administrators have chased down so many such data exchanges and learned of yet another partner altering its procedures that a clever piece of malware could easily escape detection, if it doesn’t get too greedy.

Peretti fears, though, that the next generation of Gonzalezes will likely target smaller and midsize retailers, which ostensibly have less stringent security and probably watch their event logs even less often than their larger competitors. Still, with less going on, even a small errant data transmission might stand out more at a smaller merchant.


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Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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