The CEO of retailer Target revealed Saturday in an interview that the company's point-of-sale (PoS) systems were infected with malware, confirming what security experts suspected since the massive data breach was announced in mid-December.
Answering a question about what caused the breach during an interview for CNBC, Target CEO Gregg Steinhafel said: "We don't know the full extent of what transpired, but what we do know is that there was malware installed on our point-of-sale registers. That much we've established."
Target originally said that approximately 40 million credit and debit card accounts may have been impacted by the breach. The company announced Friday that information like names, email addresses, mailing addresses and phone numbers of an additional 70 million people has also been stolen.
Malware programs designed for PoS systems are commonly referred to as RAM scrapers, because they search the terminal's random access memory (RAM) for transaction data and steal it.
PoS systems are actually computers with peripherals like card readers and keypads attached to them. Many of these systems run a version of Windows Embedded as the OS as well as special cash register software.
Every time people swipe their card at a PoS terminal to authorize a transaction, the data encoded on the card's magnetic stripe — like the card's number, the cardholder's name, the card's expiration date — is passed along with the transaction request to the payment application and then to the company's payment processing provider.
While this information is encrypted as it leaves the PoS system and the company's network, there's a period of time when it's stored in the system's RAM in cleartext and can be read by malware installed on the machine, which is what seems to have happened in the Target case.
Such PoS attacks are not new, but their frequency and the interest of cybercriminals in PoS RAM scraping malware has increased during the past year.
At the beginning of December two security companies independently reported new attack campaigns with PoS malware. Target said that the credit and debit card information was stolen from its systems between Nov. 27 and Dec. 15.
"Since January 2013, Visa has seen an increase in network intrusions involving retail merchants," Visa said in its August advisory. "Once inside the merchant's network, the hacker will install memory parser malware on the Windows based cash register system in each lane or on the Back-of-the-House (BOH) servers to extract full magnetic stripe data in random access memory (RAM)."
Hackers can break into PoS systems and merchant networks by exploiting various security holes, but a common method is to steal or brute force remote administration credentials. There are many merchants that rely on third-party companies for technical support and those companies frequently use remote access tools, sometimes with easy-to-guess credentials.
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