PIN hacks hit consumers particularly hard, because they allow thieves to withdraw cash directly from the consumer’s checking, savings or brokerage account, Sartin says. Unlike fraudulent credit card charges, which generally carry zero liability for the consumer, fraudulent cash withdrawals that involve a customer’s PIN can be more difficult to resolve since, in the absence of evidence of a breach, the burden is placed on the customer to prove that he or she didn’t make the withdrawal.
Some of the attacks involve grabbing unencrypted PINs, while they sit in memory on bank systems during the authorization process. But the most sophisticated attacks involve encrypted PINs.
Sartin says the latter attacks involve a device called a hardware security module (HSM), a security appliance that sits on bank networks and on switches through which PIN numbers pass on their way from an ATM or retail cash register to the card issuer. The module is a tamper-resistant device that provides a secure environment for certain functions, such as encryption and decryption, to occur.
“Essentially, the thief tricks the HSM into providing the encryption key,” says Sartin. “This is possible due to poor configuration of the HSM or vulnerabilities created from having bloated functions on the device.”
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