The Code Trading Problem

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After discussing the low security standards of the Codentify system when it comes to preventing counterfeiters to get away with copying Codentify codes, today I’ll explain a field where this technology has almost no security standards at all – preventing fraud by tobacco industry’s employees.

Short reminder from my first post about how the system works within a local tobacco factory:

Each production line has a Codentify certified printer (e.g. Domino, VideoJet, etc.), which is connected to a code generator computer. This code generator receives an electronic “license” key from the central server that allows it to generate and immediately print unique genuine Codentify codes. Later, this code generator reports back to the central server only the number of the produced volume. And when I say “Later”, is in some cases is much later (i.e. a week later, millions of packs later…).
So if a factory uses the good old tax-stamps, it has two parallel “counters”, one is the balance of previously bought tax-stamps, and the other is the counter on each production line printer. In this case, if somehow both counters are not even, the government is fairly “protected”: if there are packs that got produced without a stamp – it’s very distinctive, and if stamps got lost in the process – it’s the factory’s loss. Codentify basically annihilates the first counter, leaving only the printer-counter and the government/consumers to weather the damages.

Because industry’s primary objective is to boost its production volume and avoid pausing the production process at any cost, a code generator is designed to continue producing Codentify codes even when it has “connection problems” to the central server. In other words, a disconnected code generator can generate millions of codes before reporting back.
Therefore, an IT manager of a local factory is capable of stealing millions of codes in the following ways (You’re more than welcome to add methods my “creative mind” hasn’t thought of yet.)

• When a new key arrives from the central server, the code generator probably still has an excess of codes it is technically able to print. All the fraudster needs to do is printing them to a file.
• Using a software interceptor: duplicating each code sent by the code generator to the printer into a file. This can be done by installing some kind of a Trojan horse on the code generator computer, duplicating its printer output signal.

• Using a hardware interceptor: same as the software option, but for low-tech fraudsters that prefer to physically connect a “black box” to the cable in between the code generator and the printer.

• Duplicating the code generator – Installing the code generator as a VM (Virtual Machine), duplicating it each time a key arrives from the central server.
Now you might say every technological system is vulnerable to these kinds of attacks, especially by highly capable employees such as IT and production managers, but in Codentify’s case, the tobacco industry as their employer is not the one to take the hit! We are! And of course we are supposed to just trust the industry’s managers to trust its employees not to be tempted with committing fraud, that their bosses have no grave interest to avoid. I personally find this issue both suspicious and concerning.

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As I mentioned last week, I have a video interview with a Codentify insider, I have still not released it as I have been warned by experts to be concerned for the source’s personal safety. I am in the process of sorting out how to release the information and protect him at the same time. More soon.

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