Target As A Target

It is not a good thing when a local institution becomes the target of attackers, but that is what happened this week when Target Corporation announced that they have suffered a cardholder data breach of around 40 million card numbers from around Thanksgiving through December 15.

The key quote in Brian Krebs’ blog post is:

“The type of data stolen — also known as “track data” — allows crooks to create counterfeit cards by encoding the information onto any card with a magnetic stripe. If the thieves also were able to intercept PIN data for debit transactions, they would theoretically be able to reproduce stolen debit cards and use them to withdraw cash from ATMs.”

Of all of the bad things to happen, the attackers obtained track data.  The only way track data could have been obtained would have been to compromise the software that executes in their card terminals.  A huge misunderstanding we can thank the PCI SSC for when they stated that card terminals were just “dumb” devices.  Unfortunately, even when that statement was made it was not accurate.  Card terminals are similar to smartphones and typically run embedded versions of Linux or Windows and have their own software development kits (SDK) for developers to use for the rapid development of applications.

What Brian Krebs’ statement implies is that the attackers developed a version of the software that collected card swipes and the entry of the PIN from the keyboard before the real application then properly processed that same information.  It also implies that the attackers are somehow part of the terminal supply chain and were able to have Target implement the compromised version of terminal software on their terminals.

This is not as farfetched as it might seem.  A little over a year ago, Barnes & Noble was compromised by card terminals that had compromised software.  In that incident, the attacker pretended to be the third party that managed, repaired and replaced Barnes & Nobles’ terminals and shipped packages to a random number of stores asking employees to replace their busiest terminal(s) with the replacement terminal(s) that were compromised.

And compromising software is not as farfetched either.  Card terminal manufacturers are no different than other high technology manufacturers and rely on contractors in low-cost locations such as India, Mauritius China, Brazil, Argentina, Egypt and other overseas locations to develop their software.  That is not to say that someone within Target could have manipulated the software, but it is much more likely that a contractor for the terminals’ manufacturer is the culprit.

However, one thing that bothers me about this whole situation is how did the terminal software make it through Target’s quality assurance (QA) process?  The answer to that question might lend itself to the fact that an insider was involved either directly or indirectly.  The reason the QA process might not have picked up the compromised software is that the compromised software knows when it has been deployed in the field and did not activate in QA testing.  That would imply that the persons that developed the software had some insider information to ensure that the compromise would not activate during QA testing.

Finally, is it possible that other merchants have been compromised and just do not know it?  That is a definite possibility and merchants should be taking steps to ensure that they too have not been compromised.  For this sort of breach, merchants should be monitoring their network(s).  Merchants should make sure that those devices’ and systems’ network traffic is only going to their acquiring banks or transaction processors.  Network traffic going anywhere else should be investigated and halted if deemed a risk.

UPDATE – 12/21/2013

The media reports regarding what data is available seems to indicate that PINs were not compromised.  This is based on what Brian Krebs is now reporting as well as other media sources are finding at some of the online carder sites.  If true, that would indicate that the data could have come from Target’s point of sale (POS) systems as well as terminals.

That would be good news for Target customers.  While fraudulent transactions can still occur and people need to monitor their accounts, without PINs, debit cards are just credit cards and people can more readily get their money back if hit by credit transactions.  However, that can depend on your financial institution and state laws.

Inclusion of the POS solution could be bad news for a number of retailers that also use Target’s POS solution.  If the source of the breach was the POS, then obviously that POS solution has potential issues and those merchants with that POS solution could also be at risk just as the merchants using the same manufacturer’s card terminals could also be at risk if it is the terminals.

For concerned merchants, the key though is still monitoring and alerting from your POS environment.  The attackers have to get the data out by using your network for such a large breach.  So if you are properly monitoring your network and identify traffic to anywhere other than your transaction processor(s) or other approved outside sources, you have probably been breached and need to investigate.

UPDATE – 12/26/2013

News reports over the holidays are quoting unnamed sources stating that PINs for debit cards were obtained in the Target breach.  Target is denying that fact and that denial would appear to be supported by the data being sold on the carder sites that have been identified thus far as selling the Target data.  As of this writing, no one reviewing the data on the carder sites has reported seeing PIN data for sale along with cardholder data.  That is not to say that PIN data was not obtained in the Target breach.  If it was obtained, it is not being offered openly for sale on the carder sites and may be available only through back channels.  Knowing how carders work though, one would assume they would have offered the PIN data for sale if they had it.

The misinformation regarding PINs in the media reports are amazing.  I would love to know who the experts are that are advising these people as they really do not appear to know how cards work.  The PIN block on the magnetic stripe is the only field on the stripe that is encrypted.  So any PINs obtained were not obtained from the magnetic stripe.  That would mean that if PINs were collected, they would have had to have been obtained at the terminal as the user was entering the PIN and before the terminal transmitted it to the processor.

Media pundits continued the drum beat for EMV adoption.  Again, where do these pundits get their information?  EMV cards are not encrypted (as with traditional cards, only the PIN block is encrypted) and EMV would not have stopped this breach given the level of sophistication quoted by the US Secret Service.  What EMV would have done would be to have limited where people buying the card information could have used the information they gathered because they would not have had the CVV2/CVC2/CID codes.

Brian Krebs believes he has identified the person behind the marketing of the data and possibly someone who likely knows who perpetrated the Target breach.

UPDATED 12/27/2013

The plot thickened today when Target admitted that PIN data was breached as well but that data was encrypted.  This clearly points to a breach at the POS register and not the terminal.  If a terminal had been breached, one would assume that they would have had access to PIN data entered when customers entered their PINs with debit cards.

But this is not some Windows- or Linux-based POS that just anyone could know about.  This is IBM 4690 POS and it runs a specialized version of a UNIX-like operating system that is not widely known outside of the retail software industry.  As a result, the perpetrators likely work or have worked for Target’s retail software vendor or even IBM’s retail division at some point.  That will shrink the number of people that could have engineered this breach down to a very small number.

Something I would like to clarify.  While the breach involves 40 million total card numbers, the number of actual credit/debit cards involved is likely less than 40 million.  The reason is that those 40 million are likely not all unique numbers, just 40 million unique transactions.  I know that during the breach period my spouse and I visited Target a number of times as I am sure a lot of other people.  As a result, when viewed as unique card numbers, that 40 million could actually be 50% or more below that number.  Not that this makes this breach any less important or devastating, but it helps put things in perspective.

UPDATED 01/01/2014

 “But this is not some Windows- or Linux-based POS that just anyone could know about.  This is IBM 4690 POS and it runs a specialized version of a UNIX-like operating system that is not widely known outside of the retail software industry.  As a result, the perpetrators likely work or have worked for Target’s retail software vendor or even IBM’s retail division at some point.  That will shrink the number of people that could have engineered this breach down to a very small number.”

Boy, I blew that and here is why.

I was a Target store today and I examined the cash register as closely as I could without getting escorted out of the store by security.  To my shock, I realized that Target had swapped out their IBM 4690 POS registers with NCR RealPOS registers.  From a color and configuration standpoint, Target’s NCR units look almost like their former IBM units, so that is why I mistook the NCR POS for IBM POS.

The reason this POS identification is important is that NCR RealPOS is essentially an Intel-based PC with a cash drawer.  These POS systems typically run Windows but can also run Linux.  Unfortunately, I have no idea whether Target runs Windows or Linux on their POS registers.  One would assume they run Windows but the POS application they run does not give any indication of the underlying OS.

What drove all of this was an email from a reader that pointed me to a Microsoft case study.  In that case study was the following statements that caught my eye.

 “Microsoft was pretty creative about developing a virtual machine edition for SUSE Linux for us.”

“By the second quarter of 2012, we’ll be complete, with more than 15,000 virtual guests running on more than 3,600 Hyper-V hosts across our entire store network.”

“At each store, System Center Configuration Manager 2007 acts as a distribution point for security updates and application upgrades for approximately 172 devices.”

“Each of our server endpoints and each of our 5,400 POS registers has a System Center Operations Manager agent installed. That way, we can ensure the checkout experience for our guests remains fast and efficient.”

If you read the full case study, there are a lot of references to Microsoft products running on servers, but there is a lone reference to SUSE Lunix on a virtual server.  However, the real clincher that the RealPOS is likely running Windows is the statement that there are 172 store-level devices that are managed by System Center Configuration Manager 2007 (SCCM).  Since SCCM 2007 did not deploy anything other than Windows, it is almost certain that the RealPOS in Target stores are running some version of Windows.

Now one has to wonder if the POS registers are running Windows 7 or XP?  Given that the POS is isolated away from external networks, it is not likely that the attack came from the outside.  It could have, but I seriously doubt it.  Given the reference by the US Secret Service that it was a sophisticated attack, I would still bet that this breach has some form of insider knowledge be it from the POS vendor, NCR or Target.  However, now the population of people that could have pulled off the breach is rather large as we are talking a Windows environment, not a proprietary environment.

UPDATE 01/07/2014

I got an email from a friend out in California this morning.  They were shopping at their local Target and they noticed that the store has new Verifone MX925 PIN pads that have replaced the red Hypercom (now Equinox) units.

Verifone MX 915 front_light

My guess is that Target is implementing Verifone’s end-to-end encryption (E2EE) solution in response to their breach.  The E2EE solution will encrypt the data stream from the terminal and take the POS system totally out of the loop as a breach point.  Anyone that would want to compromise this solution would have to figure out a way to load software onto the terminal to intercept the data before it is encrypted.  While that is a risk, it would be almost impossible to do it to every terminal Target has installed like they did with the POS systems.

UPDATE 01/12/2014

The news on Friday, January 10, could not have been worse for Target, but not for the reasons you might think.  Yes, the attackers had accessed up to 70 million customer records containing names, addresses, telephone numbers and email addresses.  It was worse because, in a lot of instances, the media seems to have totally misrepresented and misreported what the Target press release stated.  As a result, Target’s customers were, in a lot of cases, totally misinformed about what had actually been stated and that resulted in people like yours truly dealing with a lot of silly and ridiculous questions and concerns.

My first problem was with the blaring headlines that up to 110 million individuals’ data could have been released.  While technically accurate, it is not really factually accurate.  The reason is that, according to Target’s press release, it is likely the majority of the original 40 million that were breached were highly likely to already be included in the 70 million of records breached.  As a result, it’s much more likely that only an additional 30 million or so people had their information breached.

My second problem with the reports is that none of the reports seemed to ask the obvious question that the new revelation demanded be asked.  Which breach happened first, the breach of the POS or the breach of the customer information?  The reason this question is important is that once it is answered, it will help us all understand how the breaches went down and how much liability to assign to Target.  It is one thing if Target was a victim of bad actors that doctored their POS software and then used that to access the customer information.  It is another thing if the customer information was hacked by outsiders due to security lapses and that that access to the customer information was leveraged to cause the POS breach.

My third issue with the media reports on Friday is that they also missed the easy question which is, “Are there any more data that might have been compromised?”  I am not an expert on Target’s technology infrastructure, but if they are like any other organization, they have customer information in more than one database.  As a result, one has to wonder if there will be more revelations of other customer information having been compromised.

All of this said, I think Target is giving us all as much information as the US Secret Service will allow.  What the media and public do not appreciate is that Target’s public relations department is not in control of reports regarding the breach.  If they were, we might know more details about the breach.  The reason the US Secret Service is not letting more information out is so that they can conduct their investigation to find the culprits and that cannot be done if everything is revealed in media reports.  The US Secret Service also controls the timing of when information is released

Shortly after the revelations by Target on Friday, we got another revelation that created concerns for its lack of information.  That was the acknowledgement that Neiman Marcus has also suffered a card breach of unknown length and size.  What was most disconcerting about the Neiman Marcus announcement was that they were told of their breach by the card brands in mid-December which implies that Neiman Marcus had no idea they had been breached.  While the Neiman Marcus breach was not tied to the Target breach, those of us in the industry are wondering about a potential link since both potentially may use some of the same POS applications.

It will be interesting to see how these events progress.

And this just in. The Chicago Tribune is reporting that three more retailers have been breached over the past holiday season and that announcements of those breaches are imminent.

UPDATE 01/16/2014

Brian Krebs comes through again with his take on how the Target breach occurred.  Based on my review, I have a few comments.

 “That source and one other involved in the investigation who also asked not to be named said the POS malware appears to be nearly identical to a piece of code sold on cybercrime forums called BlackPOS, a relatively crude but effective crimeware product. BlackPOS is a specialized piece of malware designed to be installed on POS devices and record all data from credit and debit cards swiped through the infected system.”

We had been led to believe that the malware was something already seen but this seems to confirm that it was BlackPOS and not some other memory scraper.

 “Somehow, the attackers were able to upload the malicious POS software to store point-of-sale machines, and then set up a control server within Target’s internal network that served as a central repository for data hoovered by all of the infected point-of-sale devices.”

That somehow is likely Microsoft System Center.  Given the number of POS systems that we believe are involved, I would assume that the attackers somehow were able to get their malware into Microsoft System Center and have it then “officially” distributed to the POS systems.

The other thing of note is that there was a control server that was commandeered to collect all of the information being gathered.  I would assume that server would have already been involved in a heavy transaction traffic situation so to mask the additional traffic created by the malware.  So the server used was probably already been used for FTP as that is the protocol BlackPOS uses.

But this also gives us a clue as to the timeline of the compromise.  The earliest that the attackers could have gotten in is the end of June 2013.  That is based on the fact that that is when BlackPOS first showed up as available for use.

 ““The bad guys were logging in remotely to that [control server], and apparently had persistent access to it,” a source close to the investigation told KrebsOnSecurity. “They basically had to keep going in and manually collecting the dumps.””

This quote just made my jaw drop but makes sense if you want to surreptitiously get information out of a heavily monitored environment.  Again, I would assume that the attackers chose their remote access point and the central server based on existing traffic volume so that their activities would be masked by the high volume of legitimate traffic.

In regards to why anti-virus and anti-malware utilities did not detect the malware.

 ““They were customized to avoid detection and for use in specific environments,” the source said.”

So those of you heavily relying on your anti-virus and anti-malware to detect these sorts of attacks, you should rethink that strategy.

So exactly how did the attackers get in?

 “But according to sources, the attackers broke in to Target after compromising a company Web server.”

This is probably why the personal information of customers was obtained.  In all likelihood, the PII was the first useful information the attackers encountered as they got into Target’s network.  And since they had no idea how far they could get, they likely downloaded that PII so they at least had something to sell for their efforts.

I am going to leave things here as I ruminate on what all of this means.  There is a lot of other pieces that come to mind and I need time to put all of it together before I comment further.

UPDATE 02/01/2014

I am behind in my updates here for a variety of reasons.  However, it appears that Target has a high likelihood that Target was PCI compliant when the breach started and even, possibly, as it gained access to sensitive authentication data (SAD).

As we have come to expect, Brian Krebs continues to give excellent updates on the Target breach.  But my hometown paper, the StarTribune, has also been doing a decent job on covering the breach as well.  On Thursday, January 30, the StarTribune following up with BMC Software on Brian Krebs’ claims, got BMC to admit that they are working with McAfee.  Later in the day, BMC Software issued an update clarifying Brian Krebs’ report.

The bottom line in the flurry of activity late last week was that a vendor’s software was used to obfuscate the attackers.  The troubling part of all of this is that the software in question is used by a multitude of retailers which could lead to further announcements of breaches as those retailers examine their implementations of BMC Software.


13 Responses to “Target As A Target”

  1. 1 Andrew Jamieson
    December 27, 2013 at 5:16 PM

    PIN data is not stored on the track – sometimes, a ‘PIN Verification Value’ (PVV) may be stored on the track, but this is not a reversible value. It allows for verification of the PIN, but cannot be used to determine the PIN directly. Additionally, the PVV is often not included on the track these days; it is easier to verify the PIN at the back end and not include any such verification values on the card at all.

    It certainly sounds like a POS breach, with the track data and (encrypted) PIN values obtained from the messages ‘flowing through’ the POS system. Of course, depending on the communications infrastructure, it may be some back-end network or concentration system that was breached, which would maybe make sense given the widespread nature of the breach.

    I would not be concerned with the encrypted PIN exposure. They are encrypted for a reason, and this should provide sufficient protection.

    • December 27, 2013 at 5:36 PM

      Unfortunately, the media is stirring the pot by reporting that PINs were taken and then later on are saying the data is encrypted. Avivah Litan from Gartner was just on the NBC Nightly News saying that PINs were decrypted a number of years ago. Yeah, a number of years ago when some dumb merchant was storing data they should not have. The swirl of crap around this breach is amazing.

      • December 30, 2013 at 1:10 PM

        I saw her on the news too and was disappointed. I think the breach she was referring to was using single DES which could be brute force attacked to obtain the key.

      • December 31, 2013 at 5:06 AM

        Yes, the breach Avivah was referring to was a while ago, but I do not recall what was the encryption algorithm used. However, I believe the attackers gained access to the encryption keys. So who cares what the algorithm was as it could have been AES. When you have the keys, it is game over regardless.

        I am hoping that her video interview was terribly edited by NBC News and she said more than what we were shown that would have given her comment more context.

    • December 30, 2013 at 1:23 PM

      It has been driving me nuts how the press is making it sound like PINs were compromised. It sounds like the data was captured in flight during the authorization process. Could be as simple as a data logger installed in software of the POS register that recorded the data received from the PIN pad device. PINs were encrypted and “stealing” cryptograms does not compromise the PIN data. I even saw one article that mentioned the encrypted PINs were stolen then went on to suggest merchants encrypt all card data. So if we are concerned with stealing cryptograms, what will the media do when the breach “steals” fully encrypted track data.

      I am actually impressed the breach was discovered as quick as it was and reported. We should not be surprised when these major merchants are breached, it will continue to happen as long as the payment brands rely on a weak product that is easily counterfeited. Since PCI DSS still does not pertain to pre-authorization data and there is no requirement to protect the authorization transactions, these will continue.

  2. December 20, 2013 at 9:17 AM

    So what do loyal Target customers do now? Sit and wait to see what happens?

    • December 20, 2013 at 9:28 AM

      Monitor your credit/debit cards for any “odd” activity. I know my debit card is at risk because I used it twice during the time period at our local Target stores. I checked my statement online yesterday and there was no odd activity, so I’m good for the moment.

  3. 10 Steve
    December 19, 2013 at 9:19 PM

    Isn’t it possible that the track data was stored at a central database and stealing happened there? However, if the PIN was also obtained then it has to be from the POS terminals.

    • December 20, 2013 at 6:37 AM

      I know that Target was not storing track data, but I cannot attest to what any of Target’s transaction processors are doing. However, from everything I have read and heard, this is most likely something at the card terminal.

  4. 12 shift4sms
    December 19, 2013 at 6:30 PM

    To me the scariest part is the mention “If the thieves were able to intercept PIN data…” — does this mean they have evidence or a strong suspicion that PINs were compromised?! If they didn’t suspect this, why would they even mention PIN?

    Regarding your last pondering as to whether or not other merchants have been compromised by the same or similar scheme. My guess is yes. Yesterday I got a call from my bank about suspicious activity happening with my debit card somewhere in North Carolina — I’m in Vegas. Someone was attempting swiped purchases. Immediately after hanging up with my bank I saw the Target headlines. The problem is, I don’t shop at Target. I seldom use my debit card for purchases and when I do, I only use it with a PIN. My latest purchases using this card were from a couple other big names. I won’t mention them here as it would only be speculation. My prediction is another big headline will be coming soon.

    • December 20, 2013 at 6:43 AM

      Given the fact that card terminal software is developed all over the world, it is highly likely that Target is not the only merchant that has been breached. Fortunately for Target, they recognized the issue quickly and were able to stop it quickly. Unfortunately, I would assume that Target was “highly encouraged” by the US Secret Service to let the breach continue so that they could gather as much evidence as possible to try and track down the perpetrators which is why the breach ran until December 15 but was reported to have been stopped a week earlier. Typically that reporting mistake occurs because Target wanted it stopped on December 6 and had requested that, but the USSS wanted more time and the Target communications person had the wrong dates in their memo.

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December 2013

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