More European Chip and Pin Insecurity
“Optimised to Fail: Card Readers for Online Banking,” by Saar Drimer, Steven J. Murdoch, and Ross Anderson.
Abstract
The Chip Authentication Programme (CAP) has been introduced by banks in Europe to deal with the soaring losses due to online banking fraud. A handheld reader is used together with the customer’s debit card to generate one-time codes for both login and transaction authentication. The CAP protocol is not public, and was rolled out without any public scrutiny. We reverse engineered the UK variant of card readers and smart cards and here provide the first public description of the protocol. We found numerous weaknesses that are due to design errors such as reusing authentication tokens, overloading data semantics, and failing to ensure freshness of responses. The overall strategic error was excessive optimisation. There are also policy implications. The move from signature to PIN for authorising point-of-sale transactions shifted liability from banks to customers; CAP introduces the same problem for online banking. It may also expose customers to physical harm.
EDITED TO ADD (3/12): More info.
Kevin • March 5, 2009 1:18 PM
I don’t understand why online banking fraud is so prevalent. Can’t the banks just introduce an extra check/balance and notification (with delay) whenever a customers web credentials are used to set up a payment to an unusual destination account?
Most people, at least in the states, only use “online banking” to pay the same few bills to the same few creditors each month. If an account suddenly is used to set up a transfer to an individual or to the Ukraine, shouldn’t this be flagged?
“The move from signature to PIN for authorising point-of-sale transactions shifted liability from banks to customers; CAP introduces the same problem for online banking. It may also expose customers to physical harm”
Great. Talk about your externalities!