Entries Tagged "banking"

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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.

Posted on March 5, 2009 at 12:45 PM • View Comments

Horrible Identity Theft Story

This is a story of how smart people can be neutralized through stupid procedures.

Here’s the part of the story where some poor guy’s account get’s completely f-ed. This thief had been bounced to the out-sourced to security so often that he must have made a check list of any possible questions they would ask him. Through whatever means, he managed to get the answers to these questions. Now when he called, he could give us the information we were asking for, but by this point we knew his voice so well that we still tried to get him to security. It worked like this: We put him on hold and dial the extension for security. We get a security rep and start to explain the situation; we tell them he was able to give the right information, but that we know is the same guy that’s been calling for weeks and we are certain he is not the account holder. They begrudgingly take the call. Minutes later another one of us gets a call from a security rep saying they are giving us a customer who has been cleared by them. And here the thief was back in our department. For those of us who had come to know him, the fight waged on night after night.

Posted on October 30, 2008 at 12:10 PM • View Comments

News from the Rock Phish Gang

Definitely interesting:

Based in Europe, the Rock Phish group is a criminal collective that has been targeting banks and other financial institutions since 2004. According to RSA, they are responsible for half of the worldwide phishing attacks and have siphoned tens of millions of dollars from individuals’ bank accounts. The group got its name from a now discontinued quirk in which the phishers used directory paths that contained the word “rock.”

The first sign the group was expanding operations came in April, when it introduced a trojan known alternately as Zeus or WSNPOEM, which steals sensitive financial information in transit from a victim’s machine to a bank. Shortly afterward, the gang added more crimeware, including a custom-made botnet client that was spread, among other means, using the Neosploit infection kit.

[…]

Soon, additional signs appeared pointing to a partnership between Rock Phishers and Asprox. Most notably, the command and control server for the custom Rock Phish crimeware had exactly the same directory structure of many of the Asprox servers, leading RSA researchers to believe Rock Phish and Asprox attacks were using at least one common server. (Researchers from Damballa were able to confirm this finding after observing malware samples from each of the respective botnets establish HTTP proxy server connections to a common set of destination IPs.)

Posted on September 10, 2008 at 7:47 AM • View Comments

A British Bank Bans a Man's Password

Weird story.

Mr Jetley said he first realised his security password had been changed when a call centre staff member told him his code word did not match with the one on the computer.

“I thought it was actually quite a funny response,” he said.

“But what really incensed me was when I was told I could not change it back to ‘Lloyds is pants’ because they said it was not appropriate.

[…]

“The rules seemed to change, and they told me it had to be one word, so I tried ‘censorship’, but they didn’t like that, and then said it had to be no more than six letters long.”

Lloyd’s claims that they fired the employee responsible for this, but what I want to know is how the employee got a copy of the man’s password in the first place. Why isn’t it stored only in encrypted form on the bank’s computers?

How secure can the bank’s computer systems be if employees are allowed to look at and change customer passwords at whim?

Posted on August 29, 2008 at 10:44 AM • View Comments

Indictments Against Largest ID Theft Ring Ever

It was really big news yesterday, but I don’t think it’s that much of a big deal. These crimes are still easy to commit and it’s still too hard to catch the criminals. Catching one gang, even a large one, isn’t going to make us any safer.

If we want to mitigate identity theft, we have to make it harder for people to get credit, make transactions, and generally do financial business remotely:

The crime involves two very separate issues. The first is the privacy of personal data. Personal privacy is important for many reasons, one of which is impersonation and fraud. As more information about us is collected, correlated, and sold, it becomes easier for criminals to get their hands on the data they need to commit fraud. This is what’s been in the news recently: ChoicePoint, LexisNexis, Bank of America, and so on. But data privacy is more than just fraud. Whether it is the books we take out of the library, the websites we visit, or the contents of our text messages, most of us have personal data on third-party computers that we don’t want made public. The posting of Paris Hilton’s phone book on the Internet is a celebrity example of this.

The second issue is the ease with which a criminal can use personal data to commit fraud. It doesn’t take much personal information to apply for a credit card in someone else’s name. It doesn’t take much to submit fraudulent bank transactions in someone else’s name. It’s surprisingly easy to get an identification card in someone else’s name. Our current culture, where identity is verified simply and sloppily, makes it easier for a criminal to impersonate his victim.

Proposed fixes tend to concentrate on the first issue—making personal data harder to steal—whereas the real problem is the second. If we’re ever going to manage the risks and effects of electronic impersonation, we must concentrate on preventing and detecting fraudulent transactions.

I am, however, impressed that we managed to pull together the police forces from several countries to prosecute this case.

Posted on August 7, 2008 at 12:45 PM • View Comments

Man-in-the-Middle Attacks

Last week’s dramatic rescue of 15 hostages held by the guerrilla organization FARC was the result of months of intricate deception on the part of the Colombian government. At the center was a classic man-in-the-middle attack.

In a man-in-the-middle attack, the attacker inserts himself between two communicating parties. Both believe they’re talking to each other, and the attacker can delete or modify the communications at will.

The Wall Street Journal reported how this gambit played out in Colombia:

“The plan had a chance of working because, for months, in an operation one army officer likened to a ‘broken telephone,’ military intelligence had been able to convince Ms. Betancourt’s captor, Gerardo Aguilar, a guerrilla known as ‘Cesar,’ that he was communicating with his top bosses in the guerrillas’ seven-man secretariat. Army intelligence convinced top guerrilla leaders that they were talking to Cesar. In reality, both were talking to army intelligence.”

This ploy worked because Cesar and his guerrilla bosses didn’t know one another well. They didn’t recognize one anothers’ voices, and didn’t have a friendship or shared history that could have tipped them off about the ruse. Man-in-the-middle is defeated by context, and the FARC guerrillas didn’t have any.

And that’s why man-in-the-middle, abbreviated MITM in the computer-security community, is such a problem online: Internet communication is often stripped of any context. There’s no way to recognize someone’s face. There’s no way to recognize someone’s voice. When you receive an e-mail purporting to come from a person or organization, you have no idea who actually sent it. When you visit a website, you have no idea if you’re really visiting that website. We all like to pretend that we know who we’re communicating with—and for the most part, of course, there isn’t any attacker inserting himself into our communications—but in reality, we don’t. And there are lots of hacker tools that exploit this unjustified trust, and implement MITM attacks.

Even with context, it’s still possible for MITM to fool both sides—because electronic communications are often intermittent. Imagine that one of the FARC guerrillas became suspicious about who he was talking to. So he asks a question about their shared history as a test: “What did we have for dinner that time last year?” or something like that. On the telephone, the attacker wouldn’t be able to answer quickly, so his ruse would be discovered. But e-mail conversation isn’t synchronous. The attacker could simply pass that question through to the other end of the communications, and when he got the answer back, he would be able to reply.

This is the way MITM attacks work against web-based financial systems. A bank demands authentication from the user: a password, a one-time code from a token or whatever. The attacker sitting in the middle receives the request from the bank and passes it to the user. The user responds to the attacker, who passes that response to the bank. Now the bank assumes it is talking to the legitimate user, and the attacker is free to send transactions directly to the bank. This kind of attack completely bypasses any two-factor authentication mechanisms, and is becoming a more popular identity-theft tactic.

There are cryptographic solutions to MITM attacks, and there are secure web protocols that implement them. Many of them require shared secrets, though, making them useful only in situations where people already know and trust one another.

The NSA-designed STU-III and STE secure telephones solve the MITM problem by embedding the identity of each phone together with its key. (The NSA creates all keys and is trusted by everyone, so this works.) When two phones talk to each other securely, they exchange keys and display the other phone’s identity on a screen. Because the phone is in a secure location, the user now knows who he is talking to, and if the phone displays another organization—as it would if there were a MITM attack in progress—he should hang up.

Zfone, a secure VoIP system, protects against MITM attacks with a short authentication string. After two Zfone terminals exchange keys, both computers display a four-character string. The users are supposed to manually verify that both strings are the same—”my screen says 5C19; what does yours say?”—to ensure that the phones are communicating directly with each other and not with an MITM. The AT&T TSD-3600 worked similarly.

This sort of protection is embedded in SSL, although no one uses it. As it is normally used, SSL provides an encrypted communications link to whoever is at the other end: bank and phishing site alike. And the better phishing sites create valid SSL connections, so as to more effectively fool users. But if the user wanted to, he could manually check the SSL certificate to see if it was issued to “National Bank of Trustworthiness” or “Two Guys With a Computer in Nigeria.”

No one does, though, because you have to both remember and be willing to do the work. (The browsers could make this easier if they wanted to, but they don’t seem to want to.) In the real world, you can easily tell a branch of your bank from a money changer on a street corner. But on the internet, a phishing site can be easily made to look like your bank’s legitimate website. Any method of telling the two apart takes work. And that’s the first step to fooling you with a MITM attack.

Man-in-the-middle isn’t new, and it doesn’t have to be technological. But the internet makes the attacks easier and more powerful, and that’s not going to change anytime soon.

This essay originally appeared on Wired.com.

Posted on July 15, 2008 at 6:47 AM • View Comments

LifeLock and Identity Theft

LifeLock, one of the companies that offers identity-theft protection in the United States, has been taking quite a beating recently. They’re being sued by credit bureaus, competitors and lawyers in several states that are launching class action lawsuits. And the stories in the media … it’s like a piranha feeding frenzy.

There are also a lot of errors and misconceptions. With its aggressive advertising campaign and a CEO who publishes his Social Security number and dares people to steal his identity—Todd Davis, 457-55-5462—LifeLock is a company that’s easy to hate. But the company’s story has some interesting security lessons, and it’s worth understanding in some detail.

In December 2003, as part of the Fair and Accurate Credit Transactions Act, or Facta, credit bureaus were forced to allow you to put a fraud alert on their credit reports, requiring lenders to verify your identity before issuing a credit card in your name. This alert is temporary, and expires after 90 days. Several companies have sprung up—LifeLock, Debix, LoudSiren, TrustedID—that automatically renew these alerts and effectively make them permanent.

This service pisses off the credit bureaus and their financial customers. The reason lenders don’t routinely verify your identity before issuing you credit is that it takes time, costs money and is one more hurdle between you and another credit card. (Buy, buy, buy—it’s the American way.) So in the eyes of credit bureaus, LifeLock’s customers are inferior goods; selling their data isn’t as valuable. LifeLock also opts its customers out of pre-approved credit card offers, further making them less valuable in the eyes of credit bureaus.

And, so began a smear campaign on the part of the credit bureaus. You can read their points of view in this New York Times article, written by a reporter who didn’t do much more than regurgitate their talking points. And the class action lawsuits have piled on, accusing LifeLock of deceptive business practices, fraudulent advertising and so on. The biggest smear is that LifeLock didn’t even protect Todd Davis, and that his identity was allegedly stolen.

It wasn’t. Someone in Texas used Davis’s SSN to get a $500 advance against his paycheck. It worked because the loan operation didn’t check with any of the credit bureaus before approving the loan—perfectly reasonable for an amount this small. The payday-loan operation called Davis to collect, and LifeLock cleared up the problem. His credit report remains spotless.

The Experian credit bureau’s lawsuit basically claims that fraud alerts are only for people who have been victims of identity theft. This seems spurious; the text of the law states that anyone “who asserts a good faith suspicion that the consumer has been or is about to become a victim of fraud or related crime” can request a fraud alert. It seems to me that includes anybody who has ever received one of those notices about their financial details being lost or stolen, which is everybody.

As to deceptive business practices and fraudulent advertising—those just seem like class action lawyers piling on. LifeLock’s aggressive fear-based marketing doesn’t seem any worse than a lot of other similar advertising campaigns. My guess is that the class action lawsuits won’t go anywhere.

In reality, forcing lenders to verify identity before issuing credit is exactly the sort of thing we need to do to fight identity theft. Basically, there are two ways to deal with identity theft: Make personal information harder to steal, and make stolen personal information harder to use. We all know the former doesn’t work, so that leaves the latter. If Congress wanted to solve the problem for real, one of the things it would do is make fraud alerts permanent for everybody. But the credit industry’s lobbyists would never allow that.

LifeLock does a bunch of other clever things. They monitor the national address database, and alert you if your address changes. They look for your credit and debit card numbers on hacker and criminal websites and such, and assist you in getting a new number if they see it. They have a million-dollar service guarantee—for complicated legal reasons, they can’t call it insurance—to help you recover if your identity is ever stolen.

But even with all of this, I am not a LifeLock customer. At $120 a year, it’s just not worth it. You wouldn’t know it from the press attention, but dealing with identity theft has become easier and more routine. Sure, it’s a pervasive problem. The Federal Trade Commission reported that 8.3 million Americans were identity-theft victims in 2005. But that includes things like someone stealing your credit card and using it, something that rarely costs you any money and that LifeLock doesn’t protect against. New account fraud is much less common, affecting 1.8 million Americans per year, or 0.8 percent of the adult population. The FTC hasn’t published detailed numbers for 2006 or 2007, but the rate seems to be declining.

New card fraud is also not very damaging. The median amount of fraud the thief commits is $1,350, but you’re not liable for that. Some spectacularly horrible identity-theft stories notwithstanding, the financial industry is pretty good at quickly cleaning up the mess. The victim’s median out-of-pocket cost for new account fraud is only $40, plus ten hours of grief to clean up the problem. Even assuming your time is worth $100 an hour, LifeLock isn’t worth more than $8 a year.

And it’s hard to get any data on how effective LifeLock really is. They’ve been in business three years and have about a million customers, but most of them have joined up in the last year. They’ve paid out on their service guarantee 113 times, but a lot of those were for things that happened before their customers became customers. (It was easier to pay than argue, I assume.) But they don’t know how often the fraud alerts actually catch an identity thief in the act. My guess is that it’s less than the 0.8 percent fraud rate above.

LifeLock’s business model is based more on the fear of identity theft than the actual risk.

It’s pretty ironic of the credit bureaus to attack LifeLock on its marketing practices, since they know all about profiting from the fear of identity theft. Facta also forced the credit bureaus to give Americans a free credit report once a year upon request. Through deceptive marketing techniques, they’ve turned this requirement into a multimillion-dollar business.

Get LifeLock if you want, or one of its competitors if you prefer. But remember that you can do most of what these companies do yourself. You can put a fraud alert on your own account, but you have to remember to renew it every three months. You can also put a credit freeze on your account, which is more work for the average consumer but more effective if you’re a privacy wonk—and the rules differ by state. And maybe someday Congress will do the right thing and put LifeLock out of business by forcing lenders to verify identity every time they issue credit in someone’s name.

This essay originally appeared in Wired.com.

Posted on June 17, 2008 at 6:51 AM • View Comments

Clever Micro-Deposit Scam

This is clever:

Michael Largent, 22, of Plumas Lake, California, allegedly exploited a loophole in a common procedure both companies follow when a customer links his brokerage account to a bank account for the first time. To verify that the account number and routing information is correct, the brokerages automatically send small “micro-deposits” of between two cents to one dollar to the account, and ask the customer to verify that they’ve received it.

Largent allegedly used an automated script to open 58,000 online brokerage accounts, linking each of them to a handful of online bank accounts, and accumulating thousands of dollars in micro-deposits.

Posted on June 5, 2008 at 1:25 PM • View Comments

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Sidebar photo of Bruce Schneier by Joe MacInnis.