Industry groups leap to Chip and PIN's defence
Despite research showing signs of terminal weakness
Analysis Banking industry suppliers have lined up to defend Chip and PIN, following the release of research last week from Cambridge University demonstrating how cybercrooks might be able to bypass security controls on credit and debit card transactions in shops.
A four man team from Cambridge University demonstrated how it might be possible to make "Verified by PIN" transactions using a stolen (but uncanceled) cards without knowing the correct PIN number. The man-in-the-middle works by tricking a card into thinking a chip-and-signature transaction is taking place while the terminal gets a signal that a correct PIN has been entered.
Would-be fraudsters would need to insert an electronic wedge between the stolen card and terminal, tricking the terminal into believing that the PIN was verified. The attack even works when the terminal is offline but isn't applicable to ATM machine cash withdrawals. It relies on the complexity and security security shortcomings of the EMV (Eurocard Mastercard Visa) standard for smartcard payments, a technology used by millions of credit and debit cards, mostly in Europe.
Cambridge University researchers demonstrated the attack on several cards during a news item on the BBC's Newsnight. The programme aired last Thursday, ahead of the planned publication of a paper (PDF draft here) at an IEEE conference in May.
Bank assurances shaken not stirred
Suppliers such as Thales and The Logic Group point out that Chip and PIN has been a success in driving down the levels of fraud in retail transactions, while acknowledging that plastic card fraud has been displaced to the internet and overseas ATM machines, rather than reduced, since the introduction of Chip and PIN.
While suppliers are keen to downplay the significance of the Cambridge team's research, other observers argue that it undermines the insistence of banks that any transactions authorised by a PIN must have been either made by a customer or the product of their negligence in keeping their cards and PIN numbers secure.
Jay Abbott, a security consultant at PricewaterhouseCoopers (PwC), commented: “At present, the customer is accountable for the fraud as banks argue that PIN verified transactions are secure. Given this attack demonstrates a clear method of bypassing the PIN system, this assertion by the banks stands on shakier ground.”
The Cambridge University team has developed a "very effective and simple way of exploiting weaknesses in the system," Abbott said. He added that even so, pulling the attack off in practice would be far from straightforward.
“A number of electronic components are involved that require concealment, therefore the fraudster must remain in contact with the card at all times", he explained. "A simple process change by the retailer of asking for the card holder to hand over the card would break the circuit, although this possibility can be eliminated if the card reader is fixed to a point on the other side of the counter."
“One of the motivations for introducing Chip and PIN in the first place was to give consumers extra protection by limiting the chance of a sales assistant being able to “skim” the card and duplicate it for fraudulent purposes. Also it is important to note that it only affects transactions where the fraudster visits the retailer in person and does not work online or on ATM transactions, where different forms of authentication are required," Abott added.
Sig sig sputnik
Steve Brunswick, strategy manager at Thales Information Systems Security, whose technology helps secure roughly 70 per cent of credit and debit card transactions worldwide, argues that Chip and PIN offers "proven benefits" not undermined by the Cambridge team's work.
It is all about the burden of proof
With magnetic stripes and signatures, banks and retailers had the burden of proof to show that a disputed transaction was not fraud. Otherwise the cardholder did not pay the disputed transaction.
With chip & pin, by default if the pin verification is supposedly completed, the cardholder is on the hook and the burden of proof on possible fraud rests on him. Which is nice, as individuals do not have the resources to fight such disputes.
I don't really care about the technical details of the system - that's bank's business, they want to prevent losses to them, by all means, do whatever you want. However, if said technology is used to shift the burden of proof to the customer, it has to be absolutely 100% bulletproof. Chip & pin demonstrably is not. Just change the assumption back to magnetic stripe/signature mode - burden of proof lies with the bank and/or the merchant to prove that the cardholder made the disputed purchase (more than just "we have these logs that show you inputted the pin") or the cardholder is not liable and the current system is fine.
Why can't we just skip this whole technical stuff and try simple social engineering.
Change the law so that a bank is responsible for all fraud or theft made on one of their cards until such a time as the customer holding the card is convicted by a jury of their peers of *deliberate* theft or fraud. And by "responsible", I mean "you have to give the complainant their money back the instant they report it".
Then we'll be spared all the banks lies about how chip and pin is secure and force them to implement a security scheme that is good enough to reduce their losses to an acceptable level.
Mine's the one with a wodge of non-sequential notes, a chequebook, an rfid blocker and a signed credit card (and microwaved chip) in the pocket.
Verified by Visa
So, there is yet another way around chip and pin. Ultimately it's pretty similar to
and plenty more.
What has been most interesting has been the banks response to these failings - that they have introduced the Verified by Visa scheme which includes a condition that transfers any liability for losses onto the customer. I do wonder what is the point of having regulatory bodies when banks are free to act like that in response to security breaches,