Online Fraud Museum details CC hacking techniques

[InfoSec News <isn () C4I ORG>]

http://www.theregister.co.uk/content/8/17592.html

By: Thomas C Greene in Washington
Posted: 14/03/2001 at 14:44 GMT

On-line merchants sick of rampant Web credit card fraud and its
attendant confiscatory charge-back fees and fines can learn the most
popular scams tricksters use and keep abreast of new developments
thanks to the AdCops Web site, which presents it all in vivid detail.

Included on the Web site is a members'-only 'Fraud Museum', exhibiting
numerous materials related to successful on-line CC tricks. Here one
will see examples of malicious CGI (Common Gateway Interface) log-in
forms which look like those at popular e-commerce sites but forward
one's details to a trickster's e-mail account, and the spam messages
designed to lure trusting Netizens to them.

We were quite simply amazed by how badly written such a spam message
can be and still work on the innocent, or the inattentive.

Other offerings include a simple program which generates valid Luhn
numbers for carders to use ordering goods on line. Many e-commerce
sites merely verify that a proffered CC number conforms to the Luhn
Algorithm, meaning that doubling every other digit and then adding all
the digits produces a sum divisible by ten, so this alone can yield a
fair amount of free merchandise. (Note to carder wannabes: we left out
an important detail.)

Another item demonstrates the ease with which a spammer can conceal
the URL to which he is referring a potential victim. DNS will resolve
Web addresses in binary, octal or hex expressions, which makes it easy
to lure the unsuspecting to a malicious Web site.

For example, the URL
http://%77%77%77%2E%74%68%65%72%65%67%69%73%74%65%72%2E%63%6F%2E%75%6B
is in fact The Register's home page. With similar tricks one can refer
surfers to, say, www.MaliciousCarder.com with a URL that looks like
this:
http://www.TheRegister.co.uk@%77%77%77%2E%6D%61%6C%69%63%69%6F%75%73%63%61%72%64%65%72%2E%63%6F%6D

DNS will ignore everything between http:// and @. The only active bit
is the obscured URL for MaliciousCarder.com. Full details on URL
obfuscation can be found here.

Another Fraud Museum exhibit we enjoyed was the reproduction of a
carder's drop box with the details of over 150 victims. This shows the
convenient format in which a malicious CGI forwards a victim's CC
details to an anonymous e-mail account set up on a free service like
HotMail or Yahoo for future retrieval.

The Other Scam
It's no secret that when carders succeed, it's the merchant who first
picks up the tab, and the consumer who finally gets shanked in the end
with higher retail costs. But perhaps the biggest scam of all is the
way credit associations like Visa and MasterCard, and the banks which
administer the accounts, skate from liability and even profit from CC
fraud.

That's because the issuers have the game rigged to keep themselves and
consumers fat, dumb and happy. But whenever there's CC fraud, there's
a charge-back; and whenever there's a charge-back, the merchant pays
it up front.

The merchant loses both the merchandise and the sale, and on top of
that pays a penalty, AdCops President Daniel Clements told The
Register.

Charge-back fees typically range from $15 to $50 per transaction.
There are also 'document retrieval' fees associated, generally at $10
or $20 a pop.

Beyond that, merchants have to limit their charge-back total to below
three per cent of a month's transactions. If they step over the line,
monstrous penalties begin to accumulate.

Visa requires merchants to keep charge-backs below 2.5 per cent of
monthly CC sales volume or fewer than 50 instances per month.
Otherwise, there's a $5,000 "review fee" (read 'fine') during the
first five months of excessive charge-backs, swelling to $25,000 after
six months.

MasterCard also requires charge-backs to be held below 2.5 per cent.
Merchants get a two-month grace period, but a $25,000 fee kicks in for
months three, four and five. It then increases to $50,000 for months
six and seven; $75,000 for months eight and nine; and finally --
assuming the merchant is overcharging customers so rapaciously that he
can actually afford it -- swells to $100,000 per month thereafter.

As for why the credit associations do so little to fight on-line
fraud, Clements is more than a bit cynical. "They're not the ones
losing money," he told us. "They have no incentive to stop fraud on
the Web."

Their primary concern, he says, is the safety of their retail
customers, the card-holders themselves.

When a scam involves millions of dollars, then the associations get
involved, along with the banks and the Feds. The Federal Trade
Commission (FTC) Sentinel database, for example, which among other
things tracks credit fraud, is open to all law-enforcement bodies; but
in these cases, "they're looking for patterns of widespread fraud,"
Clements says. "If it's just a few people, they don't really care."

Hence AdCops, which caters to the immediate needs of merchants, not
big business. It has a growing database of fraudsters and their scams,
which merchants can download, and, equally importantly, contribute to.
In time, Clements hopes, it will become the resource of choice for
on-line merchants to share information, and so protect themselves by
protecting each other.

Meanwhile, there's little going on at the national level which offers
hope for individual merchants struggling with credit fraud. Big banks
are loath to share relevant data with anyone outside their own circle,
and federal law enforcement organizations often work at cross purposes
due to jurisdictional confusion and competition.

"Everybody's got their hand in it, but no one's doing a very good
job," Clements observed.

We'll second that.

[AdCops website: http://www.adcops.com/ ]

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