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Neiman Marcus says that 1.1 million credit cards are compromised

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January 27, 2014

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After Target recently reported that over 110 million of its customers' credit cards in the United States have been compromised, now it's U.S. luxury retailer Neiman Marcus that is confirming that details from over 1.1 million of its customers' cards were stolen in a recently detected high-profile security breach.

Credit card details were lifted after hackers successfully planted malware on payment systems over a period that ran between July 18 and October 30, 2013, far earlier than previously suspected.

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

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

During that period, approximately 1,100,000 customer payment cards could have potentially been visible to the malware. To date, Visa, MasterCard and Discover have been notified that approximately 2,400 unique customer payment cards used at Neiman Marcus and Last Call stores were subsequently used fraudulently.

The retailer said that 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 that it isn't 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 CEO at Neiman Marcus Group said that "he was very sorry that some of our customers' payment cards were used fraudulently after making purchases at our stores".

Neiman Marcus said that it is offering the affected customers free credit card monitoring services. "The timeline of the Neiman Marcus compromise demonstrates the strong need for organizations to store long term forensic audit trails in order to investigate security breaches," said Tim 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."

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

Reuters previously reported that at least three other unnamed retailers may have also been hit by attacks using similar techniques and tools.

On Thursday, Reuters reported that the Feds have since expanded their victim list to include no less than twenty identified victims of hacking over the last year.

The FBI has also put out a warning to retailers urging them to review their security arrangements and to prepare for future possible attacks of the same nature.

Apparently geographically confined to North America, the spate of retailer credit card breaches has led some internet security observers to suggest that the introduction of Chip and PIN would be enough to frustrate future frauds along the same lines.

Anti-fraud firm Easy Solutions argues that 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.

Overall, internet 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 can be used to thwart this particular line of attack, says Levi Gundert, technical lead at the Cisco Threat Research department.

In other internet security news

Internet security officials in Germany are warning web users that large networks of hijacked, hacker-controlled PCs (ie- botnets) have harvested no less than 16 million email addresses and password combinations for websites and critical online services.

The German Office of Information Security (called the BSI) says police and security researchers have been closely following thousands of computers that have been infected by malware to spy on users and then send large quantities of spam.

The investigators in Germany found that the computers had gathered a vast collection of email addresses and passwords for mail accounts, social networking websites such as Facebook and Twitter, and all sorts of other services.

The sensitive credentials were lifted in bulk from infected systems and phishing emails were then sent from the botnets' drones.

The BSI and Deutsche Telekom have this week set up a German-language website where users can check their email addresses against the miscreants' database.

Should a user's address be found in the collection, they'll be told to scan their systems for malware, install anti-malware tools, and then change their passwords, particularly where a single password was shared for multiple accounts.

Frustratingly, the BSI didn't reveal the malware powering the botnets, but it did publish an otherwise extensive FAQ in the German language.

Even without the aid of malware and botnet heists, many users are leaving themselves dangerously vulnerable to account theft from the use of poor password choices.

Easily-guessed passwords were found to still be the most popular choices for log-in credentials. We'll keep you updated.

In other internet security news

In a closely scrutinized public speech on national television about the NSA and its covert spy programs, President Obama said this week that the work has already begun on hammering out some detailed reforms.

The President also announced some initial measures, including several steps to prevent the outright abuse of the widely criticized bulk phone-records program and to initiate greater privacy protections for citizens of other nations.

But critics were mostly highly skeptical and unimpressed of the President's speech, some saying it's 'too little, too late'. The speech was a direct response to comments and recommendations made by the president's handpicked NSA Review Group in a report released in late December.

In a larger sense, it was a reaction to the global debate over civil liberties and national security brought on by the leaking of top-secret NSA documents by former agency contractor Edward Snowden-- a debate that's revealed the alarming surveillance capabilities made possible by the digital age.

Echoing remarks in the Review Group's report, the President addressed the need for laws and values to keep pace with technology. "What's at stake in this debate goes far beyond a few months of headlines, or passing tensions in our foreign policy. When you cut through the noise, what's really at stake here is how we remain true to who we are in a world that is remaking itself at dizzying a speed," Obama said.

And the president signaled that he's aware of the concern raised by surveillance critics such as Snowden, Web co-inventor Tim Berners-Lee, journalist and Snowden confidant Glenn Greenwald, and others that say the Internet is at risk of being warped from a free and open, creative space into a Big Brother spy tool that would eliminate privacy once and for all.

"As the nation that developed the Internet in the first place, the world expects us to ensure that the digital revolution works as a tool for individual empowerment rather than government control," Obama said.

As for the practical realities behind such a guarantee, the president specifically tackled some of the Review Group's proposals and said that other proposals would be explored further before any decisions were made. Greenwald expressed skepticism about the real reforms behind Obama's "pretty words."

One of the most talked about items on the agenda was the program whereby the NSA vacuums up, without a warrant, the metadata -- information on calls placed and received -- that's associated with every telephone call made within, to, and from the U.S. every day.

In its report, the Review Group said, as have many people concerned about such surveillance, that metadata "can reveal an enormous amount about that individual's private life." It also said its review suggested that "the information contributed to terrorist investigations" by the NSA's bulk collection of telephony metadata "was not essential to preventing attacks and could readily have been obtained in a timely manner" using conventional legal means.

But one of the group's members -- former CIA Deputy Director Michael Morrell -- said in a later editorial that the program "would likely have prevented 9/11" had it been in place prior to the 2001 terror attacks though the Review Group report also noted, as others have, that the intelligence community had info that could have helped stop the plot but failed to share it among the appropriate agencies, namely the CIA and the FBI.

And Obama cited 9/11 when discussing the program in his speech and said the metadata effort was an important counterterrorism tool. "The telephone metadata program was designed to map the communications of terrorists, so we can see who they may be in contact with as quickly as possible," he said, adding later that "the Review Group turned up no indication that this database has been intentionally abused. And I believe it is important that the capability that this program is designed to meet is preserved."

But the President added that he recognized the danger of abuse of such a program-- ''I believe critics are right to point out that without proper safeguards, this type of program could be used to yield more information about our private lives, and open the door to more intrusive, bulk collection programs. They also rightly point out that although the telephone bulk collection program was subject to oversight by the Foreign Intelligence Surveillance Court and has been reauthorized repeatedly by Congress, it has never been subject to vigorous public debate.''

The President moved toward adopting the Review Group's recommendations on the metadata program. The group said the government should no longer collect and store phone-call metadat. Instead the information should be held by the phone companies (as it is already, as business records) or by some other third party, and that the NSA should need a court order, on a case-by-case basis, to access it.

The president said a transition would take place and that details would need to be worked out because of potential difficulties. "Relying solely on the records of multiple phone-service providers could require companies to alter their procedures in ways that raise new privacy concerns," the President said.

"On the other hand, any third party maintaining a single, consolidated database would be carrying out what is essentially a government function with more expense, more legal ambiguity, and a doubtful impact on public confidence that their privacy is being protected," he added.

The president said he's ordered the attorney general and intelligence officials to come up with a workable option "that can match the capabilities and fill the gaps that the Section 215 [metadata] program was designed to address without the government holding this metadata."

Their report is due March 28, the day the program comes up for reauthorization in Congress. Obama said he'd also speak with the appropriate congressional committees about a possible solution.

In other internet security news

Target is now saying that information taken in December's security breach includes names, phone numbers, postal and e-mail addresses and could affect upwards of 110 million U.S. citizens.

The nationwide retailer today just announced that personal information on as many as 70 million additional customers was stolen as part of the company's payment card data breach. That's on top of the 40 million users that were initially reporteded on December 19. Target has been a lot in the news lately.

The information stolen includes names, mailing addresses, zip codes, phone numbers and e-mail addresses, Target said.

While company spokesperson Molly Snyder said that there could be some overlap with the approximately 40 million people first said to be affected by the breach in December, the new total of people impacted by the breach could be as high as 110 million, if not a bit more.

"I know that it's frustrating for our guests to learn that this information was taken and we are truly sorry they are having to endure this," said Gregg Steinhafel, chairman, president and chief executive officer at Target.

"I also want our guests to know that understanding and sharing the facts related to this incident is important to me and the entire Target team," he then added.

Today's news is the latest blow to Target. The company said back in December that it believed the data stolen came from transactions made between November 27 and December 15.

Not surprisingly, hackers moved quickly to take advantage of the stolen information and put the information on the black market. According to several reports, following the Target breach there was a "ten-to-twentyfold increase" in stolen cards available on underground markets.

Target, which has nearly 1,800 stores in the United States, said Friday that affected customers will suffer no liability for any fraudulent charges.

The company will also offer one free year of credit monitoring and identity theft protection (!) One other note from Target-- the company was forced to lower its fourth-quarter sales forecast, saying that it experienced "meaningfully weaker-than-expected sales" following the data-breach announcement.

In other internet security news

According to Light Cyber, an internet security company, several malicious ads served to Yahoo surfers were designed to convert personal computers and laptops into a powerful Bitcoin mining operation.

The cybercriminals who infected the computers of European Yahoo users apparently wanted to create a very large Bitcoin network that could have yielded several million dollars in the virtual currency.

Researchers at Light Cyber revealed this week that one of the malware programs aimed to use the resources of infected PCs to perform the complex calculations necessary to run a Bitcoin network.

Reported earlier this month by fellow security firm Fox IT, the campaign spread its package by using Yahoo's ad server to deploy malicious ads. The malware took advantage of security vulnerabilities in Java to install itself on computers that visited the site.

Light Cyber founder Giora Engel says that his company detected the attack in its customers' networks four days before it was publicly known and reported by Fox IT.

Engel explained how the firm learned of the malware-- "Many of our customers share threat intelligence with our Magna Cloud, so our research lab noticed this unknown malware and attack campaign coming from our customers' networks and investigated the specific case. As part of the investigation, we found a few tools that were downloaded by the malware. This specific attack campaign incorporated a variety of different monetization techniques using a variety of malwares."

The attackers made sure they exploited each of the millions of infected machines to its full extent by employing Bitcoin miners, WebMoney wallet hackers, personal information extraction, banking information extraction, and various generic remote access tools.

Engel added that Light Cyber detected a portion of the infected computers talking to Bitcoin mining pools on the Web, a sign that they were actually being used for mining.

He also explained how Bitcoin mining works-- "Bitcoin mining is a complex, computationally intensive process that gets harder and harder in time. Bitcoin is mined in several blocks, and since it takes a lot of computing power to mine a block, the miners join forces and form mining pools or bitcoin mining networks in which each one participates with his computing power and gets in return his share of the revenue. In our case, the malware author would be the sole beneficiary of the mining efforts."

To be sure, Bitcoin mining on just a few PCs is not usually worth the effort, Engel added, because the electrical cost of operating the computer is higher than the revenue garnered from the mining itself.

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Source: Reuters.

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