Tag Archives: MasterCard Incorporated

The World Cup Walls Come Down

The more I see and read about the “sponsorship” behind the World Cup the more appalled I am. Ever since I heard that MasterCard (briefly) exerted a monopoly over buying tickets to the finals with a credit card, and men were told to take off their lederhosen, I realised that although it claims to, sponsorship never works to the benefit of the end user. But until I read this post from the excellent Paul Mason of BBC Newsnight, I hadn’t really linked what was happening to my supposed field of interest, the Internet and new media:

This, therefore is turning out to be the first “user-generated-content” global sports event. Much of the content is pretty scrappy but it shows the potential of the medium and how hard it’s going to be for Sepp Blatter and co to defend their intellectual property (image rights for individual players, no Visacards allowed etc).

Up to now football has managed to ride the big business waves of the 1990s: paid-for content, pay-TV, below the line advertising budgets and sponsorship. How will it cope with a world where all intellectual property rights are under threat? Right now the monopoly on images is easy to defend but the monopoly on sound commentary is effectively broken because you can see numerous people in the crowd giving commentaries to their mates live.

(If you’re an England fan you’ve got to read his other post about what the manager should do, a post that has attracted, at the time of writing. more than 120 comments. Last night when I looked it had about 20.)

Going back to his intellectual property post, it’s a good point. From folk taking video of their TV to others at the game shooting the scene with their camera phone, it’s going to be impossible to ring-fence what is and isn’t seen or heard in the future. (It doesn’t mean they didn’t try.) This isn’t as clear cut as Napster file sharing, where original digital content is copied and shared. It’s about individuals mashing up what they see and heard with their own creativity. It’ll be interesting match to watch, as an increasingly sophisticated (and avaricious) marketing industry faces off against the user-generated anarchy/cooperatives of shared content.

How Long Did The ‘Biggest Data Theft In History’ Go Unreported?

I continue to be intrigued, but somewhat perplexed, by the CardSystems security breach that happened nearly two months ago now. Who knew it first, and who told who, and when? And why did it take so long to tell the rest of us?

A U.S. company claimed it was its software that first spotted the breach last year, in a press release issued July 13:

ACI Worldwide (Nasdaq: TSAI), a leading international provider of enterprise payment solutions, today announced that its ACI Proactive Risk Manager™ software helped National Australia Bank (NAB) detect the recently revealed security breach at CardSystems Solution before any other bank or financial institution.

But did it? The press release from ACI quotes Australian Treasurer Peter Costello as having “recently told Parliament that National Australia Bank was actually the first bank in the world to uncover the fraud”:

“It was the NAB that uncovered this fraud out of all the domestic and international banks of the world and reported it to MasterCard and Visa in September 2004,” said Costello.

Wow. That’s eight months before anyone else, since CardSystems didn’t announce the fraud until May 22 2005. So what did the Australian media say about this?

AAP reported June 22 (sorry no links for these, they’re from Factiva) quoted Costello as saying:

“It was the NAB that uncovered this fraud out of all the domestic and international banks of the world, and reported it to Mastercard and Visa in Sept 2004,” he said. Mr Costello said the US Federal Bureau of Investigations began investigations soon after the fraud came to the attention of Visa and Mastercard.

He said the FBI declared the issue a crime scene only on June 1 this year. “During this investigation organisations were told by the FBI not to say anything publicly, and the FBI only allowed public comment on Thursday or Friday last week,” he said.

A Reuters report, covering the same press conference (or whatever it was; neither wire is clear on where Costello was speaking) quoted Costello as saying December, not September. An updated report from Reuters the same day adds comments from MasterCard and Visa that shed further light on this:

MasterCard spokeswoman Sharon Gamsin said, “We said from the beginning that it was reports of fraud from issuers that enabled us to do the analysis that led to CardSystems and led to the scope of this incident. One report of fraud would not necessarily have gotten us to that point.”

Visa spokeswoman Rosetta Jones said that when her company detects fraud, “banks are notified and accounts are closed. In this case, the National Australia Bank may have detected fraud late last year, but there was no clear indication that this fraud was part of a larger data compromise at that time.”

Finance Minister Nick Minchin said in an address to Australia’s parliament that Australia & New Zealand Bank Ltd. , Commonwealth Bank Ltd. and NAB had each been monitoring the fraud since December and had canceled and reissued cards where transaction were suspect.

An AAP story two days later adds further detail:

As long ago as December last year, round-the-clock fraud squads at the four big banks had picked up on a pattern of unauthorised transactions on their customers’ credit cards, originating out of the United States.

Treasurer Peter Costello told parliament this week that National Australia Bank was actually the first bank in the world to uncover the fraud, which has been traced to a security breach at a US company that processes transactions.

The Australian banks contacted about 2,000 affected customers and issued them with replacement cards months before MasterCard’s announcement this week.

This raises a host of issues that I’ve not seen addressed elsewhere. If the Australian banks saw this fraud so early, why did it take so long? The Australian Financial Review (subscription required) today pointed out these inconsistencies and the fact that California credit card holders have filed suit in San Francisco against CardSystems, Merrick Bank, Visa and MasterCard, claiming “the companies should take responsibility for the security data breach”:

CardSystems has claimed it did not discover the security breach until May 22, 2005. But it is now known MasterCard and Visa were alerted to fraud resulting from the data breach as early as January. The complaint also alleges Visa and MasterCard failed to take “prompt remedial action” or take steps to notify affected consumers.

“Defendants, by failing to timely disclose the security compromise or data theft to affected consumers and merchants, are attempting to shift the burden of discovering resultant fraud away from themselves, even though they are responsible and are in a better position to discover and prevent fraud to consumers and merchants.”

Visa and MasterCard have defended their handling of the incident, saying they had to be sure CardSystems was the source of the data spill before going public.

So, as far as we can deduce from this, NAB, via its fancy software, spotted some kind of fraud taking place. That information was passed on to Visa and MasterCard sometime between September 2004 and January 2005. The FBI passed this information onto CardSystems at some point, although why everyone decided to sit on the information is unclear. Their initial statements, which I illustrated in the original post, will probably require some finessing at some point as the suit passes through the legal system.

The Big Credit Card Theft

Trying to make sense of the massive theft of credit card numbers at CardSystems, ‘a leading provider of end-to-end payment processing solutions focused exclusively on meeting the needs of small to mid-sized merchants’, in which information on more than 40 million credit cards may have been stolen.

CardSystems itself has issued only a brief statement on its website (no permalink available) saying it had identified

a potential security incident on Sunday, May 22nd. On Monday, May 23rd, CardSystems contacted the Federal Bureau of Investigation. Subsequently, the VISA and MasterCard Card Associations were notified to alert them of a possible security incident. CardSystems immediately began a remediation process to ensure all systems were secure. Additionally, CardSystems immediately engaged an independent 3rd party to validate systems security.

Notice the careful language: It talks only of ensuring all ‘systems were secure’ — in the security industry this is like checking all the locks work while watching all the horses bolting off down the street. (And don’t the FBI work on Sundays? Why wait a day to let them know?)

Then there’s the question: Why wait almost a month to let us know? A separate story by AP quotes CardSystems as saying that

it was told by the FBI not to release any information to the public. The company says it’s surprised by MasterCard’s decision to go public.

Actually, not so, say the FBI: Another AP story quotes an FBI spokeswoman, Deb McCarley, as denying

that the agency told CardSystems not to disclose the existence of the intrusion. McCarley says the FBI told CardSystems to follow its corporate policies without disclosing details that might compromise the ongoing investigation.

In fact, a MasterCard statement suggests that it was they, not CardSystems, who first identified the breach:

MasterCard International’s team of security experts identified that the breach occurred at Tuscon-based CardSystems Solutions, Inc., a third-party processor of payment card data. Third party processors process transactions on behalf of financial institutions and merchants.

Through the use of MasterCard fraud-fighting tools that proactively monitor for fraud, MasterCard was able to identify the processor that was breached. Working with all parties, including issuing banks, acquiring banks, the processor and law enforcement, MasterCard immediately launched an investigation into the breach, and worked with CardSystems to remediate the security vulnerabilities in the processor’s systems.

In the meantime CardSystems was pretending it was business as usual, including an announcement on June 14 of a move into check processing, and posting job-ads for a ‘Software Quality Assurance Analyst’ to cover, among other things, ‘troubleshooting from operations, production, and outside vendors’ who can work ‘in a very fast-paced, high-visibility organization where priorities often change’. Indeed.

Anyway, the scale of the thing is pretty awesome: Softpedia quotes experts as saying

that this is the worst case of data theft in IT history. “In sheer numbers, this is probably one of the largest data security breaches,” said James Van Dyke, principal analyst at Javelin Strategy & Research in Pleasanton, Calif.

And just how did the theft happen? Details are sketchy, probably because no one yet knows (the MasterCard software which identified the fraud did so by monitoring transactions, not the actual breach. In other words, they observed the stolen goods being peddled, not the actual break-in). According to another AP story, MasterCard has identified CardSystems as being ‘hit  by a viruslike computer script that captured customer data for the purpose of fraud’, but hasn’t given any more details. CardSystems itself is not talking:

CardSystems’ chief financial officer, Michael A. Brady, refused to answer questions and referred calls to the company’s chief executive, John M. Perry, and its senior vice president of marketing, Bill N. Reeves. A message left for Perry and Reeves at the company’s Atlanta offices was not returned.

Both Perry and Brady have been with CardSystems a little over a year.

Closing The Door After The Phish Has Bolted

MasterCard, one of several banks discovered to have flaws on their websites that would have allowed a phisher to capture passwords, says it has fixed the problem.

American Banker Online reported (subscription required) last week that MasterCard International “has confirmed finding and fixing a flaw on its web site’s ‘Find A Card’ tool that could have facilitated a phishing scam”. The flaw had been discovered by British programmer Sam Greenhalgh and published on his web site on June 28. Greenhalgh lists in a sidebar those web sites that have been fixed or the flawed code removed. It’s not yet over: He says that PayPal and several sub-domains of Microsoft.com “remain susceptible”.

Besides the failure of some web sites to tackle the problem, a few other things worry me. 

  • Why did it take MasterCard three weeks to remove the flawed code? American Banker reports that the tool was removed on July 20. As Greenhalgh writes it’s probably a case of closing the door after the horse has bolted. (American Banker quotes MasterCard as saying that “It does not believe that any scams were attempted”.)
  • Why is no mention made of the flaw or the fix in MasterCard’s own ‘newsroom’? There are two releases trumpeting MasterCard’s own ‘fight on phishers’ but nothing of its own vulnerabilities.
  • How many more vulnerabilities are out there? Did Greenhalgh’s discovery trigger a serious audit of all code on such websites, or did they just plug the holes he had found?

Anyway, plaudits should be offered to Greenhalgh (so far I’ve not seen any from the banking fraternity, but I could be wrong) for his work and others encouraged to hunt for more leaks. Such folk are not troublemakers looking for nits to pick. They perform a very useful service. Phishing has shown that all this is no longer just theory, if it ever was. Every one of these vulnerabilities will be found and exploited if the good guys don’t get there first.

Wiretapping Your Way Into Credit Card Fraud

If you think the Internet is a scary place for stealing your sensitive bank data, try your local gas station.

The Star Tribune in Malaysia reports that criminals there are increasingly intercepting the transmission of credit card data between the point of sale machines that swipe your card and the bank. This data, incredibly, is being sent in unencrypted text form so all a criminal has to do is ‘wiretap’ the phone line and capture the data — usually onto an MP3 player.  All they need to do is find the phone line, either in the outlet’s Main Distribution Frame room, or that of the bank itself and record the gurgling modem sound. A special decoder can then convert that noise into data. Your data.

The banks are finally getting onto this. Malaysia’s central bank has ordered all credit cards in the country to be EMV(Europay/MasterCard/Visa)-compliant by end-2005 (this means smart, and supposedly fraud-proof). But for now, The Star Tribune says, the banking industry is trying to encrypt data. Unfortunately, so far nothing has been agreed on.

At the risk of sounding appalled, I’m appalled. How can such data be transmitted without a modicum of encryption? This means that when we’re typing our credit card number into a web page it’s actually more secure than if we give it to the guy at the gas station or restaurant?

I was never that happy anyway doing the latter, given the prevalence of skimming — where a crooked employee would either double-swipe your card, or swipe it into a separate device that stored your details — but now, it seems, the data is up for grabs even when it’s being transmitted to your bank for verification. Yikes.