How Malware Steals Credit Card Data from Your POS Systems

How Malware Steals Credit Card Data from Your POS SystemsSome of the biggest data breaches involving credit card data, including those that hit Home Depot and Target, were perpetrated by POS malware – we’ll explain exactly how POS malware works.

A brief overview of the market behind POS malware

POS malware is a vital tool in the highly lucrative credit card data theft industry. At the end of the supply chain, there are people who use fake credit cards to purchase products and services. These people source these fraudulent cards from cyber gangs who produce the fake cards.

The gangs in turn source data that make up the cards from carding forums or stores (a.k.a. card malls or card shops) on the dark net or other online black markets. Sellers in these marketplaces typically offer thousands or even millions of pieces of credit card data. Lastly, the people who sell card data in those forums and stores purchase the data in bulk from hackers (yes, we know they’re supposed to be called crackers).

It’s these hackers who employ POS malware. Cyber criminals are drawn to where the money is. As long as there are people down the supply chain who will use fake credit cards, there will always be criminals who will steal the data to make those cards work. As a result, businesses will always be under the threat of data-stealing POS malware.

How a POS system gets infected

Before any POS malware can go about stealing credit card data, it first has to find its way into a POS system. Unfortunately for us, there are many ways for it to get there.

Because POS vendors sometimes need remote access to their products for troubleshooting, applying patches, or performing technical support, most POS devices are designed to directly or indirectly connect to the Internet. As part of PCI DSS compliance, some systems are also required to connect to the Internet in order to perform time-synchronization with NTP servers. Lastly, an Internet connection may also be needed to enable the system to export purchasing, inventory, or other business data to remote servers.

While needed for upkeep, maintenance, security, and other business functions of the device, the Internet also allows attackers to gain access. Here are the most common ways POS systems get infected with malware:

Phishing and social engineering

Not all of these systems are dedicated POS terminals. In fact, many of them are regular desktops that run on Windows. When a POS system is set up like this, it’s likely to be used for other functions like sending/receiving emails, web browsing, checking social media sites, instant messaging, and other online activities.

Unfortunately, these online activities are susceptible to phishing and other social engineering attacks. Once the user clicks a link or downloads an attachment in a phishing email or message, they could end up downloading either the malware itself or a trojan that subsequently downloads the malware.

Unpatched systems

As in most other systems, a POS terminal can also get infected when malware exploits vulnerabilities in the operating system, browser plugins, or the web browser itself. Known vulnerabilities are easily addressed through patches or software updates. Unfortunately, most people don’t patch properly, and many don’t patch at all.

Hacked administrative interface

As mentioned earlier, the main purpose of these Internet connections is for performing upgrades, tech support, and troubleshooting. To perform these tasks, the vendor has to connect through some form of administrative interface. Attackers sometimes brute force their way into these interfaces or take advantage of default settings. Once they’ve gained entry, they then install the malware.

Compromised third party credentials

It’s common for businesses to employ the services of various third parties. Some of these third party providers are given access to either the POS machine itself (e.g. for vendors of software installed on the same machine) or to another device running on the same network as the POS machine. This gives cybercriminals an avenue for attack.

Cybercriminals can steal login credentials assigned to these third parties in order to gain access into the POS system. This type of attack is difficult to trace because if you view the logs, the logins appear to be carried out by someone authorized to access the system.

Other compromised devices in the network

In the event that the POS device is connected to the office LAN but not to the Internet, cyber criminals can still access the device through an indirect attack. They would first attack a device connected to the Internet and use that as a jump off point to reach their main objective.

They can employ phishing, brute force, or an SQL injection on the corporate website. They can even simply hack into a network device whose factory default passwords have not been changed. Once they’ve gotten a foothold into the network, they usually try to acquire administrative-level credentials before finally seeking out the main target – the POS machine. Once they’ve breached to the POS machine, they install the malware.

RAM scraping

So what happens when malware gets installed on a POS system? It does what it’s programmed to do – steal credit card data. Theoretically, there are number of opportunities for malware to steal credit card data from a POS system. First, while the data is stored (a.k.a. data-at-rest). Second, while it traverses the network (a.k.a. data-in-transit). And third, while the credit card data is in memory.

Most POS systems encrypt data-at-rest and data-in-transit (e.g. via SSL/TLS or IPsec), so POS malware rarely strikes at these stages. Cyber criminals can extract the information they need only if the data is in plaintext (unencrypted) form. Usually, this only ever happens when the data is still in memory. This explains why most current malware (including the one used in the Target data breach) attack there.

The process of stealing information from RAM is known as RAM scraping. Depending on the type of RAM scraper, data is stolen either wholesale (i.e. everything is grabbed from memory) or according to a pattern match. RAM scrapers can typically collect the PAN or credit card number, name of cardholder, card expiration date, CVV code, and other information embedded in the cards magnetic stripe. After the data is scraped from RAM, it is temporarily stashed in a file somewhere in the system or in the network.

As more customers come in and have their credit card data swiped, more data is collected and accumulated into that same file. After a certain period, the malware connects to a remote C&C (Command and Control) server and commences with the exfiltration process.

Covert exfiltration and persistence

To avoid being detected, some POS malware encrypts the data before transmitting to the C&C. Some also use HTTP requests in transmitting the data to avoid suspicion. This will make it appear that the POS system is being used for harmless activities like web browsing, allowing the exfiltration process to bypass firewalls and most antivirus solutions.

Note that, when a RAM scraper grabs data from memory, it only manages to grab information from a single card, i.e. the card that was recently swiped. That’s why, as mentioned earlier, the data scraped from memory would still have to be accumulated into a sort of “staging” file. Because it can take some time before a substantial amount of data is collected, the malware has to persist in the system as long as possible for it to be effective.

To do that, POS malware usually employs privilege escalation techniques like tampering logs or disabling antiviruses and monitoring tools. Some types of malware also create backup copies of themselves, which are retrieved in the event their “production” selves are somehow deleted or incapacitated.

Mitigating the POS malware threat

Last year (2016), the rate of identity theft hit an all-time high, with some 15.4 million consumers getting victimized through some form of ID theft. This translated to about $16 billion worth of losses through fraud. Although not all of these incidents involved the use of POS malware, POS malware still remains one of the biggest threats to merchants who haven’t yet adopted EMV chip cards.

To mitigate this particular threat, businesses must adopt a number of security measures, including:

1. Dedicating a POS terminal solely to POS-related functions;
2. If budget does not permit #1, prohibiting employees from using a non-dedicated POS system for non work-related tasks (e.g. personal web browsing, email, or social media);
3. If #2 is still not possible, training employees to recognize and handle phishing emails/messages;
4. Updating all firmware and software;
5. Using reputable antivirus software;
6. Using firewalls and content filtering solutions that identify and block both suspicious inbound and outbound traffic;
7. Ensuring that in-house admins and third parties use strong passwords and 2-factor authentication; and
8. Adopting EMV-enabled cards, which theoretically eliminates credit card cloning.

For help to protect yourself from POS malware, feel free to contact us.

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