All posts by mitch tanenbaum

Sony – The “Nuclear” Option

USA Today is reporting a few more details about the Sony hack-attack.  This is very scary and businesses need to consider if this could happen to them (the answer is yes) and if it does, how would they handle it.  This is the kind of attack that would put many businesses out of business.  Businesses need to review what their business continuity and disaster preparedness plan would do in a case like this.

Because of the sheer destruction these hackers have caused, the security community is referring to this as the nuclear option.  Total destruction.  Destroy as much as you can.  Steal whatever you can.  Make the company sweat.

The details:

  • This is different from the Home Depot or Target attacks where the attackers were after credit cards to use or sell.
  • AS FAR AS WE KNOW, the attackers in the Sony case have not asked for a ransom and other than the vague comments about treating people well, they have made no demands.
  • The attackers did not launch a denial of service attack to try and make Sony’s web site unavailable to customers

These three facts make this very different than most attacks.

What we do know about the Sony hack/attack:

  • The malware  was not detectable by normal anti-virus software according to a statement released by the FBI.  In fact, they issued an FLASH bulletin to businesses to be alert to some of the symptoms of the attack.
  • Kevin Mandia, CEO of the Mandiant security firm said that it was “an unparalleled and well planned crime, carried out by an organized group, for which SPE [Sony] nor other companies could have been fully prepared”
  • The attackers stole a huge amount of data (different reports say hundreds of gigabytes to terabytes).
  • In my opinion, the only way to really know that you have the attackers out of there is to rebuild your entire infrastructure from scratch.  For a company the size of Sony, this is a HUGE undertaking.  Then you  have to figure out how to keep the bad  guys out.
  • The attackers have been dribbling out (if that is the right word for releasing gigabytes of data every day) embarrassing private data belonging to Sony and other companies (Deloitte).  The result of this leaking will likely be a number of lawsuits that will cost Sony a lot of time and likely, a lot of money.
  • The attackers crippled and erased hard drives of computers at Sony.  Even now, two weeks into this, employees are being told not to open their laptops for fear of the data on them being destroyed.
  • The GOP, the hacker group behind the attack said “the data to be released next week will excite you more.”  What the bleep are they going to release next?  If they have terabytes of data, this could go on for a while.
  • The attackers are also directly threatening employees and their families.  They said: “make your company behave wisely.”  if they did not, “not only you but your family will be in danger.”  What exactly this means is unclear, but if I was an employee, I would be nervous.

All in all, this is a huge leap from what attackers have traditionally been doing and unfortunately, this means that companies will have to up their game – including, probably, spending more money – as well.   Most companies do not have the financial resources of a Sony and if they were the victim of an attack like this, they would have to shut the doors.

This saga is far from over.



Today’s Breach News

Too many breaches … too little time 🙂

First a new breach – Bebe Stores ( confirmed that they had been breached, but  not much else.  They said it covered the US, Puerto Rico and the Virgin Islands. They did say that it did not affect their online store (no POS terminal to compromise, I suspect), nor did it impact Canada or R.O.W. (the rest of the world).  The store is offering free credit monitoring, although, as Brian Krebs pointed out, that has zero effect on your existing credit cards being used by miscreants.

There is one bit of good news – and maybe a sign that the retail industry is improving it’s detection capability.  They said the breach period was only 18 days.  Given that many of these breaches have gone on for months and a few for years, this is an improvement.

Hopefully, they will release more details soon.

On to Target.  Ars Technica and other sources are reporting that the judge in the Target lawsuit case told Target that their creative legal maneuver didn’t work and the lawsuit by the banks can move forward.  For those of you who did not see my earlier post, Target’s lawyers tried to claim that because Target and the banks suing them did not have a “special relationship”, the banks could not sue them.  The judge said yes, they can.  This has the potential to push more of the cost of breaches onto the retailers which would tend to move security up the food priority chain if it does (if you had to reimburse the banks for tens or hundreds of millions of dollars for fraudulent purchases, I suspect you would begin to pay more attention too).

Next, Sony.  Apparently an HR employee at Sony pilfered some data from his or her former employer, Deloitte, and that data got outed in the Sony hack-attack.  The data that got published because of this was payroll data on thousands of Deloitte employees.  Besides the fact that it showed a huge pay gap between male and female Deloitte employees, which could wind up as the basis of a lawsuit for Deloitte, I would assume that this employee signed an agreement not to steal proprietary information.  If I were Deloitte, I would be at least considering whether I should sue this ex-employee who is now at Sony.  It is possible that Deloitte gave this ex-employee or Sony their payroll data, in which case, the employee is in the clear, but I doubt it.  Can this thing get any weirder?

It can.  The NY Times is reporting that the GOP dumped “tens of terabytes” of Sony hacked data including passwords, social security numbers, salaries and performance reviews into pastebin.  That is way more than the 100 gigabytes that was reported earlier.  From a sheer bandwidth standpoint, either the hackers were walking out the door with disk drives in hand or they were streaming the hacked data for a while.

And lastly, for today, according to the LA Times, the payroll company that processes payments for SAG (Screen Actors Guild) members was breached.  The company says that the hacker only had access to the system for two hours, but they also said  “The information accessed included Social Security numbers, private accounts and addresses”.


Home Depot Breach Update

Home Depot reported today that it spent $43 million in it’s third quarter dealing with the fallout of it’s security breach earlier this year.  Of the $43 million, $15 million will be paid for out of its $100 million cyber liability policy.

From the press release:

  • The retailer warned that it expects “to incur significant legal and other professional services expenses associated with the data breach in future periods.”
  • Home Depot is also facing 44 actions filed in courts in the U.S. and Canada. It expects more claims may be filed on behalf of customers, payment card brands, payment card issuing banks and shareholders.
  • Payment card networks may make claims seeking to recover incremental counterfeit fraud losses and costs for reissuing cards, Home Depot wrote. Its liability will depend on whether it was noncompliant with data security standards, which contributed to the breach.
  • Home Depot did pass a PCI audit in the fall of 2013 and was working on its 2014 audit at the time of the breach.
  • “The forensic investigator working on behalf of the payment card networks may claim the company was not in compliance with those standards at the time of the data breach,”

This last bullet is the bombshell in this release.  What have they discovered that would lead them to believe they were not compliant at the time of the breach.  If this turns out to be true, it could subject the company to fines from the credit card issuers and give the folks suing them some powerful ammunition in their lawsuits. They must have found something very significant to be releasing that statement at this time.





Why Medical Identity Theft Is Such A Big Deal

The insurance trade rag Property And Casualty 360 wrote about medical identity theft and the impact is staggering.

First just one example breach – A physician office’s server, which contained unencrypted information on 2,500 patients, was hacked and encrypted. The hackers demanded $50,000 to unencrypt the information and return control of the server.

That obviously, is pretty traumatic to the physician’s group, but why is medical ID theft important to you.  Here are a couple of reasons the article pointed out:

  • your credit rating can be damaged
  • Your health insurance policy could be cancelled
  • Your health insurance premiums could go up
  • Your health could be at risk

According to PhishLabs, a cybercrime protection services vendor, medical ID information is worth 10 to 20 times what credit card information is worth.

Why is that?  The answer is simple.  If your credit card is stolen, you get a new one and they shut off the old one.

How do you shut off your medical ID information and get new information?  Like a new social security number?  You don’t!  Which means the life expectancy of the stolen information is very long.  You could perpetrate ongoing crimes for years.

And, unlike credit card fraud where you are likely to review your bank or credit card statement when it comes in the mail, that is much less likely for medical ID fraud.  And the fraudsters could hide in the weeds for a year and then pop up, go into hiding again and rinse and repeat.

One question many people ask is where is the value in medical ID fraud.  One value is bogus insurance claims which translates to dollars.  An example might be that the bad guys say you now have diabetes.  Then they submit claims for all kinds of care.  Care you never knew about or got, but your insurance company will pay for.  Done cleverly, it would not throw up any flags.

But now, according to your insurance company, you now have diabetes and your electronic medical record says so (so it MUST be right).  If Congress repeals Obamacare next year like they have tried to do 40+ times so far, your insurance gets cancelled or your premiums go up.  Now you have to PROVE you don’t have diabetes.  And with all the interchange of electronic medical records, you are playing the whack-a-mole game.  You get your diabetes removed from one database but now provider A (where it still says your are a diabetic) sends an update to Insurance Company B (where you are not) and bam!, you are a diabetic again.

Worse yet, you have no way of knowing every place where your medical information lives (unlike credit, where if you correct the 3 main credit databases, you are pretty well covered).  Under federal law, the 3 credit reporting companies have to talk to each other if you even whisper fraud.  Not true for insurance and provider databases.  No particular laws cover this and that is not likely to happen any time soon.

For the consumer who gets sucked into this, it is a real mess.  How do you clean up a mess that you can’t even see (tell me every place your medical info lives – I dare you).



More Sony News

CORRECTION:  I said below that the hackers stole 25 GB of data.  According to CSO Online, they RELEASED 25 GB of data and this is only a fraction of what they stole.

UPDATE:  Brian Krebs ( is now reporting additional information:

  • The attackers stole 25 GB of data
  • The malware destroyed data on an unknown number of internal servers (as I suggested below)
  • The reason that employees were told to turn off their computers and disable Wi-Fi is that the malware destroys the Master Boot Record and wipes data on infected computers
  • One spreadsheet being floated around includes the names, dates of birth, SSNs and health savings account data on more than 700 Sony employees
  • Another spreadsheet contains the name, location, employee ID, network username, base salary and date of birth for more than 6,800 individuals.
  • Yet another apparently purloined file’s name suggests it was the product of an internal audit from accounting firm Pricewaterhouse Coopers, and includes screen shots of dozens of employee federal tax records and other compensation data

Assuming all this is true, then we are dealing with California privacy law (SB1386 and its relatives) as well, potentially, as HIPPA violations, bringing the Department of Health and Human Services’ Office of Civil Rights into the picture.  Both of these could bring large fines (HHS OCR can levy fines of up to $1.5 million per violation and they get very creative on what a violation is – could  be as much as each record being a violation).

On a side note, Target has said that their costs for last year’s breach is now $250 Million and that there won’t be any other material costs.  I assume this does not include any fines or judgements – that would be extra – since none of the cases have come to trial and the regulators have not said anything that I am aware of.

The good news just keeps on coming for Sony.

The most important takeaway from this is “How would my company deal with our version of this scenario?”  If the answer is not “Effectively, thank you!”, then there is work to be done regarding business continuity and disaster recovery.

  • The FBI released a confidential alert to businesses and requested it be distributed only on a need to know basis.  In only a few hours, published the details of it (this is why the Feds like to classify stuff.  If you publish something that is classified, you can go to jail for a long, long time – even if you claim freedom of the press.  Espionage laws trump that most of the time).  The gist of what was reported is that the malware wipes systems and overwrites data files making recovery very difficult, expensive and likely impossible to recover, except from backups.
  • On December 1st a spreadsheet was released with the salaries of the top 17 Sony Executives who make $1 million or more.  The spreadsheet also included names, job titles, home addresses, bonus plans and current salaries.
  • Sony is trying to find the miscreants who did this, of course.  It has been leaked that they have hired the cyber security gurus from FireEye’s Mandiant division.  My guess is those folks are helping to figure out how the attack took place and how to clean up the debris, as well as looking for any clues as to the source of the attack.
  • If the source of the attack is North Korea as speculated, then that is mostly a dead end.  If it was them, it was likely government sanctioned and I don’t think anyone is ready to invade North Korea over this.  Apparently, some of the software used in the attack was compiled in Korean.
  • Supposedly some business systems are back online, but Sony has not released any details.  How much work is left is unknown.
  • Sony is set to release two big budget movies this month (Annie on December 19 and The Interview on December 24).  Even if Sony manages to prop up the systems needed for the release process, the distraction  of the executives, the inability for the majority of the staff to operate normally and the media’s attention on Sony’s inability to keep their networks secure coulf have a negative effect at the box office.  On the other hand, some people say there is no such thing as bad publicity.  Only time will tell.
  • How much is all of this costing Sony – no clue yet.

Target Argues It Has No Legal Obligation To Banks Due To Last Year’s Breach

As the stakes go up, so do the creativity of the legal defenses.

According to an article in Bloomberg news,  Target says that they have no legal obligation to banks that claim they lost tens of millions of dollars as a result of last year’s breach and they want the judge to dismiss the case.

The banks argue that the Minnesota Plastic Card Security Act law, which is relevant because of where Target’s headquarters is located (in Minneapolis) allows them to recover losses.  The law requires businesses that don’t adequately protect financial information to reimburse for any losses from a breach.  Minnesota is one of 3 states that have such a law.

The law prohibits the retention of certain payment card data for more than 48 hours.  The prohibited data includes full card numbers, security codes, PINs and any full track data.

Target is, in effect, questioning the legality of this law.  They are arguing that in the absence of a “special relationship” with the banks, they aren’t responsible to the banks for anything.  I assume a special relationship is legal-speak for a contract.  Since Target has a relationship with a credit card processor and not the banks directly, that is the angle.

Target argued that the data theft happened at the point of sale and the plastic card law doesn’t apply.  Creative to be sure.

However, I don’t see anything in the law that requires a special relationship in order to invoke the law.  Nor do I see anything that says point of sale device attacks are excluded.

Given that there are hundreds of millions of dollars at stake if you assume that 40 million plus cards were compromised, it is not a big surprise that Target is grasping at any legal angle it can find.  If it only costs the banks $10 per compromised card to notify the cardholder, reissue the card, deal with calls, cover losses, etc., which I suspect is way low, that bill would be $400 million or more.  Oral arguments are scheduled for December 11th.  No matter the outcome, the decision is likely to be appealed, so don’t expect an early answer to this issue.

Assuming they are successful, they then have to navigate the interesting , landmine strewn, path of explaining to their customers, with whom they do not have a “special relationship”, that they should not be concerned about using their credit card at Target – or even shopping there – because Target is responsible if anything happens.  I want to watch that bit of spin doctoring.