Posts Tagged: Scottrade breach


13
Nov 15

JPMorgan Hackers Breached Anti-Fraud Vendor G2 Web Services

Buried in the federal indictments unsealed this week against four men accused of stealing tens of millions of consumer records from JPMorgan Chase and other brokerage firms are other unnamed companies that were similarly victimized by the accused. One of them, identified in the indictments only as “Victim #12,” is an entity that helps banks block transactions for dodgy goods advertised in spam. Turns out, the hackers targeted this company so that they could more easily push through payments for spam-advertised prescription drugs and fake antivirus schemes.

g2webAccording to multiple sources, Victim #12 is none other than Bellevue, Wash. based G2 Web Services LLC, a company that helps banks figure out if a website is fraudulent or is selling contraband. G2 Web Services has not responded to multiple requests for comment.

In the final chapters of my book, Spam Nation: The Inside Story of Organized Cybercrime, I detailed the work of The International AntiCounterfeiting Coalition (IACC), a non-profit organization dedicated to combating product counterfeiting and piracy.

In 2011, G2 Web Services landed a contract to help the IACC conduct “test buys” at sites with products that were being advertised via spam. The company would identify which banks (mostly in Asia) were processing payments for these sites, and then Visa and MasterCard would rain down steep fines on the banks for violating their contracts with the credit card companies. The idea was to follow the money from schemes tied to cybercrime, deter banks from accepting funds from fraudulent transactions, and make it difficult for spammers to maintain stable credit card processing for those endeavors.

Prosecutors say the ringleader of the cybercrime gang accused of breaking into JPMC, Scottrade, E-Trade and others is 31-year-old Gery Shalon, a resident of Tel Aviv and Moscow. Investigators allege Shalon and his co-conspirators monitored credit card transactions processed through their payment processing business to attempt to discern which, if any, were undercover transactions made on behalf of credit card companies attempting to identify unlawful merchants. The government also charges that beginning in or about 2012, Shalon and his co-conspirators hacked into the computer networks of Victim-12 (G2 Web Services).

Shalon and his gang allegedly monitored Victim-12’s detection efforts, including reading emails of Victim-12 employees so they could take steps to evade detection.

“In particular, through their unlawful intrusion into Victim-12’s network, Shalon and his co-conspirators determined which credit and debit card numbers Victim-12 employees were using the make undercover purchases of illicit goods in the course of their effort to detect unlawful merchants,” Shalon’s indictment explains. “Upon identifying those credit and debit card numbers, Shalon and his co-conspirators blacklisted the numbers from their payment processing business, automatically declining any transaction for which payment was offered through one of those credit or debit card numbers.” Continue reading →


2
Oct 15

Scottrade Breach Hits 4.6 Million Customers

Welcome to Day 2 of Cybersecurity (Breach) Awareness Month! Today’s awareness lesson is brought to you by retail brokerage firm Scottrade Inc., which just disclosed a breach involving contact information and possibly Social Security numbers on 4.6 million customers.

scottradeIn an email sent today to customers, St. Louis-based Scottrade said it recently heard from federal law enforcement officials about crimes involving the theft of information from Scottrade and other financial services companies.

“Based upon our subsequent internal investigation coupled with information provided by the authorities, we believe a list of client names and street addresses was taken from our system,” the email notice reads. “Importantly, we have no reason to believe that Scottrade’s trading platforms or any client funds were compromised. All client passwords remained encrypted at all times and we have not seen any indication of fraudulent activity as a result of this incident.”

The notice said that although Social Security numbers, email addresses and other sensitive data were contained in the system accessed, “it appears that contact information was the focus of the incident.” The company said the unauthorized access appears to have occurred over a period between late 2013 and early 2014.

Asked about the context of the notification from federal law enforcement officials, Scottrade spokesperson Shea Leordeanu said the company couldn’t comment on the incident much more than the information included in its Web site notice about the attack. But she did say that Scottrade learned about the data theft from the FBI, and that the company is working with agents from FBI field offices in Atlanta and New York. FBI officials could not be immediately reached for comment.

It may well be that the intruders were after Scottrade user data to facilitate stock scams, and that a spike in spam email for affected Scottrade customers will be the main fallout from this break-in.

In July 2015, prosecutors in Manhattan filed charges against five people — including some suspected of having played a role in the 2014 breach at JPMorgan Chase that exposed the contact information on more than 80 million consumers. The authorities in that investigation said they suspect that group sought to use email addresses stolen in the JPMorgan hacking to further stock manipulation schemes involving spam emails to pump up the price of otherwise worthless penny stocks.

Scottrade said despite the fact that it doesn’t believe Social Security numbers were stolen, the company is offering a year’s worth of free credit monitoring services to affected customers. Readers who are concerned about protecting their credit files from identity thieves should read How I Learned to Stop Worrying and Embrace the Security Freeze.