Perimeter

9/25/2014
07:20 PM
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Breached Retailers Harden PoS, For Now

Yet another point-of-sale (POS) breach at a major retail chain, and the victim adds encryption.

This time, it was the gourmet sandwich-maker with freakishly fast delivery standards that was late discovering that point-of-sale systems in more than 200 of its stores had been infiltrated with malware that swallowed its customer payment card information.

Jimmy John's, like other major US retailers before it such as Home Depot and Goodwill Industries, fell victim to cyber criminals, who literally followed the money and nabbed the necessary log-in credentials from their point-of-sale-system vendors that customers use to scan their debit and credit cards when they purchase their subs, home improvement project materials, or secondhand clothing. Like Home Depot and Goodwill -- and Target -- Jimmy John's said it has since cleaned up the malware and added encryption to its PoS systems so bad guys can't read the card data when it gets swiped at the register.

The underlying problem with the majority of payment cards issued in the US, of course, is the magnetic stripe on them that stores the sensitive customer and account number information that the crooks crave and have been so easily been able to grab when it hits the RAM of the devices. Calls for chip-and-PIN technology, where smart cards with embedded microchips authenticate the user's identity, have intensified in the US retail industry and consumer world, but the conversion will take time. So in the meantime, Jimmy John's and other retailers are adding encryption to lock down their POS systems, and some retailers are expediting the rollout of chip-and-PIN payment cards as well.

Home Depot, for instance, added Voltage Security encryption products to its POS system, and plans to provide chip-and-PIN payment technology in the US by the year's end. Chip-and-pin is already used in its stores in Canada. Target's REDcards will all be chip-and-PIN-based starting early next year.

"These attacks highlight the need for chip-and-PIN. If the attractiveness of POS malware comes from the fact that stolen card data is easily used to duplicate cards, chip-and-PIN is the answer," says Allie Brandenburger, a spokesperson for the Retail Industry Leaders Association (RILA), which boasts Target among its members.

Retailers are considering several best-practices for locking down payment card data, she says. End-to-end encryption is one, she says. "This makes it significantly more difficult for things like network sniffing tools to pick up the numbers in transit.  Additionally, encrypting data stored on the POS system is another thing to do," she says. "Tokenization is another good step because this makes the number stored in the system worthless." 

Steven Adair, founder and CEO of the IR firm Volexity LLC, says PoS systems obviously should not have Internet access, and any outbound movement should be on a whitelist. "Having them locked down and monitored as close as possible would probably be prudent as well. These machines should essentially be small fortresses. It should be very difficult to have software installed on them," Adair says.

According to one retail trade association representative, the wave of payment card breaches is its top priority. "Everybody wants to protect their brand and their customers," says the representative, who requested anonymity. Aside from encryption, retailers are finding they have to also change default passwords from POS System vendors. On the horizon is the tokenization of some sensitive data, as well as the next-generation chip & PIN cards.

"We're tasked with protecting 40-year-old technology" today, says the retail representative, referring to magnetic stripe-based cards.

Aviv Raff, CTO at Seculert, says it's taking retailers far too long to discover the POS malware. "In all the recent breaches, it's amazing to see how long attackers have been able to stay under the radar before being revealed," Raff says. "More and more enterprises need to shift their mindset and know they probably already have been compromised, and shift their budget from trying to prevent attacks to trying to detect something in their network. The retailers keep waiting for someone to knock on their door" and tell them they've been breached, he says.

Kelly Jackson Higgins is Executive Editor at DarkReading.com. She is an award-winning veteran technology and business journalist with more than two decades of experience in reporting and editing for various publications, including Network Computing, Secure Enterprise ... View Full Bio

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macker490
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macker490,
User Rank: Ninja
9/29/2014 | 8:13:49 AM
Re: Please people - EMV is not a silver bullet
AAPL is taking this 1 step further in the right direction with Apple Pay: the phone does not transmit the customer's accont number to the merchant.    EMV still does, although it also requires a 1-time use authorization code,-- which -- theoretically -- you need the original card to generate.

you can't steal what isn't there -- and thus Apple's aporoach is and even better step

the underlying problem remains though

we keep attacking encryption and passwords when the actual problem is AUTHENTICATION particularly of softwtwware updates.

by this time we all know: if your phone is hacked -- the hacker will likely have access to your payments mechanism -- if you have one on a "smart" phone

sometimes i wonder just how "smart" these gadgets are...
Stratustician
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Stratustician,
User Rank: Moderator
9/26/2014 | 1:56:17 PM
Re: Please people - EMV is not a silver bullet
We here in Canada are huge proponents of Chip and PIN technology, mostly because in the grand scheme of things we are pretty much a heavy electronic currency-based country. But to see that many retailers do not use encryption on their POS is so mind baffling to me.  The problem is that while so many organizations are still scratching their heads around PCI, they forget that one of the biggest baby steps to start with is to encrypt their sensitive information, primarily card information.  I think the industry could do more to really push retailers to comply and educate them on the importance of encryption, especially at the POS level.
Kelly Jackson Higgins
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Kelly Jackson Higgins,
User Rank: Strategist
9/26/2014 | 12:48:17 PM
Re: Please people - EMV is not a silver bullet
Good points, @hhendrickson274. EMV is definitely not a silver bullet. But the data does show that it's much better than our existing payment card technology at least at the point of sale. 
hhendrickson274
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hhendrickson274,
User Rank: Apprentice
9/26/2014 | 12:45:03 PM
Please people - EMV is not a silver bullet
I take serious excetion to the comment in the story about EMV (chip-n-pin) making stolen card data worthless.  EMV doesn't work on the Internet, so all Internet transactions will still be "card not present" transactions.  So the number and CVV will still be very valuable for Internet based fraud.  That and EMV implementation have already proven to be far from secure.  Don't get me wrong, I'm all for EMV adoption in the US, but as long as the press and the analyst pundits keep telling everying that EMV will solve all the ills of POS (in)security, they are doing a major disservice to us all, especially those in retail that are trying hard to secure their environments from compromise.
Marilyn Cohodas
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Marilyn Cohodas,
User Rank: Strategist
9/26/2014 | 11:15:56 AM
Re: PoS-Negative Reinforcement
Good question, Ryan. They are definitely not going to get anywhere by "waiting for someone to knock on their door" and tell them they've been breached," as Seculert's Aviv Raff noted in the story.

 

 
RyanSepe
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RyanSepe,
User Rank: Ninja
9/26/2014 | 9:35:00 AM
Re: PoS-Negative Reinforcement
Very true. Are there methods by which smaller organizations can effectively discover there network health at low cost? Maybe a baseline analyzer for the PoS systems.
Kelly Jackson Higgins
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Kelly Jackson Higgins,
User Rank: Strategist
9/26/2014 | 9:16:14 AM
Re: PoS-Negative Reinforcement
I am sure there are plenty more breached retailers in the pipeline who we will be hearing from. But what's more scary are the smaller ones who have no clue and may never find out.
RyanSepe
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RyanSepe,
User Rank: Ninja
9/26/2014 | 8:53:07 AM
PoS-Negative Reinforcement
Its good to hear that retailers are starting to take these breaches seriously. It is unfortunate that most are the result of negative reinforcement. If these breaches had not happened would many of these companies be pushing for stricter security standards? If the stove never burns you why not touch it?

A positive from this is that retailers that have not been breached are starting to increase their security measures and more organizations need to follow suit. Like the saying goes, a smart person learns from his or her own mistakes but a brilliant one learns from others.
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