Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.
Federal Reserve Web Sites
Other Bank Regulatory Sites
January 14, 2019
Hiding in Plain Sight
Over the holidays when our family is all together, we always try to watch A Christmas Story. There are so many memorable moments in the movie, from the triple-dog-dare-you, tongue-frozen-to-the-flagpole scene to the leg lamp breakage. When the story revolves around Ralphie and the Little Orphan Annie secret decoder ring, it triggers my childhood memories of having a similar decoder ring that came with a pair of P.F. Flyers sneakers (think pre-Nike and Adidas). This year, our movie-watching led to a storytelling session of techniques worthy of any spy movie for passing secret notes. Many of the examples were like the decoder ring—they used some sort of secret alphanumeric table as a key to solve the cryptic message. In other words, we were talking about a rudimentary form of encryption, which, in today's technology, renders data useless to those without a key, whether they're bad guys or good guys.
But our conversation didn't stop there. I told a childhood story of dipping a toothpick in lemon juice and writing a message on paper. After the juice dried, the message became invisible, and I would then write an innocuous—and visible—message on the paper with pen or pencil. The recipient would carefully hold the paper over a flame to slowly reveal the hidden message. (Kids, try this only under adult supervision!) Little did I know I was using a technique called steganography—hiding a message within another message—that people also use today to protect information online.
Various forms of the technique date back to Greek civilization when untrusted messengers had to convey sensitive or classified information, or a message was at risk of being intercepted. (There is an entertaining and educational video on steganography by Richard Buckland, a professor at the University of New South Wales in Australia.) Today, technology has created a new technique in the form of digital steganography, which is the practice of hiding an image, audio, or data file within another image, audio, or data file.
A recent article in infoRisk Today highlighted the darker side of steganography, with its use by the criminal element. That article prompted me to conduct more research on the technique as a payments risk. From a cybersecurity standpoint, the greatest risk to consumers appears to be when the criminal hides a malware file within an image, audio, or other data file that, when opened, will load malware onto the device for future eavesdropping or control. Such an event could lead to the compromise of PII (or personally identifiable information), online credentials, or other sensitive information on the device without the owner's knowledge. In an August 2017 release, Kaspersky Lab warned about the difficulty for existing data protection processes to detect embedded malicious code.
Account takeover fraud is a major criminal activity that generally begins with the compromise of an individual's legitimate banking log-in credentials. A criminal who obtains this information can execute payment transaction fraud and, ultimately, synthetic identity fraud (see last week's post). While there are valid uses for steganography as an alternative to encryption, the criminal element will continue to develop uses of digital steganography to further their criminal operations and, as the infoRisk article notes, this usage is becoming more sophisticated and harder to detect.
By David Lott, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
December 10, 2018
A Look in the Rearview Mirror of Payments for 2018
I'm sure just about everyone else in the payments industry would agree with me that 2018 was yet another exciting year for payments. The year was filled with a host of newsworthy events, but fintech most certainly took center stage in the financial services industry, including payments. Whether the news highlighted an announcement of a new product to increase financial access or discussed the regulatory challenges and associated concerns within the fintech space, it seemed that fintech made its way into the news on a daily basis. Still, for payments, 2018 will be remembered for more than just fintech.
The Retail Payments Risk Forum's last Talk About Payments webinar of 2018 will feature Doug King, Dave Lott, and Jessica Washington sharing their perspectives and memories on the year-in-payments in a round table discussion. Among the topics they will discuss are consumer payment preferences, the changing retail environment, and the state of fraud—and fintech, of course. We encourage financial institutions, retailers, payments processors, law enforcement, academia, and other payments system stakeholders to participate in this webinar. Participants will be able to submit questions during the webinar.
The webinar will be held on Thursday, December 20, from 1 to 2 p.m. (ET). Participation in the webinar is free, but you must register in advance. To register, click on the TAP webinar link. After you complete your registration, you will receive a confirmation email with all the log-in and toll-free call-in information. A recording of the webinar will be available to all registered participants in various formats within a couple of weeks.
We look forward to you joining us on December 20 and sharing your perspectives on the major payment themes of 2018.
By Douglas A. King, payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed