An ongoing ATM fraud problem that forced Citibank into reissuing an unspecified number of US credit and debit cards is only part of a larger ongoing threat, a leading analyst warns. Avivah Litan, a research director at Gartner, said that Citibank is only one of a number of victims and that the banking industry is "less than halfway through this latest scam, which will continue to affect large numbers of cardholders".
Citibank said it blocked PIN-based transactions of Citi-branded MasterCard cards in the UK, Russia and Canada to protect US customer accounts. It blamed the problem on a security breach involving an unspecified US retailer. Litan, by contrast, suggests the theft of PIN data is the more likely cause of the security flap. She adds that other US banks have been forced to reissue ATM cards after customers' details were compromised.
"Gartner believes that these combined bank actions reflect the largest PIN theft to date — and point to a new wave of 'PIN block' card fraud," Litan writes. If hackers broke into retailer servers and steal PIN blocks that represent encrypted PIN data as well as terminal encryption keys (typically stored on retailers' terminal controllers), they might be able to determine a cardholder's PIN and create counterfeit cards that enable them to withdraw cash at ATM machines.
Litan reckons that this - rather than a simple retailer breach - accounts for a recent rise in ATM fraud affecting US banks. "In this particular scam, the thieves probably also stole (likely from a retailer) magnetic-stripe data found on the back of ATM cards, which large banks typically validate," she adds.
The Payment Card Industry (PCI) Data Security standard prohibits the storage of PIN blocks and covers terminal operations. Gartner advises card issuers to follow this guidance. The analyst firm also has advice for enterprises, payment vendors and regulators which can be reviewed here. ®