Posts Tagged: Wells Fargo


4
Oct 17

Fear Not: You, Too, Are a Cybercrime Victim!

Maybe you’ve been feeling left out because you weren’t among the lucky few hundred million or billion who had their personal information stolen in either the Equifax or Yahoo! breaches. Well buck up, camper: Both companies took steps to make you feel better today.

Yahoo! announced that, our bad!: It wasn’t just one billion users who had their account information filched in its record-breaking 2013 data breach. It was more like three billion (read: all) users. Meanwhile, big three credit bureau Equifax added 2.5 million more victims to its roster of 143 million Americans who had their Social Security numbers and other personal data stolen in a breach earlier this year. At the same time, Equifax’s erstwhile CEO informed Congress that the breach was the result of even more bone-headed security than was first disclosed.

To those still feeling left out by either company after this spate of bad news, I have only one thing to say (although I feel a bit like a broken record in repeating this): Assume you’re compromised, and take steps accordingly.

If readers are detecting a bit of sarcasm and cynicism in my tone here, it may be that I’m still wishing I’d done almost anything else today besides watching three hours worth of testimony from former Equifax CEO Richard Smith before lawmakers on a panel of the House Energy & Commerce Committee.

While he is no longer the boss of Equifax, Smith gamely agreed to submit to several day’s worth of grilling from legislators in both houses of Congress this week. It was clear from the questions that lawmakers didn’t ask in Round One, however, that Smith was far more prepared for the first batch of questioning than they were, and that the entire ordeal would amount to only a gentle braising.

Nevertheless, Smith managed to paint an even more dismal picture than was already known about the company’s failures to secure the very data that makes up the core of its business. Helpfully, Smith clarified early on in the hearing that the company’s customers are in fact banks and other businesses — not consumers.

Smith told lawmakers that the breach stemmed from a combination of technological error and a human error, casting it as the kind of failure that could have happened to anyone. In reality, the company waited 4.5 months (after it discovered the breach in late July 2017) to fix a dangerous security flaw that it should have known was being exploited on Day One (~March 6 or 7, 2017).

“The human error involved the failure to apply a software patch to a dispute portal in March 2017,” Smith said. He declined to explain (and lawmakers inexplicably failed to ask) how 145.5 million Americans — nearly 60 percent of the adult population of the United States — could have had their information tied up in a dispute portal at Equifax. “The technological error involved a scanner which failed to detect a vulnerability on that particular portal.”

As noted in this Wired.com story, Smith admitted that the data compromised in the breach was not encrypted:

When asked by representative Adam Kinzinger of Illinois about what data Equifax encrypts in its systems, Smith admitted that the data compromised in the customer-dispute portal was stored in plaintext and would have been easily readable by attackers. “We use many techniques to protect data—encryption, tokenization, masking, encryption in motion, encrypting at rest,” Smith said. “To be very specific, this data was not encrypted at rest.”

It’s unclear exactly what of the pilfered data resided in the portal versus other parts of Equifax’s system, but it turns out that also didn’t matter much, given Equifax’s attitude toward encryption overall. “OK, so this wasn’t [encrypted], but your core is?” Kinzinger asked. “Some, not all,” Smith replied. “There are varying levels of security techniques that the team deploys in different environments around the business.”

Smith also sought to justify the company’s historically poor breach response after it publicly disclosed the break-in on Sept. 7 — roughly 40 days after Equifax’s security team first became aware of the incident (on July 29). As many readers here are well familiar, KrebsOnSecurity likened that breach response to a dumpster fire — noting that it was perhaps the most haphazard and ill-conceived of any major data breach disclosure in history.

Smith artfully dodged questions of why the company waited so long to notify the public, and about the perception that Equifax sought to profit off of its own data breach. One lawmaker noted that Smith gave two public speeches in the second and third weeks of August in which he was quoted as saying that fraud was a “a huge opportunity for Equifax,” and that it was a “massive, growing business” for the company.

Smith interjected that he had “no indication” that consumer data was compromised at the time of the Aug. 11 speech. As for the Aug. 17 address, he said “we did not know how much data was compromised, what data was compromised.”

Follow-up questions from lawmakers on the panel revealed that Smith didn’t ask for a briefing about what was then allegedly only classified internally as “suspicious activity” until August 15, almost two weeks after the company hired outside cybersecurity experts to examine the issue.

Smith also maneuvered around questions about why Equifax chose to disclose the breach on the very day that Hurricane Irma was dominating front-page news with an imminent landfall on the eastern seaboard of the United States.

However, Smith did blame Irma in explaining why the company’s phone systems were simply unable to handle the call volume from U.S. consumers concerned about the Category Five data breach, saying that Irma took down two of Equifax’s largest call centers days after the breach disclosure. He said the company handled over 420 million consumer visits to the portal designed to help people figure out whether they were victimized in the breach, underscoring how so many American adults were forced to revisit the site again and again because it failed to give people consistent answers about whether they were affected. Continue reading →


25
Mar 15

Tax Fraud Advice, Straight from the Scammers

Some of the most frank and useful information about how to fight fraud comes directly from the mouths of the crooks themselves. Online cybercrime forums play a critical role here, allowing thieves to compare notes about how to evade new security roadblocks and steer clear of fraud tripwires. And few topics so reliably generate discussion on crime forums around this time of year as tax return fraud, as we’ll see in the conversations highlighted in this post.

File 'em Before the Bad Guys Can

File ’em Before the Bad Guys Can

As several stories these past few months have noted, those involved in tax refund fraud shifted more of their activities away from the Internal Revenue Service and toward state tax filings. This shift is broadly reflected in discussions on several fraud forums from 2014, in which members lament the apparent introduction of new fraud “filters” by the IRS that reportedly made perpetrating this crime at the federal level more challenging for some scammers.

One outspoken and unrepentant tax fraudster — a ne’er-do-well using the screen name “Peleus” — reported that he had far more luck filing phony returns at the state level last year. Peleus posted the following experience to a popular fraud forum in February 2014:

“Just wanted to share a bit of my results to see if everyone is doing so bad or it just me…Federal this year has been a pain in the ass. I have about 35 applications made for federal with only 2 paid refunds…I started early in January (15-20) on TT [TurboTax] and HR [H&R Block] and made about 35 applications on Federal and State..My stats are as follows:

Federal: 35 applications (less than 10% approval rate) – average per return $2500

State: 35 apps – 15 approved (average per return $1600). State works just as great as last year, their approval rate is nearly 50% and processing time no more than 10 – 12 days.

I know that the IRS has new check filters this year but federals suck big time this year, i only got 2 refunds approved from 35 applications …all my federals are between $2300 – $2600 which is the average refund amount in the US so i wouldn’t raise any flags…I also put a small yearly salary like 25-30k….All this precautions and my results still suck big time compared to last year when i had like 30%- 35% approval rate …what the fuck changed this year? Do they check the EIN from last year’s return so you need his real employer information?”

A seasoned tax return fraudster discusses strategy.

A seasoned tax return fraudster discusses strategy.

Several seasoned members of this fraud forum responded that the IRS had indeed become more strict in validating whether the W2 information supplied by the filer had the proper Employer Identification Number (EIN), a unique tax ID number assigned to each company. The fraudsters then proceeded to discuss various ways to mine social networking sites like LinkedIn for victims’ employer information.

GET YER EINs HERE

A sidebar is probably in order here. EINs are not exactly state secrets. Public companies publish their EINs on the first page of their annual 10-K filings with the Securities and Exchange Commission. Still, EINs for millions of small companies here in the United States are not so easy to find, and many small business owners probably treat this information as confidential.

Nevertheless, a number of organizations specialize in selling access to EINs. One of the biggest is Dun & Bradstreet, which, as I detailed in a 2013 exposé, Data Broker Giants Hacked by ID Theft Service, was compromised for six months by a service selling Social Security numbers and other data to identity thieves like Peleus.

Last year, I heard from a source close to the investigation into the Dun & Bradstreet breach who said the thieves responsible made off with more than six million EINs. In December 2014, I asked Dun &Bradstreet about the veracity of this claim, and received a blanket statement that did not address the six million figure, but stressed that EINs are not personally identifiable information and are available to the public. Continue reading →


28
Jan 13

Big Bank Mules Target Small Bank Businesses

A $170,000 cyberheist last month against an Illinois nursing home provider starkly illustrates how large financial institutions are being leveraged to target security weaknesses at small to regional banks and credit unions.

I have written about more than 80 organizations that were victims of cyberheists, and a few recurring themes have emerged from nearly all of these breaches. First, a majority of the victim organizations banked at smaller institutions. Second, virtually all of the money mules — willing or unwitting individuals recruited to help launder the stolen funds — used accounts at the top five largest U.S. banks.

The attack on Niles Nursing Inc. provides a textbook example. On Monday, Dec. 17, 2012, computer crooks logged into the company’s online banking accounts using the controller’s credentials and tunneling their connection through his hacked PC. At the beginning of the heist, the miscreants added 11 money mules to Niles’ payroll, sending them automated clearing house (ACH) payments totaling more than $58,000, asking each mule to withdraw their transfers in cash and wire the money to individuals in Ukraine and Russia.

nilesmulespartNiles’ financial institution — Ft. Lauderdale, Fla. based Optimum Bank — evidently saw nothing suspicious about 11 new employees scattered across five states being added to its customer’s payroll overnight. From the bank’s perspective, the user submitting the payroll batch logged in to the account with the proper credentials and with the same PC that was typically used to administer the account. The thieves would put through another two fraudulent payment batches over next two days (the bank blocked the last batch on the 19th).

In total, the attackers appear to have recruited at least two dozen money mules to help haul the stolen loot. All but two of the mules used or opened accounts at four out of five of the nation’s top U.S. banks, including Bank of America, Chase, Citibank, and Wells Fargo. No doubt these institutions together account for a huge percentage of the retail banking accounts in America today, but interviews with mules recruited by this crime gang indicate that they were instructed to open accounts at these institutions if they did not already have them.

ANALYSIS

I’ve spoken at numerous financial industry conferences over the past three years to talk about these cyberheists, and one question I am almost always asked is, “Is it safer for businesses to bank at larger institutions?” This is a tricky question to answer because banking online remains a legally and financially risky affair for any business, regardless of which bank it uses. Businesses do not enjoy the same fraud protections as consumers; if a Trojan lets the bad guys siphon an organization’s online accounts, that victim organization is legally responsible for the loss. The financial institution may decide to reimburse the victim for some or all of the costs of the fraud, but that is entirely up to the bank.

What’s more, it is likely that fewer cyberheists involving customers of Top 5 banks ever see the light of day, principally because the larger banks are in a better financial position to assume responsibility for some or all of the loss (provided, of course, that the victim in return agrees not to sue the bank or disclose the breach publicly).

I prefer to answer the question as if I were a modern cyberthief in charge of selecting targets. The organized crooks behind these attacks blast out tens of millions of booby-trapped emails daily, and undoubtedly have thousands of stolen online banking credentials to use at any one time. There are more than 7,000 financial institutions in the United States…should I choose a target at one of the top 10 banks? These institutions hold a majority of the financial industry’s assets, and they’re accustomed to moving huge sums of money around each day.

On the other hand, their potential for fraud is almost certainly orders of magnitude greater than at smaller institutions. That would suggest that it may be easier for these larger institutions to justify antifraud expenditures. That incentive to enact antifraud protections is even greater because these institutions have huge numbers of retail customers, a channel in which they legally eat the loss from unauthorized account activity.

Continue reading →