Inside payment card fraud – The real story behind fraud

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Payment card fraud, arguably one of the most straightforward approaches to financially motivated crime, persists in the face of ongoing anti-fraud efforts from regulators, financial institutions, and retailers. Carding, as it’s often referred to, is the result of coordinated activities between and within communities across the global cybercrime underground, with activities spread out across deep and dark-web (DDW) forums and sites, encrypted chat services, and open-web social media sites, where threat actors have been known to share tutorial videos and discuss methods.

                        Inside payment card fraud

Since carding activity directly impacts consumers whose money is stolen or whose data is compromised, it can have significant reputational repercussions for organisations that fail to protect sensitive card information – writes Isaac Palmer, Senior Analyst at Flashpoint.

Moreover, as a threat to the financial security of citizens, combating payment card fraud is often a high-priority action item for law-enforcement. As such, some illicit communities have instituted policies for banning users who discuss carding out of fear that such activity could attract the scrutiny of various law enforcement agencies worldwide, including the U.S. Secret Service, which is in charge of addressing financial fraud crimes targeting citizens and financial institutions.

Among threat actors, carding is widely perceived as easy money, a sentiment which Flashpoint analysts have observed across manuals, tutorials, carding websites, and other illicit media. This is partly due to the widespread availability of resources for carrying out carding activity on illicit marketplaces. Some of the tools and resources used by criminals include: card skimmers and shimmers for stealing card data at point-of-sale (POS) terminals, dumps containing compromised card information along with PINs, and services for producing cloned physical cards using stolen data. Criminals can also produce their own cloned cards by purchasing cloning software and card-writing equipment from online vendors.

In terms of intelligence, teams tasked with combating payment card fraud have two basic requirements: (a) to understand evolving tactics, techniques, and procedures (TTPs) and dynamics shaping underground activity related to carding, and (b) ongoing visibility into whether any of their organisation’s data has been compromised.

How Vendors Get Victims’ Data

Compromised card data is the raw material that fuels any carding operation, and criminals have many ways of obtaining such data. A dump often includes everything needed for recreating the card physically, or linking the card account digitally with applications such as mobile wallets and shopping applications.

Skimmers and Shimmers

Card skimmers—physical devices that fit over a machine’s card reader and are used to clone magnetic stripe (magstripe) data—have long been among the most common means of obtaining victims’ card data. In the US, gas pumps remain a target for carders because the mandate to enforce EMV-enabled transactions on gas pumps has yet to take effect. Prices for skimmers can range from a few hundred dollars to around $2,000.

With the widespread implementation of EMV chips, skimmers are gradually being supplanted by shimmers, smaller devices that are placed inside the ATM to intercept and record communications between the chip card and chip reader. Shimmers may be bundled in kits that also include a user manual, software for converting encrypted card data, and other complementary goods. As with most illicit goods and services, prices of ATM shimmer kits can vary widely, but one typical kit discovered by Flashpoint analysts was advertised at a price of $1,600 USD.

In addition to manuals and resources bundled alongside shimmers, Flashpoint analysts have also discovered online threat-actor tutorials explaining shimmer best practices for successfully installing the devices and not getting caught. Skimmers and shimmers are rarely noticed by users once installed, and many devices allow criminals to discreetly extract stolen card data via Bluetooth or via cellular GSM networks, reducing the likelihood of being caught.

Shimmers are often used more frequently than skimmers in regulatory environments where EMV-chip readers have become ubiquitous. But there is a critical limitation: EMV-chip cards feature additional security in the form of a component known as an integrated circuit card verification value (iCVV). An iCVV is needed in order to copy a card’s EMV chip data. As such, the only way to commit successful fraud using EMV-chip data harvested using a shimmer is if a bank fails to check the iCVV when authorising a transaction.

This is good news for banks performing these checks, but fraudsters gravitate toward victims of opportunity. Banks that fail to implement thorough iCVV checks are magnets for this type of fraud.

Hacking e-commerce Sites

Skimmers and shimmers aren’t the only way for fraudsters to gain access to victims’ card data. One popular alternative is to hack eCommerce sites and other websites containing customer purchase information, or in some cases, to purchase access to compromised eCommerce sites from other adversaries. Once a site has been compromised, attackers attempt to access its customer database and other sensitive information.

Phishing Campaigns

One of the most pervasive social engineering tactics among threat actors, phishing, is also a common means of stealing card data. Under this method, attacks typically contact targets via email, or in some cases, SMS messages, urging them to open a link to a malicious website made to resemble the website of a legitimate bank in a ploy to trick victims into giving up their card data and credentials.

Malware

Many types of malicious software can be used to support payment card fraud. Banking Trojans and keyloggers, for instance, can be used to collect card data. As another example, point-of-sale malware infects physical retail payment terminals in order to intercept and steal card data before it is encrypted and sent to the payment processor.

What Happens After Card Data is Obtained?

Once obtained, stolen payment card data can be monetised in a number of ways:

Card Cloning

Some criminals use stolen card data to clone cards with specialised software, blank cards, and card-writing equipment. These cloned cards are then sold on illicit marketplaces or used to cash out at ATMs. Criminals have been known to copy compromised data on simple, blank white cards, but Flashpoint analysts have observed discussions indicating increased interest in creating more realistic cards featuring bank logos to avoid suspicion. Since only the magstripe data can be cloned onto a working card, attackers often seek out specific ATMs that still allow magstripe cards. In some cases, criminals enlist a money mule to carry out an ATM withdrawal using the cloned card to avoid being caught.

Card-cloning software typically runs at a price of around $1,500. Fraudsters can also purchase batches of pre-made cards on illicit marketplaces, with cards containing data for high-value accounts selling at a higher price.

Digital Shopping Account Linking

Given the authentication-related challenges and physical security risks of cashing out cards at ATMs, some criminals have discovered an alternative way for reaping the profits of credit card fraud: online shopping. Flashpoint analysts have observed criminals exchanging advice within DDW communities on using mobile shopping or wallet applications to lower the risk and increase the success rate of making online purchases using stolen cards.

Card Shops Profiting From Stolen Data

Threat actors often sell compromised card data on illicit card shops, finding it easier and more profitable to sell the data to other criminals than attempt to carry out fraud themselves. Some card shops such as Joker’s Stash—which specialises in selling cards and dumps—are expansive, well established, and allow customers to filter card data by regions and other criteria. Joker’s Stash has been a major supplier of cards and dumps for the past four-and-a-half years and is known for its flexible refund policy and reliable support.

Cybercrime Groups and Financial Data Theft

Advanced cybercriminal groups with APT-like capabilities, such as FIN7, have been associated with capturing financial details in order to create more income and disposable profit. FIN7 is a notorious cybercrime group that targets many financial institutions, payment processors, and restaurants. The group is alleged to have stolen more than 15 million credit cards and attacked more than 3,600 locations. The group monetises the pilfered data via underground services such as the top-tier card shop Joker’s Stash.

Carding Tutorials Abundant Across Global Cybercrime Community

Flashpoint analysts have seen a proliferation of carding tutorials across illicit communities spanning numerous regions and languages, often offered as a bonus to customers who purchase skimmers, shimmers, cards, or other related goods and services.

Such tutorials are also advertised individually—particularly within the Chinese-language underground—claiming to offer insight into carding TTPs, such as the use of proxies and proxy configuration, clearing of web browser history, reputable vendors of payment card information, web browser add-ons, email address set-up, and cashing out. Flashpoint analysts have observed some criminals offering carding tutoring services, where experienced cybercriminals will, for a fee, run online courses for inexperienced fraudsters. Such courses are especially popular within Russian-language communities.

Assessment

The global scope of illicit carding activity is noteworthy due to the relative weakness of payment card security in some countries compared to others. For example, the mandate of EMV chip technology has not been enforced in some areas of the world; therefore, carding guides that would be considered outdated in some parts of the world may allow criminals to profit in others.

To protect against ongoing efforts to steal payment card data and reap profits from it, financial institutions and retailers should make a priority of ensuring they are up to date with the latest point-of-sale and payment-card security technologies. Moreover, these organisations should have visibility into activity on illicit card shops to identify and quickly mitigate breaches and card dumps.

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