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Gonzalez: The Al Capone Of Cyber Thieves?

August 19th, 2009

“PCI says that you must regularly test security systems. These hackers dodged every bullet point of PCI. A test would (and probably did) prove nothing more than PCI-test-detectable breaches would have been detected. And finally, the hackers apparently didn’t feel compelled to comply with corporate security policies. Game, set, and match: Hackers 12, PCI 0,” she said. “Yes, PCI compliance may have successfully defended Heartland against lesser attackers. But the bottom line is that Heartland could have been (and probably was) breached while being 100 percent PCI 1.1 compliant on all their points. The real observation here is that PCI DSS compliance was completely ineffective against these guys, no matter how the PCI guys spin it.”

Another security expert—and one who doesn’t mind in the slightest if we quote him by name—is Mark Rasch, the former head of the U.S. Justice Department’s high-tech crimes unit and today an attorney specializing in data security cases.

Rasch thought one of the more interesting takeways from this case is the fact that Gonzalez had served as a confidential informant to the U.S. Secret Service and, indeed, started these cyber attacks while still working for the feds. He extrapolates from that advice for IT executives looking to use cyber thieves—and supposedly former cyber thieves—to test their network security.

“One of the things about confidential informants is that, by their nature, they have knowledge of criminal activity. Most have knowledge because they were involved in criminal activity and have demonstrated that they’re really not trustworthy, particularly computer hackers who occupy a netherworld. They run the gamut from black to gray. This guy was really a dark grey and relatively untrustworthy. He was also what I would call amoral. Not immoral. He does not have a value system where he thought it wrong,” Rasch said. “What we’re going see more often is confidential informants who are doing undercover work for the FBI, hacking for the government. This is the same philosophy that teaches you why you should never hire hackers to do tests of your system. They are not trustworthy.”

Another security expert, albeit one who works for an encryption vendor, said a major concern for him was the fact that two and potentially three major retail chains have still yet to disclose data breaches from a year or more.

“Companies have a duty of care for their customers’ information that does not end at the swipe of a credit card. Some states have recognized and legislated that the loss of a customer’s personal data must be disclosed. To do anything else simply leaves that person open to more losses,” said Richard Wang, a manager with Sophos Labs US. “A culture of secrecy leads to underestimation of the problem, lack of response and therefore makes data breaches more likely in future, not less.”

“I think that the fact that we’ve gotten two years past the breach and to an indictment, and some of the retail players are still not revealed exposes the weaknesses in consumer protections and why breach disclosure laws–like in Massachusetts–get continuously watered down while they wait in legislative purgatory,” Wang said. “At issue in my mind is the conflict between the general feelgood concept of corporate and government transparency, and a sorry lack of actual accountability.”


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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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