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1.1 MILLION customers' credit card data was swiped in Neiman Marcus breach

It was the old 'malware on point-of-sale terminal' wheeze again

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US luxury retailer Neiman Marcus has confirmed that details from 1.1 million customers' cards were stolen in a recently detected high-profile breach.

Card details were lifted after hackers successfully planted malware on payment systems over a period that ran between 18 July and 30 October last year, far earlier than previously suspected.

Around 2,400 of the compromised credit card details have subsequently been abused to make fraudulent purchases, according to an update by Neiman Marcus on the breach.

While the forensic and criminal investigations are ongoing, we know that malicious software (malware) was clandestinely installed on our system. It appears that the malware actively collected or "scraped" credit card data from July 16, 2013 to October 30, 2013.

During those months, approximately 1,100,000 customer payment cards could have potentially been visible to the malware.

To date, Visa, MasterCard and Discover have notified us that approximately 2,400 unique customer payment cards used at Neiman Marcus and Last Call stores were subsequently used fraudulently.

The retailer said it has already taken extensive security precautions to prevent a repetition of the breach, which has become the subject of ongoing forensic investigation and law enforcement interest.

Neiman Marcus said it is not aware of any connection between its breach to the spill of 40 million credit card details by fellow retailer Target.

In an associated statement Karen Katz, president and chief exec at Neiman Marcus Group, said "was very sorry that some of our customers' payment cards were used fraudulently after making purchases at our stores".

Neiman Marcus is offering affected customers free credit card monitoring services.

"The timeline of the Neiman Marcus compromise demonstrates the need for organisations to store long term forensic audit trails in order to investigate breaches," said Tim "TK" Keanini, CTO at security tools firm Lancope. "According to Neiman Marcus, the attack activity took place between July 16th and October 30th, 2013. However, the compromise was not discovered until January of 2014."

How deep does the rabbit hole go?

Shopping giant Target and Neiman Marcus both publicly announced huge breaches in December and January, respectively.

The Target breach at least has been narrowed down to a specific malware tool (a modified version of BlackPOS) that affected its point-of-sale systems and, according to some security experts, enterprise payment processing servers.

Reuters previously reported that at least three other unnamed retailers may have been hit by attacks using similar techniques and tools. On Thursday it reported that the Feds have since expanded their victim list to include 20 identified victims of hacking over the last year. The FBI has put out a warning to retailers urging them to review their security arrangements and to prepare for future possible attacks.

The spate of retailer credit card breaches, apparently geographically confined to North America, has led some observers to suggest the introduction of Chip and PIN would be enough to frustrate future frauds along the same lines. Anti-fraud firm Easy Solutions argues upgrading to Chip and PIN alone won't be enough.

Other experts suggest that vulnerable Point of Sale systems are the main villains in the Target and Neiman Marcus breaches.

Security researchers at Cisco have published a blog on detecting future payment card compromises and shortening the remediation window for such attacks.

The payment card data attacks on Target and other retailers were possible because the POS payment technology includes third party software installed on a computer/terminal. The problem is that the payment card data is susceptible to interception in memory before the encryption process and transmission across the network.

Hardware encryption devices at the point of sale (POS) can be used to thwart this particular line of attack, Levi Gundert, technical lead at Cisco Threat Research, Analysis, and Communications (TRAC) argues. ®

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