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Data Breach At Gunpoint: Kmart Armed Robber Gets Pharmacy Files

April 23rd, 2013

The initial police report did not reference the missing data disk, and Little Rock Police said no updated report had been filed. Such an updated report would have been filed had Sears contacted police to update the list of what had been stolen.

There is a strong chance that the thief didn’t know what was on the disk and might have thrown it out. But if he didn’t, the HIPAA-mandated alert would likely flag its value. That might prompt him to find an associate with identify-theft experience to see whether the data could be accessed and sold.

Then again, given that it’s only one day’s worth of backups, it’s not clear how many dollars that limited amount of information would likely fetch. That would have to be weighed against the risk of discovery that the identify thief wasn’t really an undercover detective looking to solve this armed robbery.

Of all the kinds of data that IT must protect, there’s a good argument that pharmacy information is the most sensitive. Credit card information is generally protected—as far as the shoppers are concerned—by zero liability and debit card information theft losses, although light-years more damaging than credit card data, will eventually be reimbursed by most banks. Social Security numbers—which were also stolen here—are quite bad, because SS numbers are so difficult to change and because they are so widely used for identification, as Macy’s just reminded us.

Drug prescription information, though, strikes at the very heart of privacy fears. Beyond identity theft, it can be sold to marketers, divorce lawyers, databases accessed by potential employers and others. At the other extreme, it can reveal the home addresses where much-sought narcotics are housed, which creates a very frightening and potentially violent situation.

The Tribune story quoted Armstrong-Fowler as saying something curious. “Kmart officials said the chance of the perpetrators accessing customer private information is slim to none, because you would need to know what software package and have that software package to” translate the information, Armstrong-Fowler said, according to The Tribune. (Armstrong-Fowler declined to confirm the quote when we asked about it.)

Although it’s true that a specialized corporate backup system—such as the one that pharmacies such as Kmart’s would likely use—would be harder for most run-of-the-mill armed robbers to access than a consumer backup system, it would not likely be that difficult to extract much of the content. A hex dump utility could likely extract much of that content, which is why strong encryption (heck, in this case, any encryption would have been nice) is critical when dealing with sensitive data. A well-built safe is only protection until a hoodlum shows up with a poorly built gun. (The only way to stop a bad guy with a gun is a good guy with a 256-bit encryption key.)


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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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