Krebs on Security

Sally Beauty Hit By Credit Card Breach

March 5, 2014

Nationwide beauty products chain Sally Beauty appears to be the latest victim of a breach targeting their payment systems in stores, according to both sources in the banking industry and new raw data from underground cybercrime shops that traffic in stolen credit and debit cards.

On March 2, a fresh batch of 282,000 stolen credit and debit cards went on sale in a popular underground crime store. Three different banks contacted by KrebsOnSecurity made targeted purchases from this store, buying back cards they had previously issued to customers.

The card shop Rescator advertising a new batch of cards. 15 cards purchased by banks from this batch all were found to have been recently used at Sally Beauty stores.

The banks each then sought to determine whether all of the cards they bought had been used at the same merchant over the same time period. This test, known as “common point of purchase” or CPP, is the core means by which financial institutions determine the source of a card breach.

Each bank independently reported that all of the cards (15 in total) had been used within the last ten days at Sally Beauty locations across the United States. Denton, Texas-based Sally Beauty maintains some 2,600 stores, and the company has stores in every U.S. state.

Asked about the banks’ findings, Sally Beauty spokeswoman Karen Fugate said the company recently detected an intrusion into its network, but that neither the company’s information technology experts nor an outside forensics firm could find evidence that customer card data had been stolen from the company’s systems.

Fugate said Sally Beauty uses an intrusion detection product called Tripwire, and that a couple of weeks ago — around Feb. 24 — Tripwire detected activity. Unlike other products that try to detect intrusions based on odd or anomalous network traffic, Tripwire fires off alerts if it detects that certain key system files have been modified.

In response to the Tripwire alert, Fugate said, the company’s information technology department “shut down all external communications” and began an investigation. That included bringing in Verizon Enterprise Solutions, a company often hired to help businesses respond to cyber intrusions.

“Since [Verizon’s] involvement, which has included a deconstruction of the methods used, an examination of network traffic, all our logs and all potentially accessed servers, we found no evidence that any data got out of our stores,” Fugate said. “But our investigation continues, of course with their assistance.”

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Thieves Jam Up Smucker’s, Card Processor

March 4, 2014

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Jam and jelly maker Smucker’s last week shuttered its online store, notifying visitors that the site was being retooled because of a security breach that jeopardized customers’ credit card data. Closer examination of the attack suggests that the company was but one of several dozen firms — including at least one credit card processor — hacked last year by the same criminal gang that infiltrated some of the world’s biggest data brokers.

Smucker’s alerts Website visitors.

As Smucker’s referenced in its FAQ about the breach, the malware that hit this company’s site behaves much like a banking Trojan does on PCs, except it’s designed to steal data from Web server applications.

PC Trojans like ZeuS, for example, siphon information using two major techniques: snarfing passwords stored in the browser, and conducting “form grabbing” — capturing any data entered into a form field in the browser before it can be encrypted in the Web session and sent to whatever site the victim is visiting.

The malware that tore into the Smucker’s site behaved similarly, ripping out form data submitted by visitors — including names, addresses, phone numbers, credit card numbers and card verification code — as customers were submitting the data during the online checkout process.

What’s interesting about this attack is that it drives home one important point about malware’s role in subverting secure connections: Whether resident on a Web server or on an end-user computer, if either endpoint is compromised, it’s ‘game over’ for the security of that Web session. With Zeus, it’s all about surveillance on the client side pre-encryption, whereas what the bad guys are doing with these Web site attacks involves sucking down customer data post- or pre-encryption (depending on whether the data was incoming or outgoing).

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Illinois Bank: Use Cash for Chicago Taxis

March 3, 2014

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First American Bank in Illinois is urging residents and tourists alike to avoid paying for cab rides in Chicago with credit or debit cards, warning that an ongoing data breach seems to be connected with card processing systems used by a large number of taxis in the Windy City.

The notice that First American sent to customers on Friday.

In an unusually blunt and public statement sent to customers on Friday, Elk Grove, Ill.-based First American Bank said, “We are advising you not to use your First American Bank debit cards (or any other cards) in local taxis.” The message, penned by the bank’s chairman Tom Wells, continued:

“We have become aware of a data breach that occurs when a card is used in Chicago taxis, including American United, Checker, Yellow, and Blue Diamond and others that utilize Taxi Affiliation Services and Dispatch Taxi to process card transactions.”

“We have reported the breach to MasterCard® and have kept them apprised of details as they’ve developed. We have also made repeated attempts to deal directly with Banc of America Merchant Services and Bank of America, the payment processors for the taxis, to discontinue payment processing for the companies suffering this compromise until its source is discovered and remediated. These companies have not shared information about their actions and appear to not have stopped the breach.”

Bank of America, in a written statement, declined to discuss the matter, saying BofA “cannot discuss specific client matters.” Neither Taxi Affiliation Services nor Dispatch Taxi returned messages seeking comment.

Christi Childers, associate general counsel and compliance officer at First American Bank, said the bank made the decision to issue the warning about 18 days after being alerted to a pattern of fraud on cards that were all previously used at taxis in Chicago. The bank, which only issues MasterCard debit cards, has begun canceling cards used in Chicago taxis, and has already reissued 220 cards related to the fraud pattern. So far, the bank has seen more than 466 suspicious charges totaling more than $62,000 subsequent to those cards being used in Chicago taxis.

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Breach Blind Spot Puts Retailers on Defensive

February 28, 2014

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In response to rumors in the financial industry that Sears may be the latest retailer hit by hackers, the company said today it has no indications that it has been breached. Although the Sears investigation is ongoing, experts say there is a good chance the identification of Sears as a victim is a false alarm caused by a common weaknesses in banks’ anti-fraud systems that becomes apparent mainly in the wake of massive breaches like the one at Target late last year.

Earlier this week, rumors began flying that Sears was breached by the same sort of attack that hit Target. In December, Target disclosed that malware installed on its store cash registers compromised credit and debit card data on 40 some million transactions. This publication reached out on Wednesday to Sears to check the validity of those rumors, and earlier today Bloomberg moved a brief story saying that the U.S. Secret Service was said to be investigating a possible data breach at Sears.

But in a short statement issued today, Sears said the company has found no information indicating a breach at the company.

“There have been rumors and reports throughout the retail industry of security incidents at various retailers, and we are actively reviewing our systems to determine if we have been a victim of a breach,” Sears said in a written statement. “We have found no information based on our review of our systems to date indicating a breach.”

The Secret Service declined to comment.

Media stories about undisclosed breaches in the retail sector have fueled rampant speculation about the identities of other victim companies. Earlier this week, The Wall Street Journal ran a piece quoting Verizon Enterprise Solutions’s Bryan Sartin saying that the company — which investigates data breaches — was responding to two different currently undisclosed breaches at major retailers.

Interestingly, Sartin gave an interview last week to this publication specifically to discuss a potential blind spot in the approach used by most banks to identify companies that may have had a payment card breach — a weakness that he said almost exclusively manifests itself directly after large breaches like the Target break-in.

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Card Backlog Extends Pain from Target Breach

February 25, 2014

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Last week’s story about steeply falling prices on credit and debit card data stolen from Target mentioned several reasons why many banks may not have already reissued all of their cards impacted by the breach. But it left out one other key reason: A huge backlog of orders at companies that manufacture credit and debit cards on behalf of financial institutions.

Turns out, while the crooks responsible for monetizing the Target breach seem to have had little trouble counterfeiting stolen cards, the process by which banks obtain legitimate replacement cards for their customers is not always quite so speedy.

I recently spoke with a gentleman who heads up security at a small federal credit union, and this individual said his institution ended up printing their own cards in-house after being told by their financial services provider that their order for some 2,000 new customer cards compromised in the Target breach would have to get behind a backlog of more than 2 million existing orders from other banks.

The credit union in question issues Visa-branded cards to its customers, but the actual physical cards are produced by Fiserv, a Brookfield, Wisc. financial services firm that also handles the online banking portals for a huge number of small to mid-sized financial institutions nationwide. In addition to servicing this credit union, Fiserv also prints cards for some of the biggest banks in the world, including Bank of America and Chase.

Shortly after the holidays, the credit union began alerting affected customers, notifying them that the institution would soon be reissuing cards. But when it actually went to place the order for the new cards, the institution was told it would have to get in line.

“They informed us that there was a backlog of 2 million cards, and said basically, ‘We’ll get to you when we get to you’,” the credit union source told KrebsOnSecurity.

Murray Walton, chief risk officer at Fiserv, acknowledged that the company has experienced extraordinarily high demand for new cards in the wake of the Target breach, but that Fiserv is quickly whittling down its existing backlog of orders.

“A large breach injects additional demand into a system that is already operating at near-peak capacity at year-end,” Walton said. “As a result, producers face the challenge of juggling existing contractual commitments with this incremental demand, and turn to mandatory overtime and staff augmentation to get the most out of their equipment and infrastructure. We believe we are managing this situation as well as possible, and are beginning to see our cycle times (order to delivery) diminish compared to a few weeks ago. Meanwhile, we note that fraud prevention is a multi-faceted challenge, and card reissue is only one arrow in the quiver. Alert consumers and behind-the-scenes fraud management programs are also essential.”

Faced with mounting customer service requests from account holders who’d been told to expect new cards, the credit union decided to take matters into its own hands.

“We have the capability to print out the cards ourselves at a local branch, so some of our software developers wrote some scripts to export the customer data and we had two people who ended up burning the midnight oil for several days making these cards by hand.”

iOS Update Quashes Dangerous SSL Bug

February 23, 2014

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Apple on Friday released a software update to fix a serious security weakness in its iOS mobile operating system that allows attackers to read and modify encrypted communications on iPhones, iPads and other iOS devices. The company says it is working to produce a patch for the same flaw in desktop and laptop computers powered by its OS X operating system.

The update — iOS 7.0.6 — addresses a glaring vulnerability in the way Apple devices handle encrypted communications. The flaw allows an attacker to intercept, read or modify encrypted email, Web browsing, Tweets and other transmitted data, provided the attacker has control over the WiFi or cellular network used by the vulnerable device.

There has been a great deal of speculation and hand-waving about whether this flaw was truly a mistake or if it was somehow introduced intentionally as a backdoor. And it’s not yet clear how long this bug has been included in Apple’s software. In any case, if you have an iPhone or iPad or other iOS device, please take a moment to apply this fix.

Generally, I advise users to avoid downloading and installing security updates when they are using public WiFi or other untrusted networks. On the surface at least, it would seem that the irony of this situation for most users is that iOS devices will download updates automatically as long as users are connected to a WiFi network. But as several folks have already pointed out on Twitter, Apple uses code-signing on iOS and app updates to ensure that rogue code can’t be pushed to devices.

I will update this post when Apple ships the patch for OS X systems. For now, it may be wise to avoid using Safari on OS X systems. As Dan Goodin at Ars Technica writes, “because the Google Chrome and Mozilla Firefox browsers appear to be unaffected by the flaw, people should also consider using those browsers when possible, although they shouldn’t be considered a panacea.”

For a deeper dive on this vulnerability and its implications, check out this piece by Larry Seltzer at ZDNet, and this analysis by Google’s Adam Langley.

Update: Apple has fixed this and a number of other important issues with OS X, in this release.

Adobe, Microsoft Push Fixes For 0-Day Threats

February 20, 2014

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For the second time this month, Adobe has issued an emergency software update to fix a critical security flaw in its Flash Player software that attackers are already exploiting. Separately, Microsoft released a stopgap fix to address a critical bug in Internet Explorer versions 9 and 10 that is actively being exploited in the wild.

The vulnerabilities in both Flash and IE are critical, meaning users could get hacked just by visiting a compromised or booby-trapped Web site. The Flash patch comes just a little over two weeks after Adobe released a rush fix for another zero-day attack against Flash.

Adobe said in an advisory today that it is aware of an exploit that exists for one of three security holes that the company is plugging with this new release, which brings Flash Player to v. 12.0.0.70 for Linux, Mac and Windows systems.

This link will tell you which version of Flash your browser has installed. IE10/IE11 and Chrome should auto-update their versions of Flash, although IE users may need to check with the Windows Update feature built into the operating system.

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Fire Sale on Cards Stolen in Target Breach

February 19, 2014

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Last year’s breach at Target Corp. flooded underground markets with millions of stolen credit and debit cards. In the days surrounding the breach disclosure, the cards carried unusually high price tags — in large part because few banks had gotten around to canceling any of them yet. Today, two months after the breach, the number of unsold stolen cards that haven’t been cancelled by issuing banks is rapidly shrinking, forcing the miscreants behind this historic heist to unload huge volumes of cards onto underground markets and at cut-rate prices.

Cards stolen in the Target breach have become much cheaper as more of them come back declined or cancelled by issuing banks.

Earlier today, the underground card shop Rescator[dot]so moved at least 2.8 million cards stolen from U.S.-based shoppers during the Target breach. This chunk of cards, dubbed “Beaver Cage” by Rescator, was the latest of dozens of batches of cards stolen from Target that have gone on sale at the shop since early December.

The Beaver Cage batch of cards have fallen in price by as much as 70 percent compared to those in “Tortuga,” a huge chunk of several million cards stolen from Target that sold for between $26.60 and $44.80 apiece in the days leading up to Dec. 19 — the day that Target acknowledged a breach. Today, those same cards are now retailing for prices ranging from $8 to $28. The oldest batches of cards stolen in the Target breach –i.e., the first batches of stolen cards sold –are at the top of legend in the graphic above; the “newer,” albeit less fresh, batches are at the bottom.

The core reason for the price drop appears to be the falling “valid rate” associated with each batch. Cards in the Tortuga base were advertised as “100 percent valid,” meaning that customers who bought ten cards from the store could expect all 10 to work when they went to use them at retailers to purchase high-priced electronics, gift cards and other items that can be quickly resold for cash.

This latest batch of Beaver Cage cards, however, carries only a 60 percent valid rate, meaning that on average customers can expect at least 4 out of every 10 cards they buy to come back declined or canceled by the issuing bank.

The most previous batch of Beaver Cage cards — pushed out by Rescator on Feb. 6 — included nearly 4 million cards stolen from Target and carried a 65 percent valid rate. Prior to Beaver Cage, the Target cards were code-named “Eagle Claw.” On Jan. 29, Rescator debuted 4 million cards bearing the Eagle Claw name and a 70 percent valid rate. The first two batches of Eagle Claw-branded cards — a chunk of 2 million cards — were released on Jan. 21 with a reported 83 percent valid rate.

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Time to Harden Your Hardware?

February 18, 2014

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Most Internet users are familiar with the concept of updating software that resides on their computers. But this past week has seen alerts about an unusual number of vulnerabilities and attacks against some important and ubiquitous hardware devices, from consumer-grade Internet routers, data storage and home automation products to enterprise-class security solutions.

Last week, the SANS Internet Storm Center began publishing data about an ongoing attack from self-propagating malware that infects some home and small-office wireless routers from Linksys. The firewall built into routers can be a useful and hearty first line of protection against online attacks, because its job is to filter out incoming traffic that the user behind the firewall did not initiate. But things get dicier when users enable remote administration capability on these powerful devices, which is where this malware comes in.

The worm — dubbed “The Moon” — bypasses the username and password prompt on affected devices. According to Ars Technica’s Dan Goodin, The Moon has infected close to 1,000 Linksys E1000, E1200 and E2400 routers, although the actual number of hijacked devices worldwide could be higher and is likely to climb. In response, Linksys said the worm affects only those devices that have the Remote Management Access feature enabled, and that Linksys ships these products with that feature turned off by default. The Ars Technica story includes more information about how to tell whether your router may be impacted. Linksys says it’s working on an official fix for the problem, and in the meantime users can block this attack by disabling the router’s remote management feature.

Similarly, it appears that some ASUS routers — and any storage devices attached to them — may be exposed to anyone online without the need of login credentials if users have taken advantage of remote access features built into the routers, according to this Ars piece from Feb. 17. The danger in this case is with Asus router models including RT-AC66R, RT-AC66U, RT-N66R, RT-N66U, RT-AC56U, RT-N56R, RT-N56U, RT-N14U, RT-N16, and RT-N16R. Enabling any of the (by-default disabled) “AiCloud” options on the devices — such as “Cloud Disk” and “Smart Access” — opens up a potentially messy can of worms. More details on this vulnerability are available at this SecurityFocus writeup.

ASUS reportedly released firmware updates last week to address these bugs. Affected users can find the latest firmware updates and instructions for updating their devices by entering the model name/number of the device here. Alternatively, consider dumping the stock router firmware in favor of something more flexible, less buggy amd most likely more secure (see this section at the end of this post for more details).

YOUR LIGHTSWITCH DOES WHAT?

Belkin WeMo Switch

Outfitting a home or office with home automation tools that let you control and remotely monitor electronics can quickly turn into a fun and addictive (if expensive) hobby. But things get somewhat more interesting when the whole setup is completely exposed to anyone on the Internet. That’s basically what experts at IOActive found is the case with Belkin‘s WeMo family of home automation devices.

According to research released today, multiple vulnerabilities in these WeMo Home Automation tools give malicious hackers the ability to remotely control the devices over the Internet, perform malicious firmware updates, and access an internal home network. From IOActive’s advisory (PDF):

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Yours Truly Profiled in The New York Times

February 17, 2014

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Today’s New York Times features a profile of this author — a story titled, “Reporting from the Web’s Underbelly”. The piece, written by The Times’s Silicon Valley reporter Nicole Perlroth, observes:

Mr. Krebs, 41, tries to write pieces that cannot be found elsewhere. His widely read cybersecurity blog, Krebs on Security, covers a particularly dark corner of the Internet: profit-seeking cybercriminals, many based in Eastern Europe, who make billions off pharmaceutical sales, malware, spam, frauds and heists like the recent ones that Mr. Krebs was first to uncover at Adobe, Target and Neiman Marcus….

…Unlike physical crime — a bank robbery, for example, quickly becomes public — online thefts are hushed up by companies that worry the disclosure will inflict more damage than the theft, allowing hackers to raid multiple companies before consumers hear about it.

“There’s a lot going on in this industry that impedes the flow of information,” Mr. Krebs said. “And there’s a lot of money to be made in having intelligence and information about what’s going on in the underworld. It’s big business but most people don’t want to pay for it, which explains why they come to someone like me.”