Very few people actually know how the TJX breach happened. Here is the sequence based on Attorney Joel Lisker's testimony in US District Court (Master Docket No. 07-10162-WGY). Joe Lisker is the Senior Vice Chairman of Dudinsky Lisker & Associates, LLC. Previously he was the SVP for Security and Risk Management for MasterCard International.

As we see below, the attack itself happened in two phases. In phase 1, the attacker penetrated and found the target - in this case, the stored Track 2 data. The attacker also managed to extract this data out of the TJX network. In Phase 2, the attacker actually installed software on servers to get at all Track 2 data being transacted. This data was subsequently retrieved without setting off any alarms.

Actual Sequence
The figures below show a highly simplified picture of the TJX infrastructure and illustrate the attack in steps.

Phase 1: Breach initiation
(1) Initial breach of the TJX system likely happened as a result of deficiencies in the wireless network used by TJX. At the time of the attack, TJX employed WEP wireless encryption at the store location, with some known deficiencies. Part of the problem was that the network broadcast SSIDs - the service set identifier name assigned to the wireless network by the administrator.
(2)  After breaching the TJX wireless system, the attacker was able to gain administrative privileges to the RTS servers located at the TJX corporate headquarters in Framingham, MA. The RTS servers hold all cardholder data that is processed centrally for most TJX stores.
(3) Once the attacker was able to gain administrative privileges to the RTS servers, he was able to find historic Track 2 data improperly stored by TJX on these servers.
(4) The attacker then used FTP to copy this Track 2 data to another machine on the Internet, utilizing TJX's high-speed internet connection.

Phase 2: Breach escalation
(5) Until this point, the attacker could only get at historical stored Track 2 data. Now it gets audacious. To get at new data, the attacker actually installed custom written traffic capture software on the servers!
(6) The attacker used the software to record live TJX transaction data. The software tool was configured to extract the payment card track data from the transactions. This track data was then stored in tool's log file, unpretentiously called just "log".
(7) The attacker used this tool to copy and extract Track 2 data from payment card transactions from May 2006 to December 2006.

The net impact of this attack?
Estimated likely 100 million unique account numbers affected by the breach, of which one attack alone compromised 42 million payment cards (12 million MasterCards, over 25 million Visa cards).

In the next post, I will outline security technologies that could have caught the TJX breach in action.