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Target Hacked; 40 Million Accounts at Risk; Hacking Credit Cards; First Lady Focuses on Obamacare; FCC Moves to End Sports Blackout Rule; A&E Suspends "Duck Dynasty" Star; Panel: Mend, But Don't End, NSA Snooping

Aired December 19, 2013 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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CAROL COSTELLO, CNN ANCHOR: Hackers broke into Target's computer network, stealing your information as you swipe your credit or debit card.

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BRIAN KREBS, KREBSONSECURITY.COM: They let them take that information and encode it on to a new card. And essentially duplicates that card and use it as if, you know, it was their credit card (INAUDIBLE) store.

COSTELLO: 40,000 devices and store registers may have been affected.

UNIDENTIFIED FEMALE: Probably cash now. I do have cash to pay for what I need tonight.

COSTELLO: Computer security expert Brian Krebs broke the story and says data was stolen from Black Friday until this past Sunday. If you shopped at Target.com you should be fine but the worst thing about this, it could take months to figure out if you're a victim.

KREBS: You as a cardholder are not liable for these charges, but there's a catch. You have to report it. You have to say, I didn't make these transactions. Well, if you're not paying attention to your statements you may miss that.

COSTELLO: This morning, Target is responding saying, quote, "Target's first priority is preserving the trust of our guests and we have moved swiftly to address this issue so guests can shop with confidence. We regret any inconvenience this may cause."

(END VIDEOTAPE)

COSTELLO: Now there are many ways hackers can get your credit card information and duplicate it in just seconds.

CNNMoney tech correspondent Laurie Segall joins me now to explain.

How did this happen, Laurie?

LAURIE SEGALL, CNN MONEY TECH CORRESPONDENT: You know, Carol, so when we talk about point of sale this is -- essentially they're saying it could have been a point of sale hack. So when you go up to the register and you swipe your card at the register that's where they're thinking this occurred.

Now let me make this clear. Usually you could manually break into one of these point of sale devices in the store but the hack was so widespread they're saying, and I've spoken to a lot of security researchers, who were saying actually they probably did this from the back and they were probably able to hack into the software at major scale.

And now we also spoke to another security researcher who talked about a different way we pay in stores which is through our mobile devices. You know, a lot of these stores, not Target exactly, but a lot of stores like Target are using mobile swiping devices so you can just pay right there. Well, they actually showed us that not only is this unsafe but we're all still at risk.

Check this out.

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MIKE PARK, TRUSTWAVE: I'm connected to this phone wirelessly right now so in real time I'm stealing credit card data. I just have to log in, I could make a selection here and then I can do a credit card swipe. I now have all of your credit card data right in here.

UNIDENTIFIED MALE: These stockings are the first things to go.

SEGALL (voice-over): When Grinch-like hackers literally steal Christmas. Now these guys aren't Grinches. They're actually security researchers with a company called Trustwave. Their job is to find flaws in technology to protect users or in this case shoppers.

PARK: And then click "pay" nothing seems untoward. You're paid, you get your receipt, you move on.

SEGALL: Bypass the cash register and swipe your card on a smartphone.

(On camera): This is just an iPhone, right?

PARK: This is just an iPod or an iPhone. It also will work with an iPad. Basically you've gone into a big box retailer of some sort, you've made a purchase, employee is here to help you now, and you hand them your card, they run the card through.

SEGALL (voice-over): And that's where shoppers are at risk.

PARK: Once the credit card transactions are run through we're able to steal them off, steal the credit card transactions before they're encrypted, if they're not encrypting in the hardware.

SEGALL: The problem isn't in the card swiper attached to the phone. It's in the software retailers use to process your payments. In some cases that software doesn't hide or encrypt your personal information which makes it easy bait for hackers. They can manipulate the device in a way that allows them to track activity like credit card numbers swiped or typed in.

CHARLES HENDERSON, TRUSTWAVE: As technology advances, and as it advances at a rapid pace, security is often slow to catch up.

SEGALL: Trustwave recommends retailers stress test their security and encourages what they call ethical hacking, essentially breaking a system before it's deployed to find the weak points. And while it's up to retailers and banks to ensure you're protected, consumers should always be on the lookout.

HENDERSON: If the cash register attendant, mobile point of sale attendant, is entering your credit card number with their fingers rather than a swipe, there's no way that the credit card is encrypted.

SEGALL: They also recommend customers always keep tabs on their transactions, especially during one of the busiest shopping periods of the year.

(On camera): Using this hack, I mean, how long would it take like you to get, you know hundreds of thousands of people's credit card information?

HENDERSON: Legitimately you can get credit card information as quickly as the clerk or clerks, if you were to compromise multiple point of sales can swipe credit cards.

SEGALL: Exactly what it would have looked like if the Grinch went high tech.

(END VIDEOTAPE)

SEGALL: And, Carol, you know, what's scary about this, it's a little bit different with what happened at Target. Target, that point of sale hack happened right when you went up at the register. These are -- these mobile devices that are being deployed everywhere but these are all point of sale hacks and these guys say, you know, this software is out there. And people are still at risk.

So, you know, protect himself. It's hard to say. But I would say make sure if you went to Target and you used your card during this period of time get in your credit card and monitor your transactions. That's still important and I talked to one -- a guy who's an ethical hacker who said, you know, there are programs like Lifelock where that help you monitor your fraudulent -- any fraudulent charges but at the end of the day it's really up to retailers to protect their consumers and to do this kind of testing ahead of him.

COSTELLO: And before you hire any service to check your credit card just go online. You're going to find out you're a victim that way, you know, if something happened because you made a transaction at Target, go online, see if anybody fraudulently is using your credit card number and then call the credit card company and they'll likely take care of it.

So that's the best way to protect yourself right now.

SEGALL: Absolutely.

COSTELLO: Laurie Segall, thanks so much.

SEGALL: Thank you.

COSTELLO: Also this morning, anti-American anger is boiling over in India, outraged Indians set fire to American flags and denounced President Obama in street protests that are growing decidedly more angry. They're railing against the arrest of an Indian diplomat in New York City. This diplomat was strip searched and handcuffed after being accused of falsifying her housekeeper's work visa and grossly underpaying her.

Now this diplomat's treatment has ignited outrage among her countrymen and of course her lawyer.

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DANIEL ARSHACK, ATTORNEY FOR DEVYANI KHOBRAGADE: She was handcuffed. She was strip searched. She was put in a cell with another people and treated like an ordinary U.S. citizen charged with a crime. The fact is, she isn't an ordinary U.S. citizen. She is a diplomat with immunity, and she should have never been treated this way.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Thus far all indications are that standard procedures were followed, but because we recognize that this is a very sensitive issue in India, we are continuing to review exactly what happened in this case.

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COSTELLO: The case has severely strained ties between the United States and one of its key allies in Asia. India's prime minister calls the diplomat's treatment, quote, "deplorable."

The president is turning to his best asset to sell Obamacare. That would be his wife, Michelle. The first lady will sit down for a round of interviews with African-American radio hosts to urge people to sign up on healthcare.gov.

Radio host Joe Madison was among the first. He aired Mrs. Obama's interview this morning.

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MICHELLE OBAMA, FIRST LADY: And I want young people out there, you know, if you were -- aren't on your parents' insurance, if you don't have the job that's going to give you coverage, if you're working part-time or if you're unemployed you need to go to the Web site and find out how to get yourself covered so that you don't have an unexpected incident that will bankrupt you, put you in debt for the rest of your lives.

That's the major cause of bankruptcy in this country today, it's health care bills, because people do think they're invincible and then they're hit with an unexpected medical emergency and they're paying hundreds of thousands of dollars. They've got bill collectors chasing them down right now. Well, because of Obamacare, no one has to go through that.

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COSTELLO: Mrs. Obama also met with a group of moms at the White House to sell her husband's signature policy.

Our Senior White House correspondent Jim Acosta is at the White House this morning with more on this story.

Good morning, Jim.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning, Carol. I think you set that up perfectly. I mean, the reason why the White House is putting out Mrs. Obama for two reasons really. I mean, if you look at the last CNN approval numbers for Michelle Obama, we did this about a year ago, there were around 73 percent. So she has very high approval numbers and she is a much more effective spokesperson than say Pajama Boy who is of course the image of that young man in his pajamas at the White House and Barack Obama Twitter handle tweeted out a couple of days ago and trying to encourage young people to sign up for Obamacare.

You heard Mrs. Obama saying in that radio interview, and she's been saying in another interviews that young Americans need to sign up for health care coverage just in case they get into a car accident, just in case some sort of medical emergency happens, they don't want to be stuck with medical bills. And that's what she's going to be doing and she has been doing the last 24 hours, sort of extolling the virtues of Obamacare, talking about why it's working, why it can work for people in those targeted groups that the White House wants to see sign up for health care coverage.

But, really, Carol, there's another thing that's going on, and that is that this White House is becoming more comfortable with what's happening on healthcare.gov. They wouldn't be putting Michelle Obama out there as a spokesperson for health care -- for Obamacare if the Web site wasn't working better so they're starting to feel better about that.

A few other things to point out, later today they're going to be doing a conference call here at the White House talking about the benefits of Obamacare state by state, and then Kathleen Sebelius, the embattled Health and Human Services secretary, she's going to be doing sort of a Q&A session on "Huffington Post Live."

So they're really pulling out all the stops once again trying to sell Obamacare as they near this very important deadline of December 23rd. That's the deadline for Americans to sign up for health care coverage starting on January 1st. The one last thing we're all waiting for, Carol, is if the salesman-in-chief, President Obama will make one last pitch for Obamacare before he goes on this two-week vacation to Hawaii. We're all wondering, is he going to do one of those year ender news conferences here at the White House. No word yet on that, though, Carol.

COSTELLO: All right. Jim Acosta reporting live from the White House this morning.

ANNOUNCER: This is CNN breaking news.

COSTELLO: Yes. We do have a bit of breaking news for you this morning. The London tabloid "News of the World" hacked into Kate Middleton's cell phone while she was still dating Prince William. The revelations were made earlier today in a British courtroom. Jurors heard transcripts of messages in which the Prince called Middleton by a personal nickname and told her about his military training.

Two former "News of the World" editors are on trial for their roles in the paper's alleged hacking sources. Both are denying the charges.

And other top stories we're following this morning at 11 minutes past. A London jury has begun deliberations in a case involving celebrity chef Nigella Lawson. Two sisters are accused of defrauding Lawson and her ex-husband of hundreds of thousands of dollars. The case has titillated observers around the world because of revelations that Lawson used cocaine and insights into her troubled marriage to a milionaire art collector.

Take a look at this. A bus passenger slapped the gun away from his face and started punching a gunman who tried to rob him of his cell phone. And then other passengers helped tackle the gunman, they held him down until police came. Seattle Police say the suspect had already robbed two other people at gunpoint.

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CHRIS BRIGGS, BUS PASSENGER: He came up to me and stuck the gun at me and took my phone. He jabbed me a little harder and say, "don't make it harder than it has to be."

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COSTELLO: The suspect 19-year-old Trevonte Brown is charged with robbery and attempted robbery. Ooh, you go.

High-end grocer Whole Foods is giving the boot to a top brand of Greek yogurt. Chobani will disappear from the market shelves early next year to make way for more organic brands. Some customers have complained that the New York yogurt maker uses milk from cows fed with genetically modified organisms.

OK, sports fans. TV blackout, dreaded words for NFL fans for almost 40 years. The FCC wants to end the rule that was started to protect home team ticket sales. Thirty-five years ago half of all NFL games were blacked out. But that number has dwindled and so far this season just one game has been blacked out.

It happened on December 1st, when fans in the San Diego area had to listen to the Chargers/Bengals game on the radio. 5,000 seats were unsold by blackout time and if I was a fan of either of those teams I'd be really mad.

Andy Scholes joins me now to tell us more about a possible end to this rule all together.

ANDY SCHOLES, BLEACHER REPORT: Yes. And it looks like really it could happen.

And, Carol, you know, I remember growing up in Houston in the mid '90s, you know. It was a chore for the oilers to sell out the Astrodome and I remember watching the local news every night. They would update ticket sales to see if we'd get to watch the game on TV.

Because back then, you know, people would go buy a ticket if they couldn't see on the TV now. It seems like things have really changed. If a game is blacked out, you don't see people running to the box office. There are so many ways you can watch the game or even follow it with NFL red zone and Twitter these days.

So I'm not sure like the FCC's point is this whole thing is that technology has advanced so far, that the blackouts aren't going to really help ticket sales at this point but the NFL says hey, let's pump the brakes here real quick, the vice president of communications Brian McCarthy released this statement.

He said, "We still strongly oppose any change in the rule. We are on pace for historic low number of blackouts since the policy was implemented 40 years ago. While affecting very few games in the past decade the blackout rule is so very important supporting NFL stadiums and the ability of NFL clubs to sell tickets and keeping our games attractive. Television programming with large crowds."

The NFL's point is, you know, as you watch a Jaguars game and there's no one in the seats do you really -- do you really want to watch that game and I guess the NFL is of course -- they're looking ahead.

COSTELLO: Do they realize how much tickets cost to go to an NFL game? I mean, get real here.

SCHOLES: Very true but they're also looking ahead. You know, the NFL is the most popular sport right now. Everybody wants to go to the games, everyone wants to watch the games. Down the line they said they'd take this rule away and hey, how -- all of a sudden people aren't going to the games and they can just watch it on TV. So, you know, they've looking out for themselves in that aspect.

COSTELLO: And it just raise the price for the NFL package, right? They have ways to make money.

Andy Scholes --

SCHOLES: Yes.

COSTELLO: Thank you very much.

SCHOLES: SHouldn't worry about it.

COSTELLO: Still to come in the NEWSROOM, A&E has suspended one of the stars of "Duck Dynasty" over some derogatory remarks.

CNN's Nischelle Turner is following this story.

Hi.

NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: Hi, Carol. Yes, Phil Robertson's anti-gay remarks got him suspended from the show. I'll tell you how it could impact the show's future, coming up.

ANA COREN, CNN INTERNATIONAL CORRESPONDENT: And Carol, former NBA star Dennis Rodman has arrived in a Pyongyang at a time of serious political upheaval going on in North Korea. He says he's not there to raise the issue of human rights, he's merely going to play basketball and have some fun. I'll have that story later in the show.

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COSTELLO: The backlash over "Duck Dynasty" has begun. This after one of the stars of the wildly popular reality show was suspended indefinitely by A&E after he made some crude anti-gay remarks. We're talking about Phil Robertson, the patriarch of the Louisiana family that struck at rich making duck call (ph), and it ratings gold by sharing its every day life on television.

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UNIDENTIFIED MALE: Well, I figure if these girls are going to talk and snap photos and Instachat, keep your head down because the sound waves bounce off the ground and go down the woods and the hogs will hear you from way off. I got the ladies here, might have a little fun with them.

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COSTELLO: A&E says it was troubled by what Robertson told "G.Q. Magazine". Now, some conservatives are up in arms about his suspension.

"Red State's" Erick Erickson writers, quote, "A&E has joined much of the mass market culture in the Western world of picking sides in a fight, tolerance for gay rights, but not for Christians expressing honest answers to questions asked of their faith," end quote.

CNN's entertainment correspondent Nischelle Turner is following the story. She joins us now.

Good morning.

NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: Hey, good morning, Carol.

You know, in the article that we're talking about, Phil Robertson appeared to be an equal opportunity offender here. It's the height of duck season in Louisiana, duck hunting season in Louisiana but he will not be on camera to show off his shot. The show's network A&E did pull hum from future shoots and said they have done this indefinitely. They also said they were, quote, "Extremely disappointed to have read Phil Robertson's comments in 'G.Q.'"

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TURNER (voice-over): The patriarch of the hit reality TV show "Duck Dynasty" sounded off.

UNIDENTIFIED MALE: My idea of happiness is killing things.

TURNER: But he turned the target on himself. On Wednesday, A&E suspended Phil Robertson, founder of the Duck Commander Company and head of his backwoods Louisiana family from filming indefinitely for the controversial anti-gay statements he made in an interview with "G.Q. Magazine".

In the article, Robertson says, "It's not logical, my man, it's just not logical." He goes on to explain what he finds sinful, saying, "start with homosexual behavior and morph out from there, bestiality, sleeping around with this woman and that woman and that woman and those men," he says.

Robertson then refers to a bible passage from Corinthians, saying, "Don't be deceived, neither the adulterers, the idolaters, the male prostitutes, the homosexual offenders, they won't inherit the kingdom of God. Don't deceive yourself. It's not right."

His words angering gay rights activists.

WILSON CRUZ, GLAAD SPOKESPERSON: I was shocked and appalled that somebody who is on A&E's highest rated show would say something along the lines of comparing homosexuality to bestiality among other things.

TURNER: Robertson and his family are known for preaching their Christian beliefs.

UNIDENTIFIED MALE: We still manage to stay true to ourselves.

TURNER: Telling "G.Q.", they're, quote, "bible thumpers who just happened to end up on television."

But gay rights advocates say, along with the limelight comes responsibility.

CRUZ: You have the freedom of speech, absolutely, but we have the freedom to turn off all of our televisions when you say something that offends us and the people that we love.

TURNER: Robertson released this statement, after the article was released saying, "I would never treat anyone with disrespect just because they are different from me. We are all created by the Almighty and like him, I love all of humanity. We would all be better off if we loved God and loved each other."

(END VIDEOTAPE) TURNER: Now, not only did Phil Robertson make anti-gay comments. He also said in the article that while growing up in the Jim Crow South, he, quote, "never saw black people mistreated and that he worked cotton fields with blacks," and, quote, "They're singing and happy." He said, "I never heard one of them, one black person say, 'I tell you what these doggone white people, not a word. Were they happy? They were godly. They were happy. No one was singing the blues".

And, Carol, we have been talking about this all morning. I come from people who grew up in the Jim Crow era and I'm not sure that is the way -- actually I know that's not the way that they felt.

COSTELLO: I bet you do know.

TURNER: Absolutely.

COSTELLO: All right. Nischelle Turner, we're going to talk more about this in the next hour of NEWSROOM, Nischelle Turner, thanks so much.

Still to come in the NEWSROOM: the opening ceremonies for the Winter Games in Sochi are 50 days away. The headlines are still focused on Russia's anti-gay attitude. Now, President Vladimir Putin is responding to the criticism.

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COSTELLO: The NSA can keep on snooping but changes must be made, one in particular and yes it would be that one, the panel put together by the president says the NSA must restructure the program that collects logs of all U.S. phone calls, score another victory for Edward Snowden, right?

Chief national correspondent John King is in Washington to talk about this.

So, John, this panel came up with 46 recommendations, including more oversight from Congress, and approvals from the courts. The question is, will the president actually put these recommendations into place?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It's a big question, Carol. The president's going to take this report and we should give the administration some credit.

This is a serious report by serious people that has started what is now a serious conversation about whether the United States, whether our government should take the most dramatic turn, turn back, if it you will, national security policy since 9/11, and we are at a turning point for the president, the challenge is, the president said he wants to make some changes. The president said given the evidence we've now seen spilled out in public he does think the government has gone too far.

The question is how far back to you go?

And you mentioned the phone, collecting all those phone records. The NSA says gee, we just collect all this metadata, only look at it when we have reasonable cause, but there are a lot of members of Congress in both parties who say we don't trust you anymore, we don't buy that.

So, one of the biggest recommendations is to not leave that data in the government's hands, to either leave it with the telecommunications companies, or create some new private entity that would hold the data and the NSA, the spy agencies could only get if they showed some reasonable cause to some oversight panel.

So, that's one of the big recommendations and it's going to be interesting to see the president, remember there's a court case pending at the same time the administration is defending doing this in court, saying we have these rights, what will the president say and we'll hear from him in January about maybe rolling some of these powers back.

COSTELLO: Well, you know, the president has put together panels in the past and he's not followed one of their recommendations. What makes anyone think he'll do it this time in?

KING: The political pressure in part, the administration's own admission that they have surprised, but the administration remember, as this played out you made an important point -- Edward Snowden is a man the White House says belongs in prison for life. He is whether you think he's a hero or a criminal, he is almost singularly responsible for putting us at this turning point in security policy.

And you made a key point, and the president has turned down recommendations in the past. We already know he opposes one recommendation which is to split the control, split the management if you will of some of these spy agencies but even the White House has been embarrassed. Because they have gone out and said, no, the NSA doesn't do this, only to find out tell maybe they do some of it and haven't been forthcoming with Congress.

So, there's no question the administration wants to dial the powers back. The question the president will have to answer sometime next month is how much.

COSTELLO: Well, we'll be listening in January. John King, many thanks to you.

KING: Thank you.

COSTELLO: Still to come in the NEWSROOM: Dennis Rodman is in North Korea this morning. But don't expect the former NBA player to engage in any basketball diplomacy.

(BEGIN VIDEO CLIP)

DENNIS RODMAN, FORMER NBA PLAYER: If it doesn't happen, I just can't bring it up. Because I don't want him to think that I'm over here trying to be a, you know, ambassador.

(END VIDEO CLIP)

COSTELLO: We'll tell you why one American family wants Rodman to reach out to his so-called friend for life.

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