How hackers use stolen credit card data

Monday, December 23, 2013 - 3:25pm

The major hack of discount retailer Target in recent weeks has highlighted the threat of credit and debit card fraud, but how do hackers actually make use of the data they steal? Laurie Segall explains.

If  you've done some Holiday shopping at Target, you might be wondering what a hacker could learn about  you from your credit card.

When you swipe, here's what a hacker could learn from the data in that magnetic strip: your name, your credit card number, the card's expiration date and the CVV code on the back.

Jose Pagliery, CNN Money, "All of this key data that can be used to falsify that card and go ahead and fraudulently use online, they can access that just by taking what's on the strip."

In the case of the Target hack, the data may have been enough for hackers to make a counterfeit card.

One security researcher, who showed us a different credit card hack, explains.

To the employee, everything looks normal, Mike Park, Trustwave "I just have to log in, I can make a selection here, and then I can do a credit card swipe. It'll ask me for the CVV, I can put in a CVV, whatever numbers I want. And then I click pay, nothing seems untoward."

For the customer, pretty standard, Mike Park, "You're paid, you get your receipt, you move on."

But for the hacker, Mike Park, "I have access to the entire mag stripe data that's on this device. And I can get all of this and enough information to actually create a whole different card."

The Target hack has some saying that the U.S. is a little behind the times in terms of secure payments, Jose Pagliery, "What one secure solution, more secure solution that they have in Europe right now is this chip and pin system, in which the card doesn't actually have a strip, it has a chip within it every time you use it you also have to enter a pin."

According to the federal reserve, credit card fraud in England plummeted 34 percent in the six years after banks and merchants implemented chip on pin cards.

During a similar period in France, fraud from in person card fell 35 percent, but this Holiday season, millions of American shoppers might have been the target.

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