How really to prepare for a credit card compromise (PCI) forensics investigation: A ex-QIRA speaks out - David Barnett

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Reviewing cases ranging in size from your neighborhood bar to the massive TJX case, an ex-QIRA will discuss the dirty inside secrets of the card associations and QSA's. Reviewing lessons learned from …

Reviewing cases ranging in size from your neighborhood bar to the massive TJX case, an ex-QIRA will discuss the dirty inside secrets of the card associations and QSA's. Reviewing lessons learned from dozens of past forensic cases, this presentation will highlight how to prepare for a PCI mandated forensics investigation including; what steps should be taken to limit fines and fees, how to ensure you have proper legal representation, how to limit the scope of the investigation, and what questions to ask before deciding on who will conduct the forensic investigation.

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  • mom and pop restaurant, bar, coffee shop, bed and breakfast
  • multiple franchise sites all over the country during a typical breach timeframe
  • The large news breaking type
  • Why are
  • This behavior is typical with larger level 1 merchants whereas, level 4 merchants often just go bankrupt.
  • The merchant POC for fraud typically is in the PCI group
  • If a POS is retaining track data, who removes the old data, upgrades the software, New software/hardware
  • The aftermath of this incident is still in flux The issue still exists
  • Heard of the practice of shopping for QSA’s?


  • 1. Preparing for a PCI forensic investigation
    • A ex-QIRA speaks out
    Copyright 2010
  • 2.
    • Qualified Incident Response Assessor
    • They are the special investigation units of the Payment Card Industry who have PCI knowledge and forensic examination skills (supposedly)
    What is a QIRA?
  • 3. David Barnett
    • Sr. Security Architect, Orbitz WorldWide
    • also - Sr. Consultant, Blue-Lava - Financial crimes forensic/fraud
    • Ex Forensics Investigator for a QSA (QIRA)
    • Consultant/Educator for US Secret Service, DHS, FBI, and DoD.
    • Participant HoneyNet Project
    [email_address] or [email_address] net Copyright 2010
  • 4. Why this talk
    • Conversations with David Taylor from PCI Knowledge Base.
      • Provided a wealth of data from interviews and anonymous questionnaires.
    • Dave passed away suddenly from a heart attack on Oct 27, 2009.
    • Breach war stories have been done ad-nausea, poorly most of the time
  • 5. Breaches effect all merchant levels
  • 6. Level 4 Merchants
  • 7. Multi-Site Franchises
  • 8. Big Corporations
  • 9. Incident Response Plans should basically the same for all merchant levels
  • 10.
    • Find the right lawyer
    • Pick your forensics investigator*
    • Know how to work with your merchant bank and the card associations
    • Ensure your software/hardware vendors, VARs, subcontractors, etc. take responsibility for their work
    • Prepare for the QIRA onsite investigation
        • *note - forensic (QIRA) vs. other forensic entities
    Lessons from 100+ CC investigations
  • 11. How did we get here?
  • 12.
    • In the beginning:
    • US Secret Service and Card Association saw individual breaches not the wider common attack trends
      • Investigated them as isolated breaches
      • Remediated as isolated cases
      • No or little breach trending
  • 13.  
  • 14. Let’s talk a little about breaches
  • 15.
    • The fundamental ways data breaches occur -
    • Theft or Loss of Physical Equipment: such as laptop computers or memory storage devices.
    • Illegal access to the systems or information: A data breach can occur through unlawful access to PII data by technological means such as hacking into existing computer systems.
    • Insiders: A data breach can be committed by current employees, ex-employees
  • 16.
    • Who is allowed to perform forensics
    • Only Qualified Incident Response Assessors
      • Master list at
      • The list has changed over the last few years - Last BIG update January 11, 2010 (only 3 companies when I was in the thick of it)
      • The process of who can be one and who can’t makes no sense at all - though looks to be improving
    A credit card breach = PCI forensics onsite
  • 17. How are merchants notified? or “Why are they picking on me?”
    • Almost all notification is due to the merchant ID being identified by one of the card brands as a Common Point of Purchase, typically referred to as (CPP) or Point of Compromise (POC)
    • This is the one method of how a merchant or processor can be identified as the breach point in a payment card fraud / compromise 
  • 18. In this case, the similarity is a single business where all of the stolen credit cards had been used before the cards had been involved in fraudulent activity. This could potentially be the sign of an employee skimming card numbers, or a breach in a database. There are always going to be coincidences involving data on a large scale, but because of the scale, it’s very difficult to end up with false positive fraud once a margin of error is established.
  • 19.
    • Card issuers  may request that  MasterCard  initiate an investigation of a merchant for possible CPP activity at any time.
    • Acquiring banks have 5 business days to acknowledge a request from MasterCard  for a CPP investigation and 30 calendar days to complete the investigation. Failure to respond may result in fines or assessments . $$$$
    • Only  MasterCard , not a member bank, may designate a merchant location as a CPP and request that an acquiring bank conduct a CPP investigation.  MasterCard  will identify a merchant location as a CPP from one or more of the following sources:
        • Information received from law enforcement and investigative authorities
        • Card issuers in accordance with the established criteria
        • MasterCard systems, databases, and any other source deemed to be reliable
  • 20. “Hello, you’ve been breached” Now what? Now what? Now what? Now what?
  • 21. It is important to move swiftly
    • Follow your completed Data Breach Incident Response Plan
    • Document all ongoing events, all people involved, and all discoveries into a timeline for evidentiary use. The following is a list of actions that are going to need to be taken when a breach occurs:
  • 22.
    • Works with the compromised entity to obtain all potentially compromised account numbers.
    • Disseminates "at risk" account numbers (or data) to the issuing banks.
    • Begins monitoring the activity on the affected accounts.
    • Works with the appropriate law enforcement on the entity’s behalf.
    • Provides guidelines to the compromised entity to assist them in responding to the incident.
    • Works with the entity to identify security deficiencies.
    • Facilitates forensic investigation in a timely manner.
    • Ensures the entity takes corrective action to minimize the risk of future loss or theft of account information.
    • Works with the entity to verify PCI DSS compliance in an expedited timeframe.
    Visa Fraud Investigations CISP Team has their own agenda, though they state the following:
  • 23. Account Data Compromise Recovery (ADCR) process:
    • Visa validates whether validated compromise meets ADCR criteria (full track, 10,000+ US accounts, incremental magnetic stripe counterfeit fraud on accounts)
    • Visa calculates and advises the acquirer of its potential ADCR financial liability
    • If at the end of the issuer fraud reporting window Visa calculates actual fraud and operating expense liability due to each participating and impacted issuer Visa notifies acquirers and issuers of their respective liability and reimbursement
  • 24. From Breach to Fraud - Typical Timeline
  • 25.
    • Merchant discovers account compromise and notifies it acquiring bank
    • Compromised (or suspected) accounts are uploaded into CAMS for monitoring
    • Visa investigates to determine if an account compromise has occurred and sends CAMS alerts to affected issuers to notify them of compromised accounts
    • Affected issuers monitor, block or close compromised accounts
    Compromised Account Management System (CAMS):
  • 26. Post notification, know what your expected to do, what you need to do, and the difference
  • 27. Visa mandated steps in event of a suspected payment card data breach
    • Immediately contain and limit exposure
    • Alert all necessary parties immediately
    • Provide all compromised accounts to your merchant bank within 10 days
    • Provide an Incident Response Report within 3 days to your merchant bank
  • 28. What your expected to do by the card associations
    • The development of an Incident Response Plan is mandated by the PCI DSS in Requirement 12.9:
      • 12.9.1: Create an incident response plan
      • 12.9.2: Test the plan at least annually
      • 12.9.3: Designate specific personnel to be available on a 24/7 basis to respond to incidents
      • 12.9.4: Provide appropriate training to staff with security breach response responsibilities
      • 12.9.5: Include alerts from IDS, IP and file integrity monitoring systems
      • 12.9.6: Develop processes to modify and evolve the IR plan according to lessons learned.
  • 29. Focus areas during the forensic investigation
    • Determine the type of cardholder information at risk
    • Determine the how many cardholder information is /was at risk
    • Perform incident validation and assessment
    • Check for sensitive authorization data - Track data, CVV2 and PIN block storage
    • Review payment gateway, VisaNet endpoint security and risk
    • Preserve all electronic evidence
    • Perform an internal and external vulnerability scan
    • Was the merchant PCI compliant at the time of the breach
  • 30. Be sure to contact - Be sure to contact -
    • Your internal information security group and incident response team.
    • Your merchant bank.
    • Your local office of the United States Secret Service.
    • If you do not know the exact name and/or contact information for your merchant bank, notify Visa Fraud Investigations and Incident Management group immediately at (650) 432-2978.
  • 31.
    • Provide all compromised Visa, Interlink, and Plus accounts to your merchant bank within 10 business days.
    • All potentially compromised accounts must be provided and transmitted as instructed by your merchant bank and Visa Fraud Investigations and Incident Management group.
    • Visa will distribute the compromised Visa account numbers to Issuers and ensure the confidentiality of entity and non-public information.
    • Within 3 business days of the reported compromise, provide an Incident Report document to your merchant bank
  • 32. Know the key stakeholders
  • 33. ..and know them intimately Merchant POS Software/hardware Merchant Bank Card Association Payment Gateway Acquiring Bank Processor
  • 34. Be Prepared to Answer the Following
    • Initial point of entry
    • Timeline of events
    • Intruder information
    • Data exfiltrated and exposed
    • Compromised accounts
    • Malware
    • Network architecture and application overview
    • Logging and monitoring
    • Investigative methods
    • Regulatory review
    • Encryption
    • Containment efforts
  • 35. Per Visa - Identify and establish relationships agreements with key vendors, including:
    • Outside IT security forensics experts who can investigate if, when and how a breach occurred, and how to close and repair your system.
    • “Visa requires its partners to use external experts for this function, and doing so is critical to establishing credibility with the media, customers, investors and other key audiences. Also, consider using a different vendor from the one that may have done previous security assessments “
  • 36.
    • Identify how the breach happened, contain the breach, and implement a solution so it can not happen again
    • Notify appropriate people within the company
    • Notify External Agencies, within required time frames, such as:
      • ›› Forensics Investigator
      • ›› Law Enforcement
      • ›› Affected vendors, suppliers
      • ›› FTC
      • ›› State Attorneys General (where applicable)
      • ›› Consumers
  • 37. Visa and MasterCard are not interested in forensics, they are interested in risk mitigation.
    • Visa maintains relationships with their QSA’s for a reason
      • Tend to work with the same people throughout the PCI-DSS world, for example, same people move from a QSA company to the PCI SSC (PCI Security Standards Council)
        • Creates an echo chamber
      • Lack of knowledge of modern forensics
      • Place artificial pressure on investigators to got out a compromise time frame
      • Rather wind down a case on lax evidence than determine the true causal effect of compromise and compromise patterns
          • Saw this all the time while a QIRA
  • 38. Important breach issues Breach Issues Action Items
    • Mandated Breach Notification
    • Media reporting
    • Negative customer reaction
    • Cost associated with brand damage and lost revenue
    • Which States require notification
    • Hire firm for media coverage and creating early press releases
    • Early customer communications
  • 39. Breach Fines (the ugly truth) (the ugly truth)
  • 40.
    • Stiff fines and penalties ranging from $10K-$500K per month for non-compliance
    • $500K fine per credit card data compromise incident if not PCI compliant
    • $100K fine if Visa is not immediately notified of as suspected data breach
    • If track data or other sensitive data elements was compromised, the merchant can be assessed the estimated cost of fraud under Visa’s ADCR Program as well as cost of card re-issuance (est. $7-$20 per card)
    • Potential termination of credit card processing privileges
    Fines; according to the card associations
  • 41. Monthly Prohibited Data Storage Violation Fines Months Months 1-3 Months 4-6 Months 7 and up Merchant Level 1 $10,000 $50,000 $100,000 Merchant Level 2 $5,000 $25,000 $50,000 $5,000 $25,000 $50,000 $5,000 $25,000 $50,000 $5,000 $25,000 $50,000 $5,000 $25,000 $50,000 $5,000 $25,000 $50,000 $5,000 $25,000 $50,000 Fines for Merchant Data Compromise Up to $600,000 for non-compliance with PCI DSS requirements.Issuer Recovery Cost of Fraud. Charges that occurred on all exposed cards from the compromised location.The cost of the forensic investigation.The cost to replace exposed credit cards. Up to $600,000 for non-compliance with PCI DSS requirements.Issuer Recovery Cost of Fraud. Charges that occurred on all exposed cards from the compromised location.The cost of the forensic investigation.The cost to replace exposed credit cards.
  • 42.
    • Large discrepancies in the per incident cost between large level 1 merchants and level 4 merchants
    • An average fine for a single food services merchant (a local bar) was $350k not including:
          • lawyers costs
          • Forensics assessment, incident investigation and containment
          • Upgrading non-compliant POS software & IT and security remediation and enhancements
          • Identity protection for impacted individuals (~$30 per person)
          • Cost associated with onsite validation for 1 year - now a Level 1 merchant
          • Class action lawsuits and liability in the event that privacy data was compromised
    In reality, fines have been handed down with no consistency
  • 43. The Heartland Data Breach Aftermath
    • "Visa sent customized settlement information packets to the affected financial institutions on January 14, 2010. In order to accept the settlement, a financial institution was required to affirmatively complete and return the settlement paperwork to Visa by January 29, 2010," said the statement from lawyers representing some of the impacted banks. "The offers--at least those reviewed by class counsel--appeared to be less than 10 cents on the dollar for most financial institutions and some at less than 1 cent on the dollar. "
  • 44. Other issues to deal with
  • 45. Make sure you know a qualified lawyer and call them immediately A good lawyer can make all the difference in the penalty phase
  • 46.
    • Does the lawyer have:
      • dedicated Internet law department?
      • In house forensics professional?
      • Know what PCI is?
      • Worked with and know key individuals at Visa/MasterCard, the banks, processors, etc.
      • How many digital crimes cases have they handled?
    Interview your lawyer
  • 47.
    • Know your merchant bank’s Point of Contact for fraud /PCI
    • Call them. Get to know this person. Take them for a beer.
      • They will be involved early in the process, up until the very end.
      • They typically know their counter parts at the card associations
      • But wait, do you have a processor who isn’t your merchant bank? Better find out and give them a call too!
      • Ensure these people are your advocate.
    Merchant Bank
  • 48. Hardware/Software Vendors
    • For level 4 merchants this can be quite complicated
  • 49. Where does the responsibility lay?
  • 50. Large Merchants
    • Per incident costs typically lower than level 3 or 4 merchants
    • IT staff
    • Leverage with manufacturers
    • Media/Marketing Dept. to control the message
  • 51. The “favorites” game
    • Several instances of medium to large size breaches which remain off all breach lists and in the media
      • Good legal representation early in the process
      • Tend to lay blame of the software/hardware vendors
        • Card Associations deathly afraid of Full Disclosure
        • These and other issues have lead to many complaints of the ADCR process
    • unofficial master record-keeper of breaches
  • 52. In an interesting development, a handful of issuing banks impacted by the Heartland breach have filed a class action lawsuit against two acquiring banks related to Heartland Payment Systems. According to this article , the issuing banks are unhappy with Heartland's proposed settlement with Visa.  This appears and to be an attempted end-run around the proposed $60 million settlement with Visa.  It also may demonstrate that issuing banks are not satisfied with the dispute resolution mechanisms under the Visa Operating Regulations (the Account Data Compromise Recovery process estimated the loss at $140 million, yet the settlement was for only $60 million), and their ability to be made whole under those mechanisms. From 01/21/2010
  • 53. Breach Trends
    • Just as merchants shop for PCI assessors (QSA’s) merchants shop for QIRA’s
      • This tends to skew a specific company’s analysis
  • 54. TrustWave Hospitality: 38%*Financial services: 19%Retail: 14%Food and beverage:13% Verizon CyberTrust Retail: 31% Financial services: 30% Food and beverage:14% Hospitality:6% Other: 17% Symantec Education: 27% Government: 20% Health care:15% Financial :14% .............
  • 55. Trend Analysis
    • Trend numbers from each company by themselves should not be taken all that seriously
    • Some basic trends can be seen when viewed outside the confines of these companies
    • is a good overall source for breach data but ... several breach cases I worked on and am aware of are not on their list
  • 56. Definite trends can be seen when viewed outside the confines of each of the forensics company
  • 57. Next up ..... banks
    • (February 16, 2010) A Michigan-based manufacturing firm is suing its bank after online crooks depleted the company's account by $560,000 via a series of unauthorized wire transfers last year.
    • The lawsuit is one of several that have been filed over the past few months involving banks and customers victimized by online theft. In this case, the theft occurred after an employee at EMI supplied the crooks with the company's online banking credentials in response to a phishing e-mail that purported to come from the bank.