17 November 2002

To: ukcrypto@chiark.greenend.org.uk
Subject: Re: PIN's and credit cards.
Date: Sun, 17 Nov 2002 13:06:13 +0000
From: Ross Anderson <Ross.Anderson@cl.cam.ac.uk>

"J. Ottosson" wrote:

> This is a very special field but for those without any kind of inside view 
> into it I can say that there is substantial effort being put into the 
> physical design and sw implementation of for example PEDs.

The security of the global ATM network is so badly broken that I don't
think any amount of device-level due diligence will make a real
difference.

The reason for the big jump in credit card fraud in Britain four or
five years ago was a very simple innovation in criminal technology. In
the old days, a middleperson attack typically involved a waiter in a
dodgy restaurant swiping a card an extra time through a copier. Once
enough people complained, the restaurant would be identified and he'd
be caught. The countermeasure was simple: stand the customer his
lunch.  A year later, when you charged $4000 in casino chips in Las
Vegas, the customer would have completely forgotten the meal. Against
tokens that are trivial to forge, such as mag stripe cards, false
terminal attacks are as good as unstoppable. That's one of the reasons
why the move to PINs at the point of sale is really asking for it.

Even in the absence of false terminals, systems are still so
vulnerable to attack by insiders that essentially the only effect of
doing security certification of PIN pads is to give bank lawyers a
little bit more paper to wave at gullible judges, for the growing
number of cases where banks tell angry customers to go jump in the
river.

The fundamental failure isn't technical, but regulatory. See
<http://www.nytimes.com/library/financial/columns/060100econ-scene.html>
or <http://www.cl.cam.ac.uk/ftp/users/rja14/econ.pdf>.

There are many severe technical problems too. There are some truly
appalling vulnerabilities in the encryption devices used to protect
customer PINs within banks. The paper Mike Bond and I wrote on API
security <http://www.cl.cam.ac.uk/users/mkb23/research/API-Attacks.pdf>
is only the tip of the iceberg. There is much more to be published in
the next few months.

There are also all the 'old faithful' attacks, as documented in
<http://www.cl.cam.ac.uk/users/rja14/wcf.html>.

The people who work on PIN security for the banks are in a hole, and
they do not seem to have the sense to stop digging

Ross