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| author | Charles.Forsyth <devnull@localhost> | 2006-12-22 20:52:35 +0000 |
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| committer | Charles.Forsyth <devnull@localhost> | 2006-12-22 20:52:35 +0000 |
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| tree | 6fdb25e5f3a2b6d5657eb23b35774b631d4d97e4 /lib/ebooks/oebtest/creditcards.html | |
| parent | 37da2899f40661e3e9631e497da8dc59b971cbd0 (diff) | |
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diff --git a/lib/ebooks/oebtest/creditcards.html b/lib/ebooks/oebtest/creditcards.html new file mode 100644 index 00000000..233757c3 --- /dev/null +++ b/lib/ebooks/oebtest/creditcards.html @@ -0,0 +1,241 @@ +<?xml version="1.0" encoding="utf-8"?> +<!DOCTYPE html PUBLIC "+//ISBN 0-9673008-1-9//DTD OEB 1.0 Document//EN" + "http://openebook.org/dtds/oeb-1.0/oebdoc1.dtd"> +<html> +<head> +<meta http-equiv="Content-Type" content="text/x-oeb1-document; charset=utf-8" /> +<link rel="stylesheet" type="text/x-oeb1-css" href="DrBillBio.css" /> +<title>Bill Wattenburg’s Background: Magnetic Credit Cards</title> +</head> + +<body> + +<h1>Magnetic Credit Cards</h1> + +<h2>(1973)</h2> + +<p>We believe that this event lends some insight into Wattenburg’s integrity in honoring +contractual commitments and confidentiality agreements.</p> + +<p>The San Francisco Chronicle reported another of Wattenburg’s startling +technical tricks during the BART controversy in 1973. A subsequent story in +Business Week (August 11, 1973, page 120) stunned and sobered the nation’s +banking and credit card industry which was planning to convert all credit cards +to the same magnetic stripe system used in the new BART cards. Chronicle +reporter Michael Harris approached Wattenburg in his Berkeley laboratory and +asked Wattenburg whether it was possible to counterfeit the new multi-million +dollar, “fool-proof” BART ticket magnetic stripe designed by IBM. +This system was the first to use a magnetic stripe to record the value of a +transit rider’s ticket. BART officials, IBM, and the nation’s banks had all said +that “anyone would need at least $500,000 worth of specialized electronic +equipment to copy the magnetic stripe and fool their reading machines.” +(Anyone but Bill Wattenburg, as it turned out.)</p> + +<p>We located one of the technical people, now retired, who was on the scene in 1973 in +order to verify a couple of minor items about Wattenburg’s financial involvement in this +event. We got a lot more than we expected. We were able to get some of “the rest of the story” at this +late date that was not available to the press in 1973.</p> + +<br /> +<p><b>Here is the story from press reports:</b></p> +<br /> + +<p>On June 4, 1973, in the San Francisco Chronicle (page 22), reporter Harris described how +he was able to “boost” a 5-cent BART ticket to any value he wanted using an inexpensive scheme +that Wattenburg had invented in a few hours. Worse yet, Wattenburg devised a simple scheme +that any housewife could do in her kitchen! Harris described how the idea came to Wattenburg, +and how he, reporter Harris, was later able to give startled officials a private demonstration at the +Chronicle offices. The banking industry was about to issue the first of millions of credit cards +that could have been counterfeited “by any high school kid”, according to Wattenburg. IBM and +the banks went back to the drawing board for another year before they came up with a better +scheme (that Wattenburg said he couldn’t easily beat—see story below).</p> + +<p>When Wattenburg was later asked by the press and angry government officials how he +could so easily defeat the efforts of this country’s best engineers, he sent them the following +apology:</p> + +<blockquote>“It’s not my fault. When engineers have too much money, they usually think only of the +most sophisticated ways they can spend it. No one asks them to play devil’s advocate and think of +the obvious until it’s too late. I never would have bothered to think about the subject. It was none +of my business. Hell, I didn’t know that BART and banks all over the country were really planning +to use this silly scheme.”</blockquote> + +<p>He continued:</p> + +<blockquote> +<p>“All that happened is that this reporter Michael Harris, who is a very +clever guy by the way, came along and bet me that I couldn’t find an easy way to copy this +funny-looking BART ticket with a magnetic stripe. I thought it was just someone’s prototype idea. But +he said that IBM had bragged that no one could do it for less than a half-million dollars. Now, +that kind of gets a scientist’s juices flowing. I mean I didn’t interrupt my serious scientific work at +Berkeley, but his challenge was on my mind for a few hours.</p> + +<p>“Suddenly, I remembered an obscure little thing about the physics of magnetic materials +that most scientists don’t bother with very often. This phenomenon had given me fits in an +experiment that I had done as a graduate student. Even my professor at the time didn’t believe it +until I showed it to him. I thought, ‘Oh my God, the IBM guys couldn’t possibly have +overlooked that! They’re the world’s experts on magnetic recording.’</p> + +<p>“I did a quick experiment with some magnetic tape that I bought at lunchtime in a music +store on Shattuck Avenue, and damned if I wasn’t able to make a good copy of the BART ticket +magnetic stripe that Harris had left with me to play with. I didn’t even have time to go to a BART +station and see if my counterfeit ticket worked. When Harris came back the next day, I gave him +the materials he would need and showed him how to do it in his kitchen at home. Well, you know +the rest of the story. …”</p> +</blockquote> + +<p>Wattenburg recently told us that he believed that the 1973 Business Week story contained +some half-truths to steer thieves in the wrong direction. The press reports show him copying a +credit card with another piece of magnetic tape. But the stories don’t explain that this was no +ordinary piece of magnetic tape. He said that the 22 other ways discovered by Cal Tech students +were all too clumsy or unreliable to be any threat. He believed that IBM and the banks didn’t +really care if thieves concentrated on these. He said that the banks wanted the Business Week +story written that way. He agreed to go along with the story for the sake of all the innocent +people who could have lost their money, but it wasn’t pleasing to him to know all the things that +were not disclosed to the press.</p> + +<p>He told us ruefully:</p> + +<blockquote><p>“At least I didn’t say anything dishonest to Business Week. They came around to +see how I did it and I showed them the mechanics of how it could be done, They +didn’t ask the right questions and I didn’t volunteer anything more. I hoped they would go out and +try to copy a card with a piece of ordinary iron oxide magnetic tape, the way Michael Harris did. +They would have discovered in a hurry that the scheme required something else special. But they +didn’t. I was really surprised that they wrote the story without checking that. … That was the last +time I ever took money to keep my mouth shut. I needed money at the time to do a lot of +important scientific experiments that were on my mind, and I had a lot of good graduate students +who needed support. The bankers were the big boys. Who was I to tell them what was ethical? +But you know, when I asked them to provide a few scholarships, they turned me down. That is +why it eventually cost them a hell of a lot more than a few scholarships.”</p> +</blockquote> + +<p>One of Wattenburg’s scientist colleagues whom we interviewed in August 1990 told us +what he thinks happened with the magnetic stripe. He said that obviously the whole thing was +hushed up very quickly because of the potential losses due to thieves learning how to copy the +magnetic stripe on the new bank credit cards. He said the rumor was that IBM or the +banks, or both, paid Wattenburg a very handsome sum to help them devise a better scheme. He said that +one of Wattenburg’s former Berkeley students who worked at IBM was asked to approach +Wattenburg and that Wattenburg agreed to help them under the condition that he work only +through his former student.</p> + +<p>This IBM engineer, Wattenburg’s former student, later went to work at Livermore. We +were told that he took great joy in telling the funny stories that happened when the banking +association attorneys tried to negotiate a deal with Wattenburg. He said they offered Wattenburg +a very large amount of money if he would help them design a new scheme that couldn’t be +counterfeited by anyone who did not have at least a hundred thousand dollars of specialized +equipment which they itemized in the agreement. And Wattenburg had to agree to never again +talk about or disclose to anyone how he had copied the BART card or anything about new +schemes that would be developed. He said that Wattenburg agreed that the payment they offered +seemed quite fair, provided there were a few minor changes. One change Wattenburg made to +the agreement he sent back was “by anyone other than Wattenburg” in the clause “couldn’t be +counterfeited by anyone”. The attorneys saw no problem with this because if he helped develop a +new scheme, obviously he would be one of the few who would know how to beat it as well. +They accepted the agreement.</p> + +<p>But then the bankers realized that Wattenburg could collect his money by only proving +that “other people” could not copy some new magnetic stripe that he helped them develop. They +protested that they already had a scheme that “other people” could not easily copy. They had paid +large sums to universities and major consulting firms to have it tested and no one could copy it +easily and reliably until Wattenburg came along.</p> + +<p>They demanded that Wattenburg change the language of the agreement. Wattenburg +responded: “Well, tell me how much it is worth to you if I take it out.” Before it was over with, +they had tripled the amount they first agreed to pay him. The former student said that Wattenburg +succeeded in beating the next two magnetic stripe recording schemes that they proposed until +they finally came up with one that he said he couldn’t beat without expensive equipment.</p> + +<p>Our contact laughed when he recalled what the former student often told his Livermore +friends about Wattenburg’s assurance that he couldn’t beat the latest magnetic stripe scheme that +is now used worldwide. He said: “I’ll bet that Wattenburg just got tired of fooling around with this +business and told them it was OK. But, do you want to bet what will happen if Wattenburg is ever +broke and he gets a hold of your credit card for a few hours?”</p> + +<hr /> + +<p>We later learned that some of the 1973 press stories were probably encouraged for public +consumption, and that maybe even Wattenburg left out a little of the story he told us—for a +proper reason.</p> + +<p>Since this was the only episode in Wattenburg’s public exploits for which he admitted +taking payment for his services, we decided to investigate it more deeply. In particular, we thought +this would be a good situation in which to explore how he handled the confidentiality of his +dealings with those who paid him in return for the same. We were able to locate the “former +student” mentioned above. Now retired, he was willing to tell us almost all of “the rest of the +story” since he felt that there was no danger at this late date.</p> + +<p>All of the above story is mostly true, as far as it goes. But there was more that the public +was not told, and for good reason. He said that in the contract that they wanted Wattenburg to +sign, he refused to disclose, even to IBM and the banks, the nature of the magnetic material he +used to copy the BART and bank cards. Wattenburg had made some magnetic strips that looked +like the ordinary Mylar-backed audio magnetic tape with the usual iron oxide magnetic surface, +but it really had been coated with another special material. Wattenburg gave the reporter Michael +Harris enough of this special magnetic tape to do his experiment at the BART ticket machines +and for Harris to later give another demonstration to various officials at the Chronicle offices. +They never knew for sure what the material was.</p> + +<p>He further explained that, unknown to Wattenburg, IBM and others had deliberately +arranged the competition with Cal Tech students to see who could counterfeit the BART cards. +But, the BART cards didn’t include all the coding safeguards that were used in the scheme that +was designed for bank credit cards. He says he believes that IBM knew that most anyone could +use simple magnetic tape reading equipment to read a BART card magnetic stripe and make a +copy, as the Cal Tech students and others quickly proved. But, they were confident that no one +could counterfeit the more valuable bank cards the same way because ordinary magnetic reading +equipment could not read the special magnetic coding that they intended to use on the bank +cards.</p> + +<p>In other words, he felt that the well-publicized student competition for copying the BART +cards and the 22 schemes they came up with was a ruse to cause potential thieves to go in the +wrong direction and frustrate themselves when the bank cards were issued. He said he learned +that the first thing that IBM had tested was to make sure that their magnetic coding scheme on +the bank cards could be not read by ordinary magnetic tape reading equipment. They were no +fools.</p> + +<p>But they did not count on Wattenburg coming along. He found a way to physically copy +the magnetic coding on the IBM stripe directly onto another magnetic stripe without using any +intermediate electronic read-write cycle. His scheme copied everything, including the magnetic +special coding on the bank cards that couldn’t be copied by inexpensive magnetic tape reading +equipment. In fact, they found out that Wattenburg’s copies had as much resolution (were as +good) as the original magnetic stripe that he had copied. This scared the hell out of them. This +meant that he could copy the new bank cards as well.</p> + +<p>He said that Wattenburg refused to tell IBM or the bankers what the material was that he +had used to make his special magnetic tape that could capture an image of their magnetic +stripes—and could be accomplished in the kitchen. This was the real sticking point in the agreement that +they wanted with him. Wattenburg insisted that if IBM scientists used their heads they would +soon figure it our on their own. He felt that he didn’t want to be the one who gave license to +thieves by being the first one to disclose it. He felt that the university would get a bad name. They +finally settled on an agreement with him to help them anyway. And, they had to pay him +handsomely to take out the “anyone other than Wattenburg” clause.</p> + +<p>He said that it became an obsession at IBM San Jose for the next year to figure out what +Wattenburg had done. He remembers engineers and scientists meeting at lunch time to compare +notes on their latest ideas and experiments. They even hired a guy from Livermore who had +worked with Wattenburg to help them as a consultant. They found all sorts of new ways, but none +of them could be accomplished with something so simple as a clothes iron the kitchen. He said +that the attorneys got very angry with Wattenburg. They essentially accused Wattenburg of +being a fraud and demanded that he disclose the answer or they would recommend that his future +payments due under their contract be stopped. Our contact says that he had to take these +communications to Wattenburg at the university. Wattenburg’s answer to the attorneys was that +IBM ought to be very happy that their engineers were discovering so many new ways on their +own that they never would have considered if they had not been trying to discover his way. He +offered to demonstrate his scheme again anytime they would like.</p> + +<p>He says that he never heard whether they figured it out on their own or whether +Wattenburg eventually told them. All he knows is that they eventually came up with a new scheme +that could not be easily counterfeited by Wattenburg, so he said.</p> + +<p>He told us that he was impressed that, for ten years, Wattenburg would never tell even +his best friends at Livermore who insisted that he could tell them his method under the strict +security rules that prevailed at this nuclear weapons laboratory. He heard one senior laboratory +official jokingly promise Wattenburg that he would personally stamp the document “classified” if +Wattenburg would write it down for them. He said that Wattenburg would not even confirm +what the answer was long after it had became generally known to scientists and engineers what +the special material was that he had used.</p> + +<p>Our contact said that he always respected Wattenburg for never violating the agreement +that he knew Wattenburg had signed with the bankers. But then he added: “if you knew how +much they paid him in real dollars today, you would not have taken a chance on losing it either by +opening your mouth just to show off.”</p> + +</body> +</html>
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