A Little Sunshine


24
Jun 14

The ‘Fly’ Has Been Swatted

A Ukrainian man who claimed responsibility for organizing a campaign to send heroin to my home last summer has been arrested in Italy on suspicion of trafficking in stolen credit card accounts, among other things, KrebsOnSecurity.com has learned.

Sergei "Fly" Vovnenko was arrested in Naples, Italy.

Passport photo for Sergei “Fly” Vovnenko. He was arrested in Naples, Italy earlier this month.

Last summer, appropos of nothing, an infamous cybercrook known as “Fly,” “Flycracker” and “Muxacc” began sending me profane and taunting tweets. On top of this, he posted my credit report on his blog and changed his Twitter profile picture to an image of an action figure holding up my severed head.

The only thing I knew about Fly then was that he was the founder and administrator of a closely-guarded Russian-language crime forum called thecc.bz (the “cc” part referring to credit cards). Fly also was a trusted moderator on Mazafaka, one of the most exclusive and venerable Russian carding forums online today.

Shortly after Fly began sending those nasty tweets, I secretly gained access to his forum, where I learned that he had hatched a plot to buy heroin on the Silk Road, have it shipped to my home, and then spoof a call from one of my neighbors to the local police when the drugs arrived (see Mail from the Velvet Cybercrime Underground).

Thankfully, I was able to warn the cops in advance, even track the package along with the rest of the forum members thanks to a USPS tracking link that Fly had posted into a discussion thread on his forum.

Angry that I’d foiled his plan to have me arrested for drug possession, Fly had a local florist send a gaudy floral arrangement in the shape of a giant cross to my home, complete with a menacing message that addressed my wife and was signed, “Velvet Crabs.”

Irina Gumenyuk-Vovnenko lists her hometown as Naples in her Odnoklassniki.ru profile.

Irina Gumenyuk-Vovnenko’s lists her hometown as Naples in her Odnoklassniki.ru profile.

After this incident, I became intensely curious about the identity of this Fly individual, so I began looking through databases of hacked carding and cybercrime forums. My first real break came when Russian computer forensics firm Group-IB provided a key piece of the puzzle (they also were quite helpful on the heroin sleuthing as well). Group-IB found that on the now-defunct vulnes[dot]com, Fly maintained an account under the nickname Flycracker, and signed up with the email address mazafaka@libero.it (.it is the country code for Italy).

According to a trusted source in the security community, that email account was somehow compromised last year. The source said the account was full of emailed reports from a keylogging device that was tied to another email address — 777flyck777@gmail.com (according to Google, mazafaka@libero.it is the recovery email address for 777flyck777@gmail.com).

Those keylog reports contained some valuable information, and indicated that Fly had planted a keylogger on his wife Irina’s computer. On several occasions, those emails show Fly’s wife typed in her Gmail address, which included her real first and last name — Irina Gumenyuk.

Later, Gumenyuk would change the surname on her various social networking profiles online to Vovnenko. She even mentioned her husband by name several times in emails to friends, identifying him as 28-year-old “Sergei Vovnenko”. Payment information contained in those emails — including shipping and other account information — put the happy couple and their young son in Naples, Italy. Continue reading →


23
Jun 14

Card Wash: Card Breaches at Car Washes

Ooh, you might not ever get rich
But let me tell ya, it’s better than diggin’ a ditch

Car Wash” by Rose Royce

An investigation into a string of credit card breaches at dozens of car wash locations across the United States illustrates the challenges facing local law enforcement as they seek to connect the dots between cybercrime and local gang activity that increasingly cross multiple domestic and international borders.

Car WashEarlier this month, police in Everett, Massachusetts arrested a local man named Jean Pierre for possessing nine stolen credit card accounts. The cards themselves weren’t stolen: They were gift cards that had been re-encoded with data from cards that were stolen from a variety of data breaches at merchants, including a Splash Car Wash in Connecticut.

How authorities in Massachusetts connected Pierre to a cybercrime at a Connecticut car wash is a mix of odd luck and old-fashioned police work. In May, the Everett police department received a complaint from a sheriff’s department in South Carolina about a resident who’d had his credit card account used repeatedly for fraudulent transactions at a Family Dollar store in Everett.

Everett PD Detective Michael Lavey obtained security camera footage from the local Dollar Store in question. When Lavey asked the store clerk if he knew the individuals pictured at the date and time of the fraudulent transactions, the clerk said the suspects had been coming in for months — several times each week — always purchasing gift cards.

“The clerk told me they would come into the store in pairs, using multiple credit cards until one of them was finally approved, at which point they’d buy $500 each in prepaid gift cards,” Lavey said. “We have two Family Dollar stores in Everett and a bunch in the surrounding area, and these guys would come in three to four times a week at each location, laundering money from stolen cards.”

Not long after Lavey posted snapshots from the video footage on a state-wide police network, he heard from an officer in Boston who said a suspect resembling one of the men in the photos was recently questioned at a city hospital after being stabbed in the legs and buttocks in an unrelated robbery. The assailant in that attack was arrested, but his victim — Jean Pierre — refused to answer questions about the incident. The police seized Jean Pierre’s pants as evidence in the assault case, and discovered numerous prepaid cards in the pockets of the trousers.

Lavey said he subpoenaed the credit card records, and working with investigators at American Express and Citibank was able to determine that at least one of the cards had been stolen from the Splash Car Wash in Connecticut. In effect, thieves were buying stolen cards to finance the purchase of gift cards, some of which would later serve as hosts for new stolen card data once their balance was exhausted. The cops call it money laundering, but in this case it might as well be called card washing.

WILL THAT BE A SUPER OR DELUXE WASH?

Soon enough, Lavey had linked up with Michael Chaves, a detective with the police department in Monroe, Conn. who’d been investigating card breaches at 14 separate car washes in his state, including the Splash case. Working with the Connecticut Financial Crimes Task Force, a broad law enforcement group that includes the U.S. Secret Service and state police, they determined that the local company was but one of at least 40 car washes across the country that had been hacked and relieved of countless customer credit and debit cards since at least February 2014.

A list of car washes allegedly compromised by card thieves this year.

A list of car washes identified by various banks as compromised by card thieves this year.

Chaves said he interviewed several of the car wash owners, and discovered that they were all using the same point-of-sale systems developed by Randolph, N.J.-based Micrologic Associates. Chaves said the store owners told him the devices had remote access via Symantec’s pcAnywhere enabled, access that was granted to anyone who knew the same set of default credentials.

“The pcAnywhere credentials were created by Micrologic, but unchanged for years,” Chaves said.

That was the same conclusion independently reached by Detective Steven LaMears with the police department in Keene, N.H. Earlier this month, a police captain at the Keene Police Dept. saw fraudulent charges show up on his credit card shortly after using it at the town’s Key Road Car Wash, an establishment which used Micrologic’s point-of-sale system.

LaMears also heard from a company in New York which reported that two its executives each had their cards compromised multiple times after visiting the Key Road Car Wash in Keene.

“We confronted them, and working with the U.S. Secret Service got them back up and running,” LaMears said of the local compromised car wash. “The Secret Service told us they were running an old version of Micrologic that had the same, one login for everything, and were using an old version of Windows XP.” Continue reading →


17
Jun 14

If It Sounds Too Good To Be True…

The old adage “If it sounds too good to be true, it probably is” no doubt is doubly so when it comes to steeply discounted brand-name stuff for sale on random Web sites, especially sports jerseys, designer shoes and handbags. A great many stores selling these goods appear to be tied to an elaborate network of phony storefronts and credit card processing sites based out of China that will happily charge your card but deliver nothing (or at best flimsy knockoffs).

Screenshot 2014-06-08 02.16.03Earlier this month I heard from a reader whose wife had purchased ladies clothing from bearcrs.co.uk, a site that until very recently billed itself as an official seller of Victoria Secrets goods. Most of the items for sale were roughly 60-70 percent off the retail price advertised anywhere else. The checkout process brought her to payment site called unimybill.com, which took her credit card information and said she’d been successfully charged for her purchases. The goods never arrived.

“They charged her card about $100,” said the reader, who asked to remain anonymous. “I tried to contact them, they never replied back. I started to discover similar websites by entering phrases from bearcrs.co.uk into Google. All websites have the same php engine, same phrases, registered in China, same checkout process, all they sell brand clothes for 30% of real price.”

Bearcrs.co.uk is one of hundreds of bogus storefronts that list products of well-known brands like Nike, Ray Ban, Michael Kors and others, hoping to lure bargain-hunting shoppers. Among the many fraudulent sites is michaelkorshandbags.co.uk, a site that claims to be a merchant in the United Kingdom but whose infrastructure is all Chinese.

The same network is tied to michaelkorshandbags.co.uk and hundreds of other similarly structured sites, all of which have left a trail of complaints online from customers who were charged for goods that never arrived. Order anything from this shop and you are taken to a checkout page at sslcreditpay.com, which tries to assure shoppers that the page is legitimate by posting a number of logos and trust seals from a variety of security and payment security providers such as Verisign, Symantec, Trustwave and the PCI Security Standards Council. Trouble is, none of these organizations actually authorized this payment gateway to use their seals, which are supposed to be clickable icons that provide information to help support that claim.

sslcreditpay.com uses a variety of security seals to make you feel more at ease submitting your credit card for goods you'll never get.

sslcreditpay.com uses a variety of security seals to make you feel more at ease submitting your credit card for goods you’ll never get.

A check with Trustwave showed that the seal was bogus. John Randall, senior product manager for the company, said Trustwave only issues the Trustwave seal for customers that purchase its domain validation or extended validation (EV) certificates, and that the site in question hadn’t done either.

Likewise, the PCI Security Standards Council said it doesn’t authorize the use of its logo for payment processing sites.

“As a standards setting organization we do not validate compliance with PCI Standards – this is managed separately by each payment card brand,” said Ella Nevill, vice president of stakeholder engagement at the PCI Counil. “As such, we don’t provide any sort of compliance ‘seal’ or use of our company logo. What we do provide is use of a PCI Participating Organization logo for our member organizations that pay to be PCI Participating Organizations and be involved in standards development process.”

Sslcreditpay.com is one of many apparently bogus online payment processing sites tied to this fraud network. Other phony payment portals include payitrust.com and paymentsol.com. You can’t reach the payment pages for these processors directly unless you actually check out from an associated online store. At that point, you’ll be directed to a subdomain like https://payment.payitrust.com and https://payment.paymentsol.com. Continue reading →


12
Jun 14

P.F. Chang’s Confirms Credit Card Breach

Nationwide restaurant chain P.F. Chang’s Chinese Bistro on Thursday confirmed news first reported on this blog: That customer credit and debit card data had been stolen in a cybercrime attack on its stores. The company had few additional details to share about the breach, other than to say that it would temporarily be switching to a manual credit card imprinting system for all P.F. Chang’s restaurants in the United States.

In statement released to this reporter this evening, P.F. Chang’s said it first learned of the breach on June 10, the same day this publication pointed to evidence that the eatery chain may have been compromised. Their complete statement is as follows: Continue reading →


10
Jun 14

Banks: Credit Card Breach at P.F. Chang’s

Nationwide chain P.F. Chang’s China Bistro said today that it is investigating claims of a data breach involving credit and debit card data reportedly stolen from restaurant locations nationwide.

pfchangsOn June 9, thousands of newly-stolen credit and debit cards went up for sale on rescator[dot]so, an underground store best known for selling tens of millions of cards stolen in the Target breach. Several banks contacted by KrebsOnSecurity said they acquired from this new batch multiple cards that were previously issued to customers, and found that all had been used at P.F. Chang’s locations between the beginning of March 2014 and May 19, 2014.

Contacted about the banks’ claims, the Scottsdale, Arizona-based restaurant chain said it has not yet been able to confirm a card breach, but that the company “has been in communications with law enforcement authorities and banks to investigate the source.”

“P.F. Chang’s takes these matters very seriously and is currently investigating the situation, working with the authorities to learn more,” the company said in an emailed statement. “We will provide an update as soon as we have additional information.”

A spokesperson for the U.S. Secret Service, which typically investigates breaches involving counterfeit credit and debit cards, declined to comment.

It is unclear how many P.F. Chang’s locations may have been impacted. According to the company’s Wikipedia entry, as of January 2012 there were approximately 204 P.F. Chang’s restaurants in the United States, Puerto Rico, Mexico, Canada, Argentina, Chile and the Middle East. Banks contacted for this story reported cards apparently stolen from PFC locations in Florida, Maryland, New Jersey, Pennsylvania, Nevada and North Carolina.

The new batch of stolen cards, dubbed “Ronald Reagan” by the card shop’s owner, is the first major glut of cards released for sale on the fraud shop since March 2014, when curators of the crime store advertised the sale of some 282,000 cards stolen from nationwide beauty store chain Sally Beauty.

The items for sale are not cards, per se, but instead data copied from the magnetic stripe on the backs of credit cards. Armed with this information, thieves can re-encode the data onto new plastic and then use the counterfeit cards to buy high-priced items at big box stores, goods that can be quickly resold for cash (think iPads and gift cards, for example).

The most common way that thieves steal this type of card data is by hacking into cash registers at retail locations and planting malicious software that surreptitiously records mag stripe data when cards are swiped through the machines. The breaches at Target, Neiman Marcus, Michaels and Sally Beauty all were powered by malware that thieves planted on point-of-sale systems.

Unlike with the Target and Sally Beauty batches, however, the advertisement on Rescator’s shop for cards sold under the Ronald Reagan batch does not list the total number of cards that are for sale currently. Instead, it appears to list just the first 100 pages of results, at approximately 50 cards per page. The cards range in price from $18 to $140 per card. Many factors can influence the price of an individual card, such as whether the card is a Visa or American Express card; similarly, Platinum and Business cards tend to fetch far higher prices than Classic and Standard cards.

A new ad that debuted on June 10 for a fresh batch of cards apparently stolen from PF Chang's China Bistro locations.

A new ad that debuted on June 9 for a fresh batch of cards apparently stolen from PF Chang’s China Bistro locations.

The ad for the Ronald Reagan batch of cards also includes guidance for potential customers who wish to fund their accounts via Western Union or MoneyGram wire transfers, advice that strongly suggests those involved in this apparent heist are once again from Russia and Eastern Europe: Continue reading →


9
Jun 14

Backstage with the Gameover Botnet Hijackers

When you’re planning to rob the Russian cyber mob, you’d better make sure that you have the element of surprise, that you can make a clean getaway, and that you understand how your target is going to respond. Today’s column features an interview with two security experts who helped plan and execute last week’s global, collaborative effort to hijack the Gameover Zeus botnet, an extremely resilient and sophisticated crime machine that helped an elite group of thieves steal more than $100 million from banks, businesses and consumers worldwide.

Gameover infections on June 4. Source: Shadowserver.org

Gameover infections on June 4, 2014. Source: Shadowserver.org

Neither expert I spoke with wished to be identified for this story, citing a lack of permission from their employers and a desire to remain off the radar of the crooks inconvenienced by the action. For obvious reasons, they were also reluctant to share details about the exact weaknesses that were used to hijack the botnet, focusing instead on the planning and and preparation that went into this effort.

GAMEOVER ZEUS PRIMER

A quick review of how Gameover works should help readers get more out of the interview. In traditional botnets, infected PCs report home to and are controlled by a central server. But this architecture leaves such botnets vulnerable to disruption or takeover if authorities or security experts can gain access to the control server.

Gameover, on the other hand, is a peer-to-peer (P2P) botnet designed as a collection of small networks that are distinct but linked up in a decentralized fashion. The individual Gameover-infected PCs are known as “peers.” Above the peers are a select number of slightly more powerful and important infected systems that are assigned roles as “proxy nodes,” meaning they were selected from the peers to serve as relay points for commands coming from the Gameover botnet operators and as conduits for encrypted data stolen from the infected systems.

The basic network structure of the Gameover botnet. Source: FBI

The basic network structure of the Gameover botnet. Source: FBI

The Gameover botnet code also includes a failsafe mechanism that can be invoked if the botnet’s P2P communications system fails, whether the failure is the result of a faulty malware update or because of a takedown effort by researchers/law enforcement. That failsafe is a domain generation algorithm (DGA) component that generates a list of 1,000 domain names each week (gibberish domains that are essentially long jumbles of letters) combined with one of six top-level domains; .com, .net, .org, .biz, .info and .ru. In the event the infected Gameover systems can’t get new instructions from their peers, the code instructs the botted systems to seek out domains from the latest list of 1,000 domains generated by the DGA until it finds a site with new instructions.

HUNDREDS OF ‘WEB INJECTS’

The Gameover malware was designed specifically to defeat two-factor authentication used by many banks. It did so using a huge collection of custom-made scripts known as “Web injects” that can inject custom content into a Web browser when the victim browses to certain sites — such as a specific bank’s login page. Web injects also are used to prompt the victim to enter additional personal information when they log in to a trusted site. An example of this type of Web inject can be seen in the video below, which shows an inject designed for Citibank customers. Continue reading →


5
Jun 14

They Hack Because They Can

The Internet of Things is coming….to a highway sign near you? In the latest reminder that much of our nation’s “critical infrastructure” is held together with the Internet equivalent of spit and glue, authorities in several U.S. states are reporting that a hacker has once again broken into and defaced electronic road signs over highways in several U.S. states.

Image: WNCN.

Image: WNCN.

Earlier this week, news media in North Carolina reported that at least three highway signs there had apparently been compromised and re-worded to read “Hack by Sun Hacker.” Similar incidents were reported between May 27 and June 2, 2014 in two other states, which spotted variations on that message left by the perpetrator, (including an invitation to chat with him on Twitter).

The attack was reminiscent of a series of incidents beginning two years ago in which various electronic message signs were changed to read “Warning, Zombies Ahead”.

While at least those attacks were chuckle-worthy, messing with traffic signs is no laughing matter: As a report by the Multi-State Information Sharing and Analysis Center (MS-ISAC) points out, changes to road signs create a public safety issue because instead of directing drivers through road hazards, they often result in drivers slowing or stopping to view the signs or take pictures.

That same MS-ISAC notice, obtained by KrebsOnSecurity and published here (PDF), points out that these incidents appear to be encouraged by sloppy security on the part of those responsible for maintaining these signs.

“Investigators in one state believe the compromise may be in part due to the use of weak Simple Network Management Protocol (SNMP) community strings. Investigators in another state believe the malicious actor used Telnet port 23 and a simple password cracker to gain remote access. In one state the malicious actor changed the modem passwords, forcing technicians to restore to factory default settings to regain access.”

Continue reading →


4
Jun 14

Peek Inside a Professional Carding Shop

Over the past year, I’ve spent a great deal of time trolling a variety of underground stores that sell “dumps” — street slang for stolen credit card data that buyers can use to counterfeit new cards and go shopping in big-box stores for high-dollar merchandise that can be resold quickly for cash. By way of explaining this bizarro world, this post takes the reader on a tour of a rather exclusive and professional dumps shop that caters to professional thieves, high-volume buyers and organized crime gangs.

mcdumpalsjoinedThe subject of this post is “McDumpals,” a leading dumps shop that first went online in late April 2013.  Featuring the familiar golden arches and the bastardized logo, “i’m swipin’ it,”  the site’s mascot is a gangstered-up Ronald McDonald pointing a handgun at the viewer.

Nevermind that this shop is violating a ridiculous number of McDonald’s trademarks in one fell swoop: It’s currently selling cards stolen from data breaches at main street stores in nearly every U.S. state.

Like many other dumps shops, McDumpals recently began requiring potential new customers to pay a deposit (~$100) via Bitcoin before being allowed to view the goods for sale. Also typical of most card shops, this store’s home page features the latest news about new batches of stolen cards that have just been added, as well as price reductions on older batches of cards that are less reliable as instruments of fraud.

I’ve put together a slideshow (below) that steps through many of the updates that have been added to this shop since its inception. One big takeaway from this slideshow is that many shops are now categorizing their goods for sale by the state or region of the victim company.

This was a major innovation that we saw prominently on display in the card shop that was principally responsible for selling cards stolen in the Target and Sally Beauty retail breaches: In those cases, buyers were offered the ability to search for cards by the city, state and ZIP of the Target and Sally Beauty stores from which those cards were stolen. Experienced carders (as buyers are called) know that banks will often flag transactions as suspicious if they take place outside of the legitimate cardholder’s regular geographic purchasing patterns, and so carders tend to favor cards stolen from consumers who live nearby.

The slideshow may make more sense if readers familiarize themselves with a few terms and phrases that show up in the text:

Continue reading →


2
Jun 14

‘Operation Tovar’ Targets ‘Gameover’ ZeuS Botnet, CryptoLocker Scourge

The U.S. Justice Department is expected to announce today an international law enforcement operation to seize control over the Gameover ZeuS botnet, a sprawling network of hacked Microsoft Windows computers that currently infects an estimated 500,000 to 1 million compromised systems globally. Experts say PCs infected with Gameover are being harvested for sensitive financial and personal data, and rented out to an elite cadre of hackers for use in online extortion attacks, spam and other illicit moneymaking schemes.

This graphic, from 2012, shows the decentralized nature of P2P network connectivity of 23,196 PCs infected with Gameover.  Image: Dell SecureWorks

This graphic, from 2012, shows the decentralized nature of P2P network connectivity of 23,196 PCs infected with Gameover. Image: Dell SecureWorks

The sneak attack on Gameover, dubbed “Operation Tovar,” began late last week and is a collaborative effort by investigators at the FBI, Europol, and the UK’s National Crime Agency; security firms CrowdStrike, Dell SecureWorks, SymantecTrend Micro and McAfee; and academic researchers at VU University Amsterdam and Saarland University in Germany. News of the action first came to light in a blog post published briefly on Friday by McAfee, but that post was removed a few hours after it went online.

Gameover is based on code from the ZeuS Trojan, an infamous family of malware that has been used in countless online banking heists. Unlike ZeuS — which was sold as a botnet creation kit to anyone who had a few thousand dollars in virtual currency to spend — Gameover ZeuS has since October 2011 been controlled and maintained by a core group of hackers from Russia and Ukraine.

Those individuals are believed to have used the botnet in high-dollar corporate account takeovers that frequently were punctuated by massive distributed-denial-of-service (DDoS) attacks intended to distract victims from immediately noticing the thefts. According to the Justice Department, Gameover has been implicated in the theft of more than $100 million in account takeovers.

The curators of Gameover also have reportedly loaned out sections of their botnet to vetted third-parties who have used them for a variety of purposes. One of the most popular uses of Gameover has been as a platform for seeding infected systems with CryptoLocker, a nasty strain of malware that locks your most precious files with strong encryption until you pay a ransom demand.

According to a 2012 research paper published by Dell SecureWorks, the Gameover Trojan is principally spread via Cutwail, one of the world’s largest and most notorious spam botnets (for more on Cutwail and its origins and authors, see this post). These junk emails typically spoof trusted brands, including shipping and phone companies, online retailers, social networking sites and financial institutions. The email lures bearing Gameover often come in the form of an invoice, an order confirmation, or a warning about an unpaid bill (usually with a large balance due to increase the likelihood that a victim will click the link). The links in the email have been replaced with those of compromised sites that will silently probe the visitor’s browser for outdated plugins that can be leveraged to install malware.

It will be interesting to hear how the authorities and security researchers involved in this effort managed to gain control over the Gameover botnet, which uses an advanced peer-to-peer (P2P) mechanism to control and update the bot-infected systems. Continue reading →


5
Apr 14

Fact-Checking Experian’s Talking Points

In the wake of long-overdue media attention to revelations that a business unit of credit bureau Experian sold consumer personal data directly to an online service that catered to identity thieves, Experian is rightfully trying to explain its side of the story by releasing a series of talking points. This blog post is an attempt to add more context and fact-checking to those talking points.

Experian has posted several articles on its Web properties that lament the existence of “inaccurate information about Experian circulating in news outlets and other Web sites.”

“It’s no surprise that cybercrime and data breaches are hot topics for media and bloggers these days,” wrote Gerry Tschopp, senior vice president of public affairs at Experian. “Unfortunately, because of all the attention paid to these topics, we’ve seen some inaccurate information about Experian circulating in news outlets and other Web sites. I want to take a moment to clarify the facts and events.”

I’ve read this clarification closely, and it seems that Experian’s latest talking points deserve some clarification and fact-checking of their own. Below are Experian’s assertions of the facts (in bold), followed by some supplemental information glossed over by said statements of fact.

-No Experian database was accessed. The data in question have at all relevant times been owned and maintained, not by Experian, but by a company called US Info Search.

As all of my stories on this incident have explicitly stated, the government has said the data was not obtained directly from Experian, but rather via Columbus, Ohio-based US Info Search. US Info Search had a contractual agreement with a California company named Court Ventures, whereby customers of Court Ventures had access to the US Info Search data as well as Court Ventures’ data, and vice versa. Experian came into the picture in March 2012, when it purchased Court Ventures (along with all of its customers — including the proprietor of the identity theft service).

For its part, US Info Search says Experian’s explanation of the events is based on false statements and misrepresentations, and that the proprietor of the ID theft service paid Experian for his access using large cash payments sent to Experian via wire from Singapore.

“Experian provided access to records via a gateway that used multiple data sources and the suspect never had access to our service,” US Info Search CEO Marc Martin said in a written statement. “We, like many others, provide data to Experian, who in turn sold data to customers they approved and monitored. Our agreement with Court Ventures and subsequently Experian was to provide information that was being used for identity verification and fraud prevention.

-Further, Experian’s only involvement was that it purchased the assets of a company, Court Ventures, that provided access to US Info Search’s data to Court Ventures’ customers. Under that contract, customers of Court Ventures, including the criminal in this case, could access US Info Search’s data. This was not an Experian database, and specifically, this was not a credit database.

Experian has a duty to conduct “due diligence” on companies it wishes to acquire, because it knows that in purchasing a company it will acquire all of the company’s assets — including whatever debts, liabilities or poor decisions the previous owners may have incurred that end up creating problems down the road. Experian wants to blame everyone else, but by its own admission, Experian didn’t conduct proper due diligence on Court Ventures before acquiring the company. Addressing a U.S. Senate committee last December, Experian’s senior vice president of government policy, Tony Hadley, allowed that “during the due diligence process, we didn’t have total access to all the information we needed in order to completely vet that, and by the time we learned of the malfeasance nine months had expired, and the Secret Service came to us and told us of the incident. We were a victim, and scammed by this person.”

Also, if it wasn’t clear by now, Experian’s PR mantra on this crisis has been that “no Experian database was accessed,” in this fraud. But this mantra draws attention away from the real victim: Consumers whose information was sold by Experian’s company directly to an identity theft service. A critical question to ask to this line of thinking is: Why does it matter whose database it is, if it contains personal info and Experian profited from its sale?  Continue reading →