IT’s Worst Nightmare: The Disciplined And Patient Thief

Written by Evan Schuman
November 4th, 2010

Last week, one of the industry’s best security analysts (Avivah Litan, from Gartner) wrote a blog post about the latest round of skimming attacks and she made two intriguing points: that POS card reader tamper attacks skirt PCI protections and that most bank fraud detectors fail because the amounts are too small. These attacks actually are even more clever than that. Through a disciplined, non-greedy approach, many of these attacks make it not worthwhile for either the consumer or the bank to pursue.

Litan spoke of additional security measures being better than the alternative of “having the customer account drained.” But that’s just it. These thieves are not stupid enough to kill the goose that laid the golden mag-stripe. Just as the typical consumer needs to see enough fraud to make a phone call to a bank—and endure the inevitable series of hold music performances—worthwhile (for some, that’s more than $5, and for others, it can be more than $20), the typical bank needs to see enough of its customers get hit to make a call to its fraud department worthwhile.

If the attacks are carefully planned and the victims chosen even more carefully, thieves can make a nice living as long as no single bank or customer gets hit for too much. This approach is the classic salami attack (taking a tiny sliver from a huge number of accounts).

At a low enough level, consumers won’t notice it. There’s then that gray area where they notice and suspect it, but it’s only $3 so they may let it slide. What does this all add up to? Very few checks bouncing, which means no lawsuits being filed, which likely means no media interest.

It’s a twist on the tree falling in the woods line. “If a fraud happens and no one hears about it, will anyone bother to stop it?” When cyberthieves start acting like adults, we’re all in trouble. Fortunately, with criminals, greed and speed will invariably trump wisdom. Until then, though, I’ll be checking my bank and credit card statements very carefully.


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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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