Target Data Breach – Holiday Shopping Season 2013

INVESTIGATION UPDATE:

From KrebsonSecurity: Target’s HVAC contractor was the vulnerability for the attack–

“It’s not immediately clear why Target would have given an HVAC company external network access, or why that access would not be cordoned off from Target’s payment system network.

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It remains unclear when the dust settles from this investigation whether Target will be liable for failing to adhere to payment card industry (PCI) security standards, violations that can come with hefty fines.

Avivah Litan, a fraud analyst with Gartner Inc., said that although the current PCI standard (PDF) does not require organizations to maintain separate networks for payment and non-payment operations (page 7), it does require merchants to incorporate two-factor authentication for remote network access originating from outside the network by personnel and all third parties — including vendor access for support or maintenance (see section 8.3).”

AND ON THE LITIGATION FRONT:

Banks file suit over their costs:

“The cancellation and reissuance of cards has caused significant damages and losses to Amalgamated and members of its class,” the company said in its complaint.

http://blogs.wsj.com/riskandcompliance/2014/02/07/banks-heap-suits-on-target-over-data-breach/

 

POST-BREACH REVIEW:

Notification to consumers (not just customers, apparently) appeared to be a phishing attack and with link to suspicious subdomain:

http://www.pcworld.com/article/2089104/target-breach-notifications-are-a-perfect-example-of-what-not-to-do.html

CHRONOLOGY:

From the New York Times:-

DEC. 12 The Secret Service requests a meeting with Target.

13 Target is informed of the breach by the Secret Service and Justice Department.

15 Target removes the malware that evening.

17 Credit card companies are given information about which cards were compromised. Target determines 40 million customers were affected and tells financial firms it will publicly announce the breach on Dec. 18.

18 MasterCard and Visa begin informing banks of the breach. Brian Krebs publishes a story on the breach in the afternoon.

19 Target makes its first public acknowledgement of the breach.

20 Target tells its financial partners that credit card data and encrypted PIN data had been taken. JPMorgan decides at night to reissue all debit cards that were compromised and keep its branches open late over the weekend.

UPDATES:

Congressional hearing: Target and Secret Service representatives are asked to testify before the House Commerce sub-committee.  See:

http://thehill.com/blogs/hillicon-valley/technology/195664-target-to-testify-on-data-breach-next-month

And from Reuters: A cybersecurity firm, IntelCrawler, said it has uncovered at least six ongoing attacks at merchants across the United States whose credit card processing systems are infected with the same type of malicious software used to steal data from credit cards at Target Inc.  The attackers used an inexpensive “off the shelf” malware known as BlackPOS. The same malware may have also been involved in the Neiman Marcus attack.

http://www.reuters.com/article/2014/01/17/us-target-databreach-idUSBREA0G18P20140117

http://intelcrawler.com/about/press08

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Target, one of the largest US retailers, is reporting a data breach from November 27th through December 15th, involving consumer credit card data – customer name, card number.  News reports are estimating 40 million accounts impacted.Credit Cards

The Target website includes a banner at the top of the home page with a link to the current information.  Click to that link and Target has included the following information, so far:

“We wanted to make you aware of unauthorized access to Target payment card data. The unauthorized access may impact guests who made credit or debit card purchases in our U.S. stores from Nov. 27 to Dec. 15, 2013…

We began investigating the incident as soon as we learned of it. We have determined that the information involved in this incident included customer name, credit or debit card number, and the card’s expiration date and CVV (the three-digit security code).”

See notice at:

https://corporate.target.com/discover/article/Important-Notice-Unauthorized-access-to-payment-ca

And news articles at:

http://www.reuters.com/article/2013/12/19/us-target-breach-idUSBRE9BH1GX20131219

http://www.latimes.com/business/money/la-fi-mo-target-40-million-credit-debit-cards-possibly-breached-20131219,0,774974.story#axzz2nvWL0Dlb

UPDATE:  It appears the magnetic strip is getting the blame for the security weakness and the fact that the data from the Target systems was unencrypted as the data transferred through the payment system.  Reportedly, 40 million accounts had names, credit/debit card numbers, expiration dates and three-digit security codes compromised.  Target has not yet specifically identified the method of access or weakness that allowed for the breach.

Experts suggest it is time for U.S. card issuers to go to the chip-card system, currently in use in most other markets, as chip cards use a different encrypted mathematical value for each transaction, making it harder for criminals to use stolen data for future purchases.

ADDITIONAL UPDATE:

PINs also breached:-

http://bits.blogs.nytimes.com/2013/12/27/targets-nightmare-goes-on-encrypted-pin-data-stolen/?_r=0

UPDATE AND COMMENTARY: 

What are the prospects for class litigation?  Will the claimants be able to string together an ‘actual injury’ theory or is it more likely that a “class” of financial institutions will bring suit?

http://blogs.reuters.com/alison-frankel/2014/01/13/why-most-consumer-data-breach-class-actions-vs-target-are-doomed/?goback=%2Egde_88093_member_5828604845245898755#%21

See also top ten data breaches for 2013 (thanks to Daniel M. Ryan for graphs):

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2013 Top 10 US Data Breaches 1

Reports of ‘Safe Harbor’ Demise are Premature?

Brill addresses Issues at IAPP Data Protection Congress in Brussels
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FTC Commissioner Julie Brill delivered remarks at the IAPP Data Protection Congress in Brussels today along with one the EU’s Commissioners, Constantijn van Orange-Nassau.  Commissioner Brill acknowledged some of the criticism being leveled at the U.S.-EU Safe Harbor Data Protection process in light of revelations from the Edward Snowden-NSA so-called spying scandal.  Snowden’s disclosures included copies of PowerPoint presentation slides identifying the NSA’s PRISM program, which program reportedly allowed the NSA to gain access to the private communications of users of nine popular Internet services (including Google, Yahoo!, Facebook, Microsoft and others).  The Safe Harbor framework is supposed to allow for the transfer of such personal data in compliance with the EU Data Protection Directive.  The FTC is responsible for compliance enforcement, once an entity self-reports to the U.S. Department of Commerce.

As a result of the revelations, certain EU principals began to question the efficacy of the terms of transferring data between U.S. and EU entities, via the Safe Harbor program.  See remarks from Vice President Reding as of July 2013:

http://europa.eu/rapid/press-release_MEMO-13-710_en.htm

–“PRISM has been a wake-up call. The data protection reform is Europe’s answer.”

–“The Safe Harbour agreement may not be so safe after all.”

Now, Commissioner Brill acknowledges the issue and responds, in part:

–“[Safe Harbor is a] very effective tool for protecting the privacy of EU consumers … the FTC has vigorously enforced the Safe Harbor.”

–“We’ve taken the initiative to look for Safe Harbor violations in every single privacy and data security investigation we conduct. That’s how we discovered the Safe Harbor violations of Facebook, Google and Myspace.”

–“[Safe Harbor has]received its share of criticism in large part due to revelations about government surveillance. There’s no doubt that has created tensions in the transatlantic partnership.”

Commissioner Brill likewise took to Twitter to drive home the point:  “Safe Harbor is strong – can help make it strong; increase transparency; make ADR more affordable; strengthen accountability #dpcongress”

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See article at:

https://www.privacyassociation.org/publications/eu_u.s._officials_indicate_potential_privacy_agreement_at_data_protection_c

Her EU colleague took the opportunity to outline what should be the focus for these cross-Atlantic partnerships: 1) a standard commitment to Privacy by Design; 2) any Big Data applications that might put fundamental rights at risk should have a privacy impact assessment required; 3) consent is a cornerstone of data protection; and, 4) there needs to be a commitment to de-identification.

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Brill, for her part, Tweeted a photo of the two privacy regulators engaged in conversation; apparently, doing some one-on-one diplomacy to try to calm these choppy waters!
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Ride the Pony, Mony, Mony

TrustWave SpiderLabs tm is reporting on stolen credentials for approximately two million compromised accounts.  The tactic is similar to earlier breaches: harvesting passwords using key logging software.  The team believes the passwords had been harvested by a large botnet –
dubbed Pony.  Given that many users employ the same or similar passwords for many purposes, the security risks are apparent.  TrustWave cautions “If you don’t enforce a password policy, don’t expect your users to do it for you.”

Most of the compromised web log-ins belong to popular websites and services such as Facebook, Google, Yahoo, Twitter, LinkedIn, etc.

See link to the report:

http://blog.spiderlabs.com/2013/12/look-what-i-found-moar-pony.html

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