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Chip and PIN security busted

UnVerified by PIN attack undermines bank security assurances

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Security researchers have demonstrated a gaping security hole in Chip and PIN credit card authorisations which undermines trust in the technology as a means to verify retail purchases.

Cambridge University security researchers have demonstrated how it might be possible to trick the card into thinking it’s doing a chip-and-signature transaction while the terminal thinks it’s authorised by chip-and-PIN. The flaw creates a means to make transactions that are "Verified by PIN" using a stolen (uncancelled) card without knowing the PIN number.

Fraudsters would insert a "wedge" between the stolen card and terminal, tricking the terminal into believing that the PIN was correctly verified.

It's not surprising that the attack works when a terminal is offline but it works when the terminal is connected too. Victims of fraud who complain of phantom transactions are denied refunds in cases where a purchase is PIN verified. The attack undermines faith in the banking industry’s claim that its systems are secure.

Saar Drimer, one of the Cambridge researchers, warned: "The technical sophistication for carrying out this attack is low, and the compact equipment will not be noticed by shop staff. A single criminal can develop and industrialize a kit to be used by others who do not need to understand how the attack works.”

The man-in-middle attack outlined by the Cambridge researchers doesn’t work at ATMs but it can work regardless of the amount spent in retail transactions. The security shortcomings apply to cards based on EMV (Eurocard Mastercard Visa), the most widely deployed standard for smartcard payments, which is used millions of credit and debit cards, mostly in Europe.

The research was carried out by Steven J Murdoch, Saar Drimer, Ross Anderson and Mike Bond, researchers at the Computer Laboratory, University of Cambridge, and is due to be presented at the IEEE Symposium on Security and Privacy conference in Oakland in May (draft paper here in pdf). Researchers from the team demonstrated the attack in an episode of the BBC Newsnight programme on Thursday night.

"There is a gaping hole in the specifications which together create the 'Chip and PIN' system... The EMV specification stack is broken, and needs fixing," the researchers conclude in a blog posting.

"We’re really worried that if something isn’t done to fix this problem, and the many others we’ve found in EMV, other regions adopting it (like the USA) are going to make the same mistakes again and again – and that means customers stay vulnerable."

"That’s why again we’re arguing that Chip and PIN is broken. We don’t want people keeping their money in shoe boxes – we want the problems fixed. That means getting decent governance for the system that involves all the stakeholders – banks, regulators, merchants and customers." ®

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