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At the Black Hat USA conference in Las Vegas this week, Andrea Barisani, chief security engineer for secure design consultancy Inverse Path, will join with colleagues to show how flaws in chip-and-PIN -- which is becoming a standard in Europe and Asia -- can be easily exploited.
Chip-and-PIN systems are designed to support legacy transactions -- including the transmission of the card's password or PIN in plain text, Barisani observes. As a result, it can be a trivial matter for an attacker to install a skimmer on a point-of-sale terminal and steal the credit card data.
Barisani says these flaws can be found in current and emerging credit card systems, including the EuroPay-Mastercard-Visa (EMV) system that is being implemented worldwide. While EMV supports three types of cards -- older magnetic stripe cards, current chip cards, and more secure chip cards -- skimmers can force transactions to use the least secure transaction method, he warns.
"EMV is broken," Barisani says. "In order to fix the problem, they will have to change the standard and break compatibility with older cards."
EMV currently supports three different standards: static data authentication, an upgrade from older magstripe cards; dynamic data authentication, a more secure implementation that uses an encryption key to scramble transaction information; and combined data authentication, which implements more stringent security measures.
Attackers who can attach a skimming device to the point-of-sale terminal can control the security negotiation between the terminal and the consumer's credit card, Barisani explains. In order to support the older POS technologies, credit and debit cards will transmit a user's PIN in the clear if required by the terminal. A skimmer attacked to the device can then scoop up the details of the credit card.
Tampering with point-of-sale terminals has been a popular exploit among cybercriminals for years. In May, craft-supply chain Michaels notified customers that their credit- and debit-account details may have been leaked after finding more than 70 compromised POS terminals in its stores nationwide.
The chip-and-PIN flaws could be problematic for banks, which previously blamed users when a PIN was stolen or misused, clearing themselves of liability for the theft. But if the new vulnerabilities are exploited, the source of the PIN theft -- and the liability for the loss -- could be in question.
"If this kind of liability shift happens and the customers cannot demonstrate that the PIN was stolen, then it can be a problem," Barisani says.
Already, a customer has sued the Canadian Imperial Bank of Commerce, which has countersued, alleging that such a flaw led to a fraudulent transaction of more than $81,000. The bank argues that the customer must have lost his card and PIN, and thereforte the bank should not be responsible for the loss.
There is no easy way for consumers or employees to know which authentication method is being used to process a given transaction, Barisani says. While the receipt will have a code that indicates the type of transaction, the code can be spoofed by skimming hardware.
Consumers should not expect a quick fix for the vulnerability, Barisani says. The move away from magstripe cards -- even with all their security problems -- has taken more than a decade.
"It has really taken ages to move away from the magstripe," he says. "So if the EMV problems are not fixed in the initial implementation, then the security issues are going to be around for a long time."
Barisani will present the findings of the vulnerability study at Black Hat. He will be joined at the podium by Daniele Bianco -- a colleague from Inverse Path -- as well as Adam Laurie and Zac Franken from Aperture Labs.
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