Krebs on Security

The Role of Phony Returns in Gift Card Fraud

December 10, 2015

On any given day, there are thousands of gift cards from top retailers for sale online that can be had for a fraction of their face value. Some of these are exactly what they appear to be: legitimate gift cards sold through third-party sites that specialize in reselling used or unwanted cards. But many of the more steeply discounted gift cards for sale online are in fact the product of merchandise return fraud, meaning consumers who purchase them unwittingly help thieves rob the stores that issued the cards.

giftcards This type of scam mainly impacts brick-and-mortar retailers that issue gift cards when consumers return merchandise at a store without presenting a receipt. Last week I heard from KrebsOnSecurity reader Lisa who recently went online to purchase a bunch of steeply discounted gift cards issued by pet supply chain Petco.

Lisa owns two Rottweilers that both eat a good chunk of their weight each month in dog food, so Lisa said she felt like she’d really hit on a bargain when she found a $165 Petco gift card for sale at a popular online gift card retailer for $120 (a nearly 30 percent discount on the value).

“When I went to Petco to get my monthly supply of dog food and snacks for my Rotties, I used my merchandise card and the manager shared with me that folks are stealing merchandise from one Petco store and returning the items to another without a receipt and then selling the cards to places like raise.com and cardpool.com at a discounted price,” Lisa recounted.

Petco’s official policy is that for returns more than 60 days after the purchase — or if the receipt is unavailable — the value of the goods returned will be refunded to a merchandise card. Lisa said she bought the Petco card from raise.com, but she said the company never disclosed that the card was a merchandise return card — a fact that was printed on the front of the card she received.

“I feel really bad now because my purchase of these cards may have contributed to unlawful activities,” Lisa said. “Even though I saved $40+, Petco actually lost money as a result.”

Neither Raise nor Petco responded to requests for comment. But a look at the available Petco cards for sale via one gift card tracking site — giftcardgranny.com — shows Petco cards routinely sell for at least 25 percent off their value.

In any case, this fraud scheme is hardly specific to Petco. Cards from Petsmart, a competitor that also offers merchandise return cards, generally sell at 20 percent off their value. Clothier H&M’s cards average about 30 percent off.

Contrast these discounts with those for gift cards from restaurants, fuel stations and other businesses that generally don’t have to deal with customer returns and you’ll notice two interesting patterns: For starters, the face value of the cards from merchants that don’t take customer returns are far more likely to be even amounts, such as $50, $25 and $40. The percentage off the face value also tends to be much lower — between 3 and 15 percent. For example, see the discount percentage and value of cards from Starbucks and Chevron.

“Twenty-five percent off is really high, and there aren’t many that offer that high of a discount,” said Damon McCoy, an assistant professor of computer science at New York University and an expert on fraud involving stored value cards. “Normally, it is around 5 percent to 15 percent.” Continue reading →

Adobe, Microsoft Each Plug 70+ Security Holes

December 8, 2015

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Adobe and Microsoft today independently issued software updates to plug critical security holes in their software. Adobe released a patch that fixes a whopping 78 security vulnerabilities in its Flash Player software. Microsoft pushed a dozen patch bundles to address at least 71 flaws in various versions of the Windows operating system and associated software.

Three-quarters of the patches Microsoft issued earned the company’s most dire “critical” rating, meaning malware or attackers could use the flaws fixed in these patches to fully compromise vulnerable systems with zero help from users. What’s more, two of the vulnerabilities are actively being exploited, including a bug in Windows and Microsoft Office.

As per usual, a patch for Internet Explorer addresses a huge chunk (30) of the individual security flaws tackled in this month’s update cycle. Microsoft also released a critical patch to correct 15 weaknesses in Microsoft Edge, the browser meant to supplant IE.

According to security firm Shavlik, supported versions of IE will be changing quite a bit in January. After January 12, 2016, only the latest IE version available on each operating system will be supported. This means if you are not running the latest version of IE available for the version of Windows you are on, you will no longer be getting security updates. More information about this change is available here. Continue reading →

When Undercover Credit Card Buys Go Bad

December 7, 2015

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I recently heard from a source in law enforcement who had a peculiar problem. The source investigates cybercrime, and he was reaching out for advice after trying but failing to conduct undercover buys of stolen credit cards from a well-known underground card market. Turns out, the cybercrime bazaar’s own security system triggered a “pig alert” and brazenly flagged the fed’s transactions as an undercover purchase placed by a law enforcement officer.

Law enforcement officials and bank anti-fraud specialists sometimes purchase stolen cards from crime forums and “carding” markets online in hopes of identifying a pattern among all the cards from a given batch that might make it easy to learn who got breached: If all of the cards from a given batch were later found to be used at the same e-commerce or brick-and-mortar merchant over the same time period, investigators can often determine the source of the card breach, alert the breached company and stem the flow of stolen cards.

Of course, such activity is not something the carding shops take lightly, since it tends to cut into their criminal sales and revenues. So it is that one of the more popular carding shops — Rescator — somehow enacted a system to detect purchases from suspected law enforcement officials. Rescator and his crew aren’t shy about letting you know when they think you’re not a real criminal. My law enforcement source said he’d just placed a batch of cards into his shopping cart and was preparing to pay for the goods when the carding site’s checkout page was replaced with this image:

A major vendor of stolen credit cards tries to detect suspicious transactions by law enforcement officials. When it does, it triggers this “pig detected” alert.

The shop from which my source attempted to make the purchase — called Rescator — is the same carding store that was the first to move millions of cards on sale that were stolen in the Target and Home Depot breaches, among others. I’ve estimated that although Rescator and his band of thieves stole 40 million credit and debit card numbers from Target, they only likely managed to sell between 1 and 3 million of those cards. Even so, at a median price of $26.85 per card and the median loss of 2 million cards, that’s still more than $50 million in revenue. It’s no wonder they want to keep the authorities out. Continue reading →

OPM Breach: Credit Monitoring vs. Freeze

December 2, 2015

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Many readers wrote in this past week to say they’d finally been officially notified that their fingerprints, background checks, Social Security numbers, and other sensitive information was jeopardized in the massive data breach discovered this year at the Office of Personnel Management (OPM). Almost as many complained that the OPM’s response — the offering of free credit monitoring services for up to three years — won’t work if readers have taken my advice and enacted a “security freeze” on one’s credit file with the major credit bureaus. This post is an attempt to explain what’s going on here.

OPM offices in Washington, DC. Image: Flickr.

Earlier this week I got the following message from a reader:

“I just received official notification that I am affected by the OPM data breach. I attempted to sign up for credit monitoring services with the OPM’s contractor ID Experts at opm.myidcare.com, but was denied these services because I have a credit security freeze. I was told by ID Experts that the OPM’s credit monitoring services will not work for accounts with a security freeze.”

The reader continued:

“This supports my decision to issue a security freeze for all my credit accounts, and in my assessment completely undermines the utility and value of the OPM’s credit monitoring services when individuals can simply issue a security freeze. This inability to monitor a person’s credit file when a freeze is in place speaks volumes about the effectiveness of a freeze in blocking anyone — ID protection firms or ID thieves included — from viewing your file.”

I reached out to my followers on Twitter to gauge their reactions to this. I wrote: “Finish this sentence: Lifting a freeze to enable credit monitoring is like….” Here were some of the notable responses:

@sdweberg 10:22pm …shooting your rottweilers and paying the neighbors a monthly fee to “keep an eye on” your house.

@shane_walton 10:15pm …installing flash to watch a flash video about the evils of flash.

@danblondell 10:13pm …leaving the storm doors open to keep an eye on the tornado

@flakpaket 12:48am …leaving your doors and windows unlocked so that burglars can set off your indoor motion sensors.

@ShermanTheDad 8:25am …taking your gun off safety to check and see if it’s loaded.

Removing a security freeze to enable credit monitoring is foolhardy because the freeze offers more comprehensive protection against ID theft. Credit monitoring services are useful for cleaning up your credit file *after* you’re victimized by ID thieves, but they generally do nothing to stop thieves from applying for and opening new lines of credit in your name.

As I discussed at length in this primer, credit monitoring services aren’t really built to prevent ID theft. The most you can hope for from a credit monitoring service is that they give you a heads up when ID theft does happen, and then help you through the often labyrinthine process of getting the credit bureaus and/or creditors to remove the fraudulent activity and to fix your credit score. Continue reading →

DHS Giving Firms Free Penetration Tests

December 1, 2015

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The U.S. Department of Homeland Security (DHS) has been quietly launching stealthy cyber attacks against a range of private U.S. companies — mostly banks and energy firms. These digital intrusion attempts, commissioned in advance by the private sector targets themselves, are part of a little-known program at DHS designed to help “critical infrastructure” companies shore up their computer and network defenses against real-world adversaries. And it’s all free of charge (well, on the U.S. taxpayer’s dime).

Organizations participating in DHS’s “Cyber Hygiene” vulnerability scans. Source: DHS

KrebsOnSecurity first learned about DHS’s National Cybersecurity Assessment and Technical Services (NCATS) program after hearing from a risk manager at a small financial institution in the eastern United States. The manager was comparing the free services offered by NCATS with private sector offerings and was seeking my opinion. I asked around to a number of otherwise clueful sources who had no idea this DHS program even existed.

DHS declined requests for an interview about NCATS, but the agency has published some information about the program. According to DHS, the NCATS program offers full-scope penetration testing capabilities in the form of two separate programs: a “Risk and Vulnerability Assessment,” (RVA) and a “Cyber Hygiene” evaluation. Both are designed to help the partner organization better understand how external systems and infrastructure appear to potential attackers.

“The Department of Homeland Security (DHS) works closely with public and private sector partners to strengthen the security and resilience of their systems against evolving threats in cyberspace,” DHS spokesperson Sy Lee wrote in an email response to an interview request. “The National Cybersecurity Assessments and Technical Services (NCATS) team focuses on proactively engaging with federal, state, local, tribal, territorial and private sector stakeholders to assist them in improving their cybersecurity posture, limit exposure to risks and threats, and reduce rates of exploitation. As part of this effort, the NCATS team offers cybersecurity services such as red team and penetration testing and vulnerability scanning at no cost.”

The RVA program reportedly scans the target’s operating systems, databases, and Web applications for known vulnerabilities, and then tests to see if any of the weaknesses found can be used to successfully compromise the target’s systems. In addition, RVA program participants receive scans for rogue wireless devices, and their employees are tested with “social engineering” attempts to see how employees respond to targeted phishing attacks.

The Cyber Hygiene program — which is currently mandatory for agencies in the federal civilian executive branch but optional for private sector and state, local and tribal stakeholders — includes both internal and external vulnerability and Web application scanning.

The reports show detailed information about the organization’s vulnerabilities, including suggested steps to mitigate the flaws. DHS uses the aggregate information from each client and creates a yearly non-attributable report. The FY14 End of Year report created with data from the Cyber Hygiene and RVA program is here (PDF).

Among the findings in that report, which drew information from more than 100 engagements last year:

-Manual testing was required to identify 67 percent of the RVA vulnerability findings (as opposed to off-the-shelf, automated vulnerability scans);

-More than 50 percent of the total 344 vulnerabilities found during the scans last year earned a severity rating of “high” (4o percent) or “critical” (13 percent).

-RVA phishing emails resulted in a click rate of 25 percent.

Data from NCATS FY 2014 Report.

ANALYSIS

I was curious to know how many private sector companies had taken DHS up on its rather generous offers, since these services can be quite expensive if conducted by private companies. In response to questions from this author, DHS said that in Fiscal Year 2015 NCATS provided support to 53 private sector partners. According to data provided by DHS, the majority of the program’s private sector participation come from the energy and financial services industries — with the latter typically at regional or smaller institutions such as credit unions.

DHS has taken its lumps over the years for not doing enough to gets its own cybersecurity house in order, let alone helping industry fix its problems. In light of the agency’s past cybersecurity foibles, the NCATS program on the surface would seem like a concrete step toward blunting those criticisms.

I wondered how someone in the penetration testing industry would feel about the government throwing its free services into the ring. Dave Aitel is chief technology officer at Immunity Inc., a Miami Beach, Fla. based security firm that offers many of the same services NCATS bundles in its product. Continue reading →

Gas Theft Gangs Fuel Pump Skimming Scams

November 30, 2015

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Few schemes for monetizing stolen credit cards are as bold as the fuel theft scam: Crooks embed skimming devices inside fuel station pumps to steal credit card data from customers. Thieves then clone the cards and use them to steal hundreds of gallons of gas at multiple filling stations. The gas is pumped into hollowed-out trucks and vans, which ferry the fuel to a giant tanker truck. The criminals then sell and deliver the gas at cut rate prices to shady and complicit fuel station owners.

Agent Steve Scarince of the U.S. Secret Service heads up a task force in Los Angeles that since 2009 has been combating fuel theft and fuel pump skimming rings. Scarince said the crooks who plant the skimmers and steal the cards from fuel stations usually are separate criminal groups from those who use the cards to steal and resell gas.

An external pump skimmer is attached to the end of this compromised fuel dispenser in Los Angeles (right).

“Generally the way it works is the skimmer will sell the cards to a fuel theft cell or ring,” he said. “The head of the ring or the number two guy will go purchase the credit cards and bring them back to the drivers. More often than not, the drivers don’t know a whole lot about the business. They just show up for work, the boss hands them 25 cards and says, ‘Make the most of it, and bring me back the cards that don’t work.’ And the leader of the ring will go back to the card skimmer and say, ‘Okay out of 100 of those you sold me, 50 of them didn’t work.'”

Scarince said the skimmer gangs will gain access to the inside of the fuel pumps either secretly or by bribing station attendants. Once inside the pumps, the thieves hook up their skimmer to the gas pump’s card reader and PIN pad. The devices also are connected to the pump’s electric power — so they don’t need batteries and can operate indefinitely.

Internal pump skimming device seized from a Los Angeles fuel station.

Most internal, modern pump skimmers are built to record the card data on a storage device that can transmit the data wirelessly via Bluetooth technology. This way, thieves can drive up with a laptop and fill their tank in the time it takes to suck down the card data that’s been freshly stolen since their last visit.

The Secret Service task force in Los Angels has even found pump skimming devices that send the stolen card data via SMS/text message to the thieves, meaning the crooks don’t ever have to return to the scene of the crime and can receive the stolen cards and PINs anywhere in the world that has mobile phone service.

MOBILE BOMBS

Scarince said the fuel theft gangs use vans and trucks crudely modified and retrofitted with huge metal and/or plastic “bladders” capable of holding between 250 and 500 gallons of fuel.

“The fuel theft groups will drive a bladder truck from gas station to gas station, using counterfeit cards to fill up the bladder,” he said. “Then they’ll drive back to their compound and pump the fuel into a 4,000 or 5,000 [gallon] container truck.”

A bladder truck made to look like it’s hauling used tires. The wooden panel that was hiding the metal tank exposed here has been removed in this picture.

The fuel will be delivered to gas station owners with whom the fuel theft ring has previously brokered with on the price per gallon. And it’s always a cash transaction.

“The stations know they’re buying stolen gas,” Scarince said. “They’re fully aware the fuel is not coming from a legitimate source. There’s never any paperwork with the fuel driver, and these transactions are missing all the elements of a normal, legitimate transaction between what would be a refinery and a gas station.”

Fuel theft gangs converted this van into a bladder truck. Image: Secret Service.

Needless to say, the bladder trucks aren’t exactly road-worthy when they’re filled to the brim with stolen and highly flammable fuel. From time to time, one of the dimmer bladder truck drivers will temporarily forget his cargo and light up a smoke.

“Two or three summers ago we had this one guy who I guess was just jonesing for a cigarette,” Scarince said. “He lit up and that was the last thing he did.”

This bladder truck went up in (a) smoke.

Continue reading →

Breach at IT Automation Firm LANDESK

November 25, 2015

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LANDESK, a company that sells software to help organizations securely and remotely manage their fleets of desktop computers, servers and mobile devices, alerted employees last week that a data breach may have exposed their personal information. But LANDESK employees contacted by this author say the breach may go far deeper for the company and its customers.

The South Jordan, Utah-based LANDESK makes and markets software that helps organizations manage all users, platforms and devices from a single digital dashboard. The company’s software specializes in automating and integrating IT systems management, endpoint security management, service management, IT asset management, and mobile device management.

On Nov. 18, 2015, LANDESK sent a letter to current and former employees warning of an intrusion, stating that “it is possible that, through this compromise, hackers obtained personal information, including names and Social Security numbers, of some LANDESK employees and former Wavelink employees.”

LANDESK declined to answer questions for this story. But the company did share a written statement that mirrors much of the text in the letter sent to affected employees:

“We recently became aware of some unusual activity on our systems and immediately initiated safeguards as a precaution and began an investigation. As part of our ongoing investigation in partnership with a leading computer forensics firm, we recently learned that a small amount of personally identifiable information for a limited number of our employees may have been accessible during the breach. While no data compromises of personally identifiable information are confirmed at this point, we have reached out with information and security resources to individuals who may have been affected. The security of our networks is our top priority and we are acting accordingly.”

“The few employees who may have been affected were notified promptly, and at this point the impact appears to be quite small.”

According to a LANDESK employee who spoke on condition of anonymity, the breach was discovered quite recently, but system logs show the attackers first broke into LANDESK’s network 17 months ago, in June 2014.

The employee, we’ll call him “John,” said the company only noticed the intrusion when several co-workers started complaining of slow Internet speeds. A LANDESK software developer later found that someone in the IT department had been logging into his build server, so he asked them about it. The IT department said it knew nothing of the issue. Continue reading →

Hilton Acknowledges Credit Card Breach

November 24, 2015

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Two months after KrebsOnSecurity first reported that multiple banks suspected a credit card breach at Hilton Hotel properties across the country, Hilton has acknowledged an intrusion involving malicious software found on some point-of-sale systems.

According to a statement released after markets closed on Tuesday, the breach persisted over a 17-week period from Nov. 18, 2014 to Dec. 5, 2014, or April 21 to July 27, 2015.

“Hilton Worldwide (NYSE: HLT) has identified and taken action to eradicate unauthorized malware that targeted payment card information in some point-of-sale systems,” the company said. “Hilton immediately launched an investigation and has further strengthened its systems.”

Hilton said the data stolen includes cardholder names, payment card numbers, security codes and expiration dates, but no addresses or personal identification numbers (PINs).

The company did not say how many Hilton locations or brands were impacted, or whether the breach was limited to compromised point-of-sale devices inside of franchised restaurants, coffee bars and gift shops within Hilton properties — as previously reported here.

The announcement from Hilton comes just five days after Starwood Hotel & Resorts Worldwide — including some 50 Sheraton and Westin locations — was hit by a similar breach that lasted nearly six months.

Starwood and Hilton join several other major hotel brands in announcing a malware-driven credit card data breach over the past year. In October 2015, The Trump Hotel Collection confirmed a report first published by KrebsOnSecurity in June about a possible card breach at the luxury hotel chain.

In March, upscale hotel chain Mandarin Oriental acknowledged a similar breach. The following month, hotel franchising firm White Lodging allowed that — for the second time in 12 months — card processing systems at several of its locations were breached by hackers.

Readers should remember that they are not liable for unauthorized debit or credit card charges, but with one big caveat: the onus is on the cardholder to spot and report any unauthorized charges. Keep a close eye on your monthly statements and report any bogus activity immediately. Many card issuers now let customers receive text alerts for each card purchase and/or for any account changes. Take a moment to review the notification options available to you from your bank or card issuer.

Security Bug in Dell PCs Shipped Since 8/15

November 24, 2015

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All new Dell laptops and desktops shipped since August 2015 contain a serious security vulnerability that exposes users to online eavesdropping and malware attacks. Dell says it is prepping a fix for the issue, but experts say the threat may ultimately need to be stomped out by the major Web browser makers.

At issue is a root certificate installed on newer Dell computers that also includes the private cryptographic key for that certificate. Clever attackers can use this key from Dell to sign phony browser security certificates for any HTTPS-protected site.

Translation: A malicious hacker could exploit this flaw on open, public networks (think WiFi hotspots, coffee shops, airports) to impersonate any Web site to a Dell user, and to quietly intercept, read and modify all of a vulnerable Dell system’s Web traffic.

According to Joe Nord, the computer security researcher credited with discovering the problem, the trouble stems from a certificate Dell installed named “eDellRoot.”

Dell says the eDellRoot certificate was installed on all new desktop and laptops shipped from August 2015 to the present day. According to the company, the certificate was intended to make it easier for Dell customer support to assist customers in troubleshooting technical issues with their computers.

“We began loading the current version on our consumer and commercial devices in August to make servicing PC issues faster and easier for customers,” Dell spokesperson David Frink said. “When a PC engages with Dell online support, the certificate provides the system service tag allowing Dell online support to immediately identify the PC model, drivers, OS, hard drive, etc. making it easier and faster to service.”

“Unfortunately, the certificate introduced an unintended security vulnerability,” the company said in a written statement. “To address this, we are providing our customers with instructions to permanently remove the certificate from their systems via direct email, on our support site and Technical Support.”

In the meantime, Dell says it is removing the certificate from all Dell systems going forward. Continue reading →

How to Enable Multifactor Security on Amazon

November 23, 2015

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Amazon has added multi-factor authentication to help customers better secure their accounts from hackers. With this new feature enabled, thieves would have to know your username, password, and have access to your mobile device or impersonate you to your mobile provider in order to hijack your Amazon account. The security feature allows users to receive a one-time code via text message, automated phone call, or third-party app — such as Google Authenticator.

Step one of enabling multi-factor identification on your Amazon account.

Multi-factor authentication, also often called “two-step” or “two factor” authentication, is a great way to improve the security of your various online accounts (where available). With multi-factor logins enabled, even if thieves somehow steal your account username and password they’ll still need access to the second factor — your mobile phone — to successfully hijack your account.

Users can instruct Amazon to “remember” each device, which disables future prompts for the second factor on that device going forward. If Amazon later detects a login attempt from a device it does not recognize as associated with that account, it will prompt for the code from the second factor — text message, voice call, or app (whichever you choose). Continue reading →

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