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Backoff, Dairy Queen, UPS & Retail's Growing PoS Security Problem
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Marilyn Cohodas
Marilyn Cohodas,
User Rank: Strategist
8/28/2014 | 7:36:36 AM
Brand reputation
It's unfathomable to me that franchisors are passing the security buck to their independent franchisees. As a consumer, when I go to a UPS store or a Dairy Queen, do I think of the retailer as a small independent business? Of course not. It's the brand reputation that is at risk in the case of a security breach. Unbelievable!
Stratustician
Stratustician,
User Rank: Moderator
8/28/2014 | 9:19:35 AM
Re: Brand reputation
I agree Marilyn, the corporate headquarters of these brandsmust be responsible for pushing down security guidelines or requirements to each of these franchises.  While it's easy for them to say "well, it's the fault of that particular franchise", the reality is yes, as you mentioned, it's the entire brand that will suffer the fallout when the public decides that they would not rather deal with these companies as they don't appear to value the privacy and security of their customers.  Passing the responsibility around is never going to fix the real issue, that security controls must be incorporated into these sytems.  Perhaps it will come down to legislation to protect the consumer.  While PCI attempted to do this, there is still very little backlash when these events occur.
aws0513
aws0513,
User Rank: Ninja
8/28/2014 | 9:22:20 AM
Re: Brand reputation
I have seen this corporate finger pointing technique in both the private and public sectors for years.

Almost every time, the public will connect/attribute the brand to the breach problem, not the franchisee or contractor.  Occasionally, the brand can brush off the connection if the problem has particulars regarding specific employees or activities at a specific facility or area.  But when a problem is pervasive across multiple stores or facilities, the brand CANNOT avoid the attribution no matter how many statements they may make.

To me, this is a classic example of poor executive decision making where the management mindset is to divert blame away from the crystal corporate palace.

For me, I would have more confidence and respect for any organization that is willing to stand up to the problem at hand, accept blame even if it really isn't their fault, and attest to (and follow through with) broad measures focused on full and proper remediation.
Marilyn Cohodas
Marilyn Cohodas,
User Rank: Strategist
8/28/2014 | 9:31:30 AM
Re: Brand reputation
A franchisee has to adhere to corporate standards for sales, pricing, marketing, what uniforms employees where to work. It's ludicrous that the same rigor would not be applied to security breaches. 
aws0513
aws0513,
User Rank: Ninja
8/28/2014 | 11:03:40 AM
Re: Brand reputation
I agree Marilyn.

As the commentary in the article mentions, it is hubris.
Image supersedes substance. 
Presentation supersedes ethics or integrity of character.

Like so many other human ventures... the minimum amount of effort for the greatest gain, but with a catch in that the minimum is often well below what should be in order to increase the gain.
GonzSTL
GonzSTL,
User Rank: Ninja
8/28/2014 | 1:17:58 PM
Re: Brand reputation
If the brand were to require security standards (which I support, by the way), then a franchisee should provide evidence of security compliance to corporate standards. In a small operation such as a fast food restaurant, this incurs additional operating expense in the form of external security auditing. I'm not sure a small franchise operation can absorb that cost. Since the brand itself would ultimately suffer as well from a franchisee breach, it seems to me that the corporate office should shoulder at least a large part of that cost. It wouldn't be difficult for the corporation to contract with an auditing firm to perform periodic audits of the individual franchises. This would serve to reduce those individual audit costs, as well as provide a means for compliance reporting that rolls up to the corporation. Frankly, I think this will eventually become standard in a franchise operation.
RyanSepe
RyanSepe,
User Rank: Ninja
8/28/2014 | 3:09:00 PM
Re: Brand reputation
I agree with you 100%. Unfortunately, I think that the use regulating bodies is needed in most cases to get corporations to jump on the security train. It seems that fines/repercussions are one of the largest drivers for implementation of security measures. Its unfortunate but thats what I have noticed throughtout the years. Many corporations try to provide the minimum just to attain compliance. 

Who would be, if any, the regulatory agency for retailers? I know the healthcare industry has OCR following HIPAA standards and the financial industry has FINRA.
GonzSTL
GonzSTL,
User Rank: Ninja
8/28/2014 | 8:19:23 PM
Re: Brand reputation
I'm not sure that regulatory agencies are the solution. In the case of a breach that exposes card data, industry bodies such as the PCI Standards Council are effective in levying fines and penalties, plus the brand itself suffers due to a lack of confidence by the spending public. This lack of confidence, although difficult to measure and predict, can almost certainly be attributed as a factor in the diminished bottom line of any company that has suffered such a breach. In effect, the matter is almost Darwinian.
DarkReadingTim
DarkReadingTim,
User Rank: Strategist
8/29/2014 | 10:15:13 AM
Re: Brand reputation
It seems to me that we need to do more to address the fundamental flaws in the way PoS systems are deployed and maintained. Most retail stores are using very old PoS technology, and they are often deployed on a store-by-store basis. The way they are used by staff can be very inconsistent, and most brick-and-mortar store managers don't understand the ways that the systems can be attacked.

More needs to be done to keep PoS systems consistent and up to date at all locations, and to ensure that the devices aren't exposed to potential threats by untrained staff.
Krishnaprasad Prabhakaran CFE
Krishnaprasad Prabhakaran CFE,
User Rank: Apprentice
9/2/2014 | 6:17:59 PM
Re: Brand reputation
Dear All,

My question to you all,whether these retailers have CISO on place where they do IDS(Intrusion Detection system),penetration testing.If they did so,how a botnet can enter their server and POS gets compromised.Though they have their security officer in place then why he was not alert even after BLACKPOS attack and TargetCorp instance.I even doubt that these retailers follow PCI standards.

 

Krishna Prasad Prabhakaran .CFE

UAE
GonzSTL
GonzSTL,
User Rank: Ninja
9/3/2014 | 8:36:11 AM
Re: Brand reputation
Simply having a CISO or an IDS solution in place does not necessarily provide invulnerability to an organization. Imagine a car with a sophisticated alarm system with an active monitor - how easy would it be to steal that car if it was unlocked and the keys were in it? In reality, no organization is invulnerable; it can only mitigate risks to the best of its ability and according to its own risk analysis. It really boils down to the culture of the organization. If it does not see security as a critical goal, then its likelihood for compromise increases.
Krishnaprasad Prabhakaran CFE
Krishnaprasad Prabhakaran CFE,
User Rank: Apprentice
9/3/2014 | 11:30:47 AM
Re: Brand reputation
 

I agree with you,let me explain you the reason for my earlier question.

Backoff is a malware which is known as RAM scrapper.This malware is a type of BotNet.A BotNet can be spreaded through IRC(Internet Relay Chat) ,social engineering or hackers are able to guess a poorly constructed password and install malware like Backoff.

According to US-CERT's, where the attackers were able to guess the password to the system,and  installed the Backoff program. The malware disguises itself as an innocent Java component but 'listens' for credit card transactions, storing them and transmitting them to criminals. The department says the malware was released last October 2013, but was undetectable to current anti-malware software.

Hence,I have raised a question about CISO and intrusion detection system.

As everyone related to Anti-Fraud and compliance were very much aware about the target Corp attack and it's a similar attack,my question is why CISO had not taken any precautionary steps.He should have trained his employee about malware attack.

As I think in a 360degree ,it could be CI(Competitive Intelligence) as sleepers/moles.

Krishna Prasad Prabhakaran .CFE

UAE
Some Guy
Some Guy,
User Rank: Moderator
9/3/2014 | 3:33:25 PM
Re: Brand reputation
Not so fast. If the POS and IT system is supplied by the Fanchisor, I'd agree. If not, it really is the Franchisee's responsibility. I think that it's wrong to hold the Franchisors accountable *ex post facto* when, up to now, the Franchisors haven't even been provided an opportunity to address this new risk to their reputation. (Clearly fair to hold them accountable for failing to anticipate this risk.)

It's a fine line, but a well understood distinction, especially in a legal liability sense. As with many things legal, check your intuition and sensibilities at the courthouse door.

That being said, I agree that it has definitely emerged to be in the best interest of the Fanchisor to, at the very least, specify security requirements (and probably enshrine it in the franchise agreement). The Franchisors could just as easily revoke the offending Franchisees to protect their reputation. In the vein of "every problem is an opportunity," the smart play would be for a Franchisor to impose security across the Franchise and provide value add to the Franchisees, as well as turn this into a feature of the Franchise -- great service and secure purchases now at *all* UPS Stores.

 


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