Original URL: http://www.theregister.co.uk/2008/08/21/pin_tampering_analysis/

UK fraudster gang go PIN sniffing

Portsmouth Asda links to credit card hack

By John Leyden

Posted in Security, 21st August 2008 09:57 GMT

Analysis The organised tampering of PIN entry devices to commit credit card fraud, which led to arrests in Birmingham last week, has been linked to a breach in an Asda store on the outskirts of Portsmouth.

Cash was withdrawn from ATMs in China and Canada after the cards were used in the Gosport branch of Asda, Register sources confirmed.

Margaret Galea, 66, was one of the Barclays customers hit by the scam, which involved creating counterfeit cards and tampering with PIN entry terminals to capture and relay details to cybercriminals. Galea and fellow victim Deborah Gibbs, 48, each had around £1,000 taken from their accounts as a result of the scam. Barclays spokesman Danny Reardon told the Portsmouth News that 20 customers had lost money.

Arrests of the two suspects last week are part of an investigation into the tampering of PIN entry devices. Recent posts in underground forums have offered information on how to tamper with PIN entry devices, including schematics and a specialist Bluetooth transmitter and associated software for $4,000, net security firm PrevX reports.

It's likely that a network of cybercriminals has adopted the tactic, though how commonplace its use is remains unclear.

PED internals

Cambridge University research lifted the lid on PIN Terminal insecurity

Concerns about the security of chip and PIN surfaced after Shell temporarily withdrew the authorisation method in May 2006. These worries were underlined by research by Cambridge University, published in February 2008, which discovered a lack of encryption in the data exchanged between PIN entry devices and cards during transactions.

After tampering with vulnerable devices cybercrooks harvested card details and PIN numbers; this data can be used in counterfeit cards to make withdrawals at foreign ATMs that only check details on easily forged magnetic strips.

Hacking Chip and PIN readers in this way is somewhat involved. The line from banking industry associations such as APACS is that there are easier, more cost-effective methods to extract the same information.

APACS maintains that Chip and PIN is the safest method of payment for goods and services. It points out that fraud on the High Street has steadily reduced since Chip and PIN's roll-out in 2005. However, figures from APACS show that online fraud (which is outside the scope of Chip and PIN), and more recently fraud abroad, have steadily increased.

APACS states that victims of PIN tampering attacks can rely on the banking code to refund them for losses. In these circumstances, customers' PIN numbers have been used to complete transactions. So unless a pattern of fraud is apparent, customers may have their work cut out to convince banks they have been careful in not disclosing their PIN when they come to contest "phantom withdrawals".

A leaked advisory from specialist police at the UK's Dedicated Cheque and Plastic Crime Unit (DCPCU) to merchants, distributed on 5 August - a week before the Birmingham arrests - warns of the risk:

Criminals have found it possible to insert data capturing equipment into the devices used to input credit/debit card and PIN details at retail outlets. These devices are known as PIN Entry Devices (or PEDs). <p/>

The method involves the theft of PEDs from stores and retail outlets. These stolen PEDs are re-engineered and fitted with additional equipment inside.

It should be noted that the criminals have overcome the security features of several different manufacturers. The compromised devices are then installed into a retail outlet, such as a supermarket or petrol station, (often with the assistance of a collusive member of staff) and card details and PINs captured from transactions. This data is transmitted to the criminals who then use it to create fake credit cards that are used abroad.

DCPCU advised merchants to regularly audit PIN entry systems to detect if devices have been moved or replaced. It also urged caution over the handling of malfunctioning PIN entry terminals, sent back to manufacturers for repair. As possible safeguards, it suggests the placement of internal CCTV systems to cover till areas, as well as IT systems to detect PED replacement. But security experts are sceptical about the effectiveness of such measuresp.

"I find some of the guidelines to be a bit far fetched, especially CCTV monitoring of each terminal," said Jacques Erasmus, director of research at Prevx. "This will cost a lot of additional money to protect the Chip and PIN systems. The scary thing with this attack is it’s so hard to detect - with ATM skimming, it’s much easier to detect [that] the machine has been tampered with."

He added that the production of see-through terminals by manufacturers such as Verifone and Ingenico could be one approach that would uncover terminal tampering, whic typically involves planting Bluetooth tapping on doctored devices.

Saar Drimer, one of three researchers from Cambridge University who have led efforts to investigate Chip and PIN terminal security, is also doubtful about the DCPCU advice.

"Recommending placing CCTV coverage of tills allows crooks to harvest cardholders' PINs during a transaction," he told El Reg. "From a cardholder security perspective, this is clearly undesirable, especially when APACS requires cardholders to be diligent with keeping their PINs secret, or face the loss when fraudsters withdraw money from their accounts using fake cards."

Drimer suggested connection between PIN entry terminals and back-end banking systems would make it easier to detect when tampered devices had been placed on networks. "Payment equipment should have been properly tamper-proofed and designed such that swapping PEDs is made very difficult," he said.

Andrew Goodwill, a director at card fraud prevention specialists The 3rd Man, said that although the latest scam relies on forged cards with counterfeit magnetic strips it was only a matter of time before crooks created counterfeit cards.

"I am astounded at just how easy criminals are able to get access to Chip and PIN machines from companies large and small and how easy it seems to be that they can then bypass the security measures that are built in each machine at manufacture," Goodwill told El Reg. "I believe we are only 18 months to two years away from criminal gangs being able to clone a chip and pin card (including the Chip)." ®