Entries Tagged "essays"

Page 43 of 46

Phishing

My third Wired column is on line. It’s about phishing.

Financial companies have until now avoided taking on phishers in a serious way, because it’s cheaper and simpler to pay the costs of fraud. That’s unacceptable, however, because consumers who fall prey to these scams pay a price that goes beyond financial losses, in inconvenience, stress and, in some cases, blots on their credit reports that are hard to eradicate. As a result, lawmakers need to do more than create new punishments for wrongdoers—they need to create tough new incentives that will effectively force financial companies to change the status quo and improve the way they protect their customers’ assets.

EDITED TO ADD: There’s a discussion on Slashdot.

Posted on October 6, 2005 at 8:10 AM • View Comments

Judge Roberts, Privacy, and the Future

My second essay for Wired was published today. It’s about the future privacy rulings of the Supreme Court:

Recent advances in technology have already had profound privacy implications, and there’s every reason to believe that this trend will continue into the foreseeable future. Roberts is 50 years old. If confirmed, he could be chief justice for the next 30 years. That’s a lot of future.

Privacy questions will arise from government actions in the “War on Terror”; they will arise from the actions of corporations and individuals. They will include questions of surveillance, profiling and search and seizure. And the decisions of the Supreme Court on these questions will have a profound effect on society.

Posted on September 22, 2005 at 12:28 PM • View Comments

Katrina and Security

I had an op ed published in the Minneapolis Star-Tribune today.

Toward a Truly Safer Nation
Published September 11, 2005

Leaving aside the political posturing and the finger-pointing, how did our nation mishandle Katrina so badly? After spending tens of billions of dollars on homeland security (hundreds of billions, if you include the war in Iraq) in the four years after 9/11, what did we do wrong? Why were there so many failures at the local, state and federal levels?

These are reasonable questions. Katrina was a natural disaster and not a terrorist attack, but that only matters before the event. Large-scale terrorist attacks and natural disasters differ in cause, but they’re very similar in aftermath. And one can easily imagine a Katrina-like aftermath to a terrorist attack, especially one involving nuclear, biological or chemical weapons.

Improving our disaster response was discussed in the months after 9/11. We were going to give money to local governments to fund first responders. We established the Department of Homeland Security to streamline the chains of command and facilitate efficient and effective response.

The problem is that we all got caught up in “movie-plot threats,” specific attack scenarios that capture the imagination and then the dollars. Whether it’s terrorists with box cutters or bombs in their shoes, we fear what we can imagine. We’re searching backpacks in the subways of New York, because this year’s movie plot is based on a terrorist bombing in the London subways.

Funding security based on movie plots looks good on television, and gets people reelected. But there are millions of possible scenarios, and we’re going to guess wrong. The billions spent defending airlines are wasted if the terrorists bomb crowded shopping malls instead.

Our nation needs to spend its homeland security dollars on two things: intelligence-gathering and emergency response. These two things will help us regardless of what the terrorists are plotting, and the second helps both against terrorist attacks and national disasters.

Katrina demonstrated that we haven’t invested enough in emergency response. New Orleans police officers couldn’t talk with each other after power outages shut down their primary communications system—and there was no backup. The Department of Homeland Security, which was established in order to centralize federal response in a situation like this, couldn’t figure out who was in charge or what to do, and actively obstructed aid by others. FEMA did no better, and thousands died while turf battles were being fought.

Our government’s ineptitude in the aftermath of Katrina demonstrates how little we’re getting for all our security spending. It’s unconscionable that we’re wasting our money fingerprinting foreigners, profiling airline passengers, and invading foreign countries while emergency response at home goes underfunded.

Money spent on emergency response makes us safer, regardless of what the next disaster is, whether terrorist-made or natural.

This includes good communications on the ground, good coordination up the command chain, and resources—people and supplies—that can be quickly deployed wherever they’re needed.

Similarly, money spent on intelligence-gathering makes us safer, regardless of what the next disaster is. Against terrorism, that includes the NSA and the CIA. Against natural disasters, that includes the National Weather Service and the National Earthquake Information Center.

Katrina deftly illustrated homeland security’s biggest challenge: guessing correctly. The solution is to fund security that doesn’t rely on guessing. Defending against movie plots doesn’t make us appreciably safer. Emergency response does. It lessens the damage and suffering caused by disasters, whether man-made, like 9/11, or nature-made, like Katrina.

Posted on September 11, 2005 at 8:00 AM • View Comments

Movie-Plot Threats

Wired.com just published an essay by me: “Terrorists Don’t Do Movie Plots.”

Sometimes it seems like the people in charge of homeland security spend too much time watching action movies. They defend against specific movie plots instead of against the broad threats of terrorism.

We all do it. Our imaginations run wild with detailed and specific threats. We imagine anthrax spread from crop dusters. Or a contaminated milk supply. Or terrorist scuba divers armed with almanacs. Before long, we’re envisioning an entire movie plot, without Bruce Willis saving the day. And we’re scared.

Psychologically, this all makes sense. Humans have good imaginations. Box cutters and shoe bombs conjure vivid mental images. “We must protect the Super Bowl” packs more emotional punch than the vague “we should defend ourselves against terrorism.”

The 9/11 terrorists used small pointy things to take over airplanes, so we ban small pointy things from airplanes. Richard Reid tried to hide a bomb in his shoes, so now we all have to take off our shoes. Recently, the Department of Homeland Security said that it might relax airplane security rules. It’s not that there’s a lessened risk of shoes, or that small pointy things are suddenly less dangerous. It’s that those movie plots no longer capture the imagination like they did in the months after 9/11, and everyone is beginning to see how silly (or pointless) they always were.

I’m now doing a bi-weekly column for them. I will post a link to the essays when they appear on the Wired.com site, and will reprint them in the next Crypto-Gram.

Posted on September 8, 2005 at 6:57 AM • View Comments

Trusted Computing Best Practices

The Trusted Computing Group (TCG) is an industry consortium that is trying to build more secure computers. They have a lot of members, although the board of directors consists of Microsoft, Sony, AMD, Intel, IBM, SUN, HP, and two smaller companies who are voted on in a rotating basis.

The basic idea is that you build a computer from the ground up securely, with a core hardware “root of trust” called a Trusted Platform Module (TPM). Applications can run securely on the computer, can communicate with other applications and their owners securely, and can be sure that no untrusted applications have access to their data or code.

This sounds great, but it’s a double-edged sword. The same system that prevents worms and viruses from running on your computer might also stop you from using any legitimate software that your hardware or operating system vendor simply doesn’t like. The same system that protects spyware from accessing your data files might also stop you from copying audio and video files. The same system that ensures that all the patches you download are legitimate might also prevent you from, well, doing pretty much anything.

(Ross Anderson has an excellent FAQ on the topic. I wrote about it back when Microsoft called it Palladium.)

In May, the Trusted Computing Group published a best practices document: “Design, Implementation, and Usage Principles for TPM-Based Platforms.” Written for users and implementers of TCG technology, the document tries to draw a line between good uses and bad uses of this technology.

The principles that TCG believes underlie the effective, useful, and acceptable design, implementation, and use of TCG technologies are the following:

  • Security: TCG-enabled components should achieve controlled access to designated critical secured data and should reliably measure and report the system’s security properties. The reporting mechanism should be fully under the owner’s control.
  • Privacy: TCG-enabled components should be designed and implemented with privacy in mind and adhere to the letter and spirit of all relevant guidelines, laws, and regulations. This includes, but is not limited to, the OECD Guidelines, the Fair Information Practices, and the European Union Data Protection Directive (95/46/EC).
  • Interoperability: Implementations and deployments of TCG specifications should facilitate interoperability. Furthermore, implementations and deployments of TCG specifications should not introduce any new interoperability obstacles that are not for the purpose of security.
  • Portability of data: Deployment should support established principles and practices of data ownership.
  • Controllability: Each owner should have effective choice and control over the use and operation of the TCG-enabled capabilities that belong to them; their participation must be opt-in. Subsequently, any user should be able to reliably disable the TCG functionality in a way that does not violate the owner’s policy.
  • Ease-of-use: The nontechnical user should find the TCG-enabled capabilities comprehensible and usable.

It’s basically a good document, although there are some valid criticisms. I like that the document clearly states that coercive use of the technology—forcing people to use digital rights management systems, for example, are inappropriate:

The use of coercion to effectively force the use of the TPM capabilities is not an appropriate use of the TCG technology.

I like that the document tries to protect user privacy:

All implementations of TCG-enabled components should ensure that the TCG technology is not inappropriately used for data aggregation of personal information/

I wish that interoperability were more strongly enforced. The language has too much wiggle room for companies to break interoperability under the guise of security:

Furthermore, implementations and deployments of TCG specifications should not introduce any new interoperability obstacles that are not for the purpose of security.

That sounds good, but what does “security” mean in that context? Security of the user against malicious code? Security of big media against people copying music and videos? Security of software vendors against competition? The big problem with TCG technology is that it can be used to further all three of these “security” goals, and this document is where “security” should be better defined.

Complaints aside, it’s a good document and we should all hope that companies follow it. Compliance is totally voluntary, but it’s the kind of document that governments and large corporations can point to and demand that vendors follow.

But there’s something fishy going on. Microsoft is doing its best to stall the document, and to ensure that it doesn’t apply to Vista (formerly known as Longhorn), Microsoft’s next-generation operating system.

The document was first written in the fall of 2003, and went through the standard review process in early 2004. Microsoft delayed the adoption and publication of the document, demanding more review. Eventually the document was published in June of this year (with a May date on the cover).

Meanwhile, the TCG built a purely software version of the specification: Trusted Network Connect (TNC). Basically, it’s a TCG system without a TPM.

The best practices document doesn’t apply to TNC, because Microsoft (as a member of the TCG board of directors) blocked it. The excuse is that the document hadn’t been written with software-only applications in mind, so it shouldn’t apply to software-only TCG systems.

This is absurd. The document outlines best practices for how the system is used. There’s nothing in it about how the system works internally. There’s nothing unique to hardware-based systems, nothing that would be different for software-only systems. You can go through the document yourself and replace all references to “TPM” or “hardware” with “software” (or, better yet, “hardware or software”) in five minutes. There are about a dozen changes, and none of them make any meaningful difference.

The only reason I can think of for all this Machiavellian maneuvering is that the TCG board of directors is making sure that the document doesn’t apply to Vista. If the document isn’t published until after Vista is released, then obviously it doesn’t apply.

Near as I can tell, no one is following this story. No one is asking why TCG best practices apply to hardware-based systems if they’re writing software-only specifications. No one is asking why the document doesn’t apply to all TCG systems, since it’s obviously written without any particular technology in mind. And no one is asking why the TCG is delaying the adoption of any software best practices.

I believe the reason is Microsoft and Vista, but clearly there’s some investigative reporting to be done.

(A version of this essay previously appeared on CNet’s News.com and ZDNet.)

EDITED TO ADD: This comment completely misses my point. Which is odd; I thought I was pretty clear.

EDITED TO ADD: There is a thread on Slashdot on the topic.

EDITED TO ADD: The Sydney Morning Herald republished this essay. Also “The Age.”

Posted on August 31, 2005 at 8:27 AM • View Comments

Attack Trends: 2004 and 2005

Counterpane Internet Security, Inc., monitors more than 450 networks in 35 countries, in every time zone. In 2004 we saw 523 billion network events, and our analysts investigated 648,000 security “tickets.” What follows is an overview of what’s happening on the Internet right now, and what we expect to happen in the coming months.

In 2004, 41 percent of the attacks we saw were unauthorized activity of some kind, 21 percent were scanning, 26 percent were unauthorized access, 9 percent were DoS (denial of service), and 3 percent were misuse of applications.

Over the past few months, the two attack vectors that we saw in volume were against the Windows DCOM (Distributed Component Object Model) interface of the RPC (remote procedure call) service and against the Windows LSASS (Local Security Authority Subsystem Service). These seem to be the current favorites for virus and worm writers, and we expect this trend to continue.

The virus trend doesn’t look good. In the last six months of 2004, we saw a plethora of attacks based on browser vulnerabilities (such as GDI-JPEG image vulnerability and IFRAME) and an increase in sophisticated worm and virus attacks. More than 1,000 new worms and viruses were discovered in the last six months alone.

In 2005, we expect to see ever-more-complex worms and viruses in the wild, incorporating complex behavior: polymorphic worms, metamorphic worms, and worms that make use of entry-point obscuration. For example, SpyBot.KEG is a sophisticated vulnerability assessment worm that reports discovered vulnerabilities back to the author via IRC channels.

We expect to see more blended threats: exploit code that combines malicious code with vulnerabilities in order to launch an attack. We expect Microsoft’s IIS (Internet Information Services) Web server to continue to be an attractive target. As more and more companies migrate to Windows 2003 and IIS 6, however, we expect attacks against IIS to decrease.

We also expect to see peer-to-peer networking as a vector to launch viruses.

Targeted worms are another trend we’re starting to see. Recently there have been worms that use third-party information-gathering techniques, such as Google, for advanced reconnaissance. This leads to a more intelligent propagation methodology; instead of propagating scattershot, these worms are focusing on specific targets. By identifying targets through third-party information gathering, the worms reduce the noise they would normally make when randomly selecting targets, thus increasing the window of opportunity between release and first detection.

Another 2004 trend that we expect to continue in 2005 is crime. Hacking has moved from a hobbyist pursuit with a goal of notoriety to a criminal pursuit with a goal of money. Hackers can sell unknown vulnerabilities—”zero-day exploits”—on the black market to criminals who use them to break into computers. Hackers with networks of hacked machines can make money by selling them to spammers or phishers. They can use them to attack networks. We have started seeing criminal extortion over the Internet: hackers with networks of hacked machines threatening to launch DoS attacks against companies. Most of these attacks are against fringe industries—online gambling, online computer gaming, online pornography—and against offshore networks. The more these extortions are successful, the more emboldened the criminals will become.

We expect to see more attacks against financial institutions, as criminals look for new ways to commit fraud. We also expect to see more insider attacks with a criminal profit motive. Already most of the targeted attacks—as opposed to attacks of opportunity—originate from inside the attacked organization’s network.

We also expect to see more politically motivated hacking, whether against countries, companies in “political” industries (petrochemicals, pharmaceuticals, etc.), or political organizations. Although we don’t expect to see terrorism occur over the Internet, we do expect to see more nuisance attacks by hackers who have political motivations.

The Internet is still a dangerous place, but we don’t foresee people or companies abandoning it. The economic and social reasons for using the Internet are still far too compelling.

This essay originally appeared in the June 2005 issue of Queue.

Posted on June 6, 2005 at 1:02 PM • View Comments

Mitigating Identity Theft

Identity theft is the new crime of the information age. A criminal collects enough personal data on someone to impersonate a victim to banks, credit card companies, and other financial institutions. Then he racks up debt in the person’s name, collects the cash, and disappears. The victim is left holding the bag. While some of the losses are absorbed by financial institutions—credit card companies in particular—the credit-rating damage is borne by the victim. It can take years for the victim to clear his name.

Unfortunately, the solutions being proposed in Congress won’t help. To see why, we need to start with the basics. The very term “identity theft” is an oxymoron. Identity is not a possession that can be acquired or lost; it’s not a thing at all. Someone’s identity is the one thing about a person that cannot be stolen.

The real crime here is fraud; more specifically, impersonation leading to fraud. Impersonation is an ancient crime, but the rise of information-based credentials gives it a modern spin. A criminal impersonates a victim online and steals money from his account. He impersonates a victim in order to deceive financial institutions into granting credit to the criminal in the victim’s name. He impersonates a victim to the Post Office and gets the victim’s address changed. He impersonates a victim in order to fool the police into arresting the wrong man. No one’s identity is stolen; identity information is being misused to commit fraud.

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.

Fraudulent transactions have nothing to do with the legitimate account holders. Criminals impersonate legitimate users to financial intuitions. That means that any solution can’t involve the account holders. That leaves only one reasonable answer: financial intuitions need to be liable for fraudulent transactions. They need to be liable for sending erroneous information to credit bureaus based on fraudulent transactions.

They can’t claim that the user must keep his password secure or his machine virus free. They can’t require the user to monitor his accounts for fraudulent activity, or his credit reports for fraudulently obtained credit cards. Those aren’t reasonable requirements for most users. The bank must be made responsible, regardless of what the user does.

If you think this won’t work, look at credit cards. Credit card companies are liable for all but the first $50 of fraudulent transactions. They’re not hurting for business; and they’re not drowning in fraud, either. They’ve developed and fielded an array of security technologies designed to detect and prevent fraudulent transactions. They’ve pushed most of the actual costs onto the merchants. And almost no security centers around trying to authenticate the cardholder.

That’s an important lesson. Identity theft solutions focus much too much on authenticating the person. Whether it’s two-factor authentication, ID cards, biometrics, or whatever, there’s a widespread myth that authenticating the person is the way to prevent these crimes. But once you understand that the problem is fraudulent transactions, you quickly realize that authenticating the person isn’t the way to proceed.

Again, think about credit cards. Store clerks barely verify signatures when people use cards. People can use credit cards to buy things by mail, phone, or Internet, where no one verifies the signature or even that you have possession of the card. Even worse, no credit card company mandates secure storage requirements for credit cards. They don’t demand that cardholders secure their wallets in any particular way. Credit card companies simply don’t worry about verifying the cardholder or putting requirements on what he does. They concentrate on verifying the transaction.

This same sort of thinking needs to be applied to other areas where criminals use impersonation to commit fraud. I don’t know what the final solutions will look like, but I do know that once financial institutions are liable for losses due to these types of fraud, they will find solutions. Maybe there’ll be a daily withdrawal limit, like there is on ATMs. Maybe large transactions will be delayed for a period of time, or will require a call-back from the bank or brokerage company. Maybe people will no longer be able to open a credit card account by simply filling out a bunch of information on a form. Likely the solution will be a combination of solutions that reduces fraudulent transactions to a manageable level, but we’ll never know until the financial institutions have the financial incentive to put them in place.

Right now, the economic incentives result in financial institutions that are so eager to allow transactions—new credit cards, cash transfers, whatever—that they’re not paying enough attention to fraudulent transactions. They’ve pushed the costs for fraud onto the merchants. But if they’re liable for losses and damages to legitimate users, they’ll pay more attention. And they’ll mitigate the risks. Security can do all sorts of things, once the economic incentives to apply them are there.

By focusing on the fraudulent use of personal data, I do not mean to minimize the harm caused by third-party data and violations of privacy. I believe that the U.S. would be well-served by a comprehensive Data Protection Act like the European Union. However, I do not believe that a law of this type would significantly reduce the risk of fraudulent impersonation. To mitigate that risk, we need to concentrate on detecting and preventing fraudulent transactions. We need to make the entity that is in the best position to mitigate the risk to be responsible for that risk. And that means making the financial institutions liable for fraudulent transactions.

Doing anything less simply won’t work.

Posted on April 15, 2005 at 9:17 AM • View Comments

More on Two-Factor Authentication

Recently I published an essay arguing that two-factor authentication is an ineffective defense against identity theft. For example, issuing tokens to online banking customers won’t reduce fraud, because new attack techniques simply ignore the countermeasure. Unfortunately, some took my essay as a condemnation of two-factor authentication in general. This is not true. It’s simply a matter of understanding the threats and the attacks.

Passwords just don’t work anymore. As computers have gotten faster, password guessing has gotten easier. Ever-more-complicated passwords are required to evade password-guessing software. At the same time, there’s an upper limit to how complex a password users can be expected to remember. About five years ago, these two lines crossed: It is no longer reasonable to expect users to have passwords that can’t be guessed. For anything that requires reasonable security, the era of passwords is over.

Two-factor authentication solves this problem. It works against passive attacks: eavesdropping and password guessing. It protects against users choosing weak passwords, telling their passwords to their colleagues or writing their passwords on pieces of paper taped to their monitors. For an organization trying to improve access control for its employees, two-factor authentication is a great idea. Microsoft is integrating two-factor authentication into its operating system, another great idea.

What two-factor authentication won’t do is prevent identity theft and fraud. It’ll prevent certain tactics of identity theft and fraud, but criminals simply will switch tactics. We’re already seeing fraud tactics that completely ignore two-factor authentication. As banks roll out two-factor authentication, criminals simply will switch to these new tactics.

Security is always an arms race, and you could argue that this situation is simply the cost of treading water. The problem with this reasoning is it ignores countermeasures that permanently reduce fraud. By concentrating on authenticating the individual rather than authenticating the transaction, banks are forced to defend against criminal tactics rather than the crime itself.

Credit cards are a perfect example. Notice how little attention is paid to cardholder authentication. Clerks barely check signatures. People use their cards over the phone and on the Internet, where the card’s existence isn’t even verified. The credit card companies spend their security dollar authenticating the transaction, not the cardholder.

Two-factor authentication is a long-overdue solution to the problem of passwords. I welcome its increasing popularity, but identity theft and bank fraud are not results of password problems; they stem from poorly authenticated transactions. The sooner people realize that, the sooner they’ll stop advocating stronger authentication measures and the sooner security will actually improve.

This essay previously appeared in Network World as a “Face Off.” Joe Uniejewski of RSA Security wrote an opposing position. Another article on the subject was published at SearchSecurity.com.

One way to think about this—a phrasing I didn’t think about until after writing the above essay—is that two-factor authentication solves security problems involving authentication. The current wave of attacks against financial systems are not exploiting vulnerabilities in the authentication system, so two-factor authentication doesn’t help.

Posted on April 12, 2005 at 11:02 AM • View Comments

The Failure of Two-Factor Authentication

Two-factor authentication isn’t our savior. It won’t defend against phishing. It’s not going to prevent identity theft. It’s not going to secure online accounts from fraudulent transactions. It solves the security problems we had ten years ago, not the security problems we have today.

The problem with passwords is that they’re too easy to lose control of. People give them to other people. People write them down, and other people read them. People send them in e-mail, and that e-mail is intercepted. People use them to log into remote servers, and their communications are eavesdropped on. They’re also easy to guess. And once any of that happens, the password no longer works as an authentication token because you can’t be sure who is typing that password in.

Two-factor authentication mitigates this problem. If your password includes a number that changes every minute, or a unique reply to a random challenge, then it’s harder for someone else to intercept. You can’t write down the ever-changing part. An intercepted password won’t be good the next time it’s needed. And a two-factor password is harder to guess. Sure, someone can always give his password and token to his secretary, but no solution is foolproof.

These tokens have been around for at least two decades, but it’s only recently that they have gotten mass-market attention. AOL is rolling them out. Some banks are issuing them to customers, and even more are talking about doing it. It seems that corporations are finally waking up to the fact that passwords don’t provide adequate security, and are hoping that two-factor authentication will fix their problems.

Unfortunately, the nature of attacks has changed over those two decades. Back then, the threats were all passive: eavesdropping and offline password guessing. Today, the threats are more active: phishing and Trojan horses.

Here are two new active attacks we’re starting to see:

  • Man-in-the-Middle attack. An attacker puts up a fake bank website and entices user to that website. User types in his password, and the attacker in turn uses it to access the bank’s real website. Done right, the user will never realize that he isn’t at the bank’s website. Then the attacker either disconnects the user and makes any fraudulent transactions he wants, or passes along the user’s banking transactions while making his own transactions at the same time.

  • Trojan attack. Attacker gets Trojan installed on user’s computer. When user logs into his bank’s website, the attacker piggybacks on that session via the Trojan to make any fraudulent transaction he wants.

See how two-factor authentication doesn’t solve anything? In the first case, the attacker can pass the ever-changing part of the password to the bank along with the never-changing part. And in the second case, the attacker is relying on the user to log in.

The real threat is fraud due to impersonation, and the tactics of impersonation will change in response to the defenses. Two-factor authentication will force criminals to modify their tactics, that’s all.

Recently I’ve seen examples of two-factor authentication using two different communications paths: call it “two-channel authentication.” One bank sends a challenge to the user’s cell phone via SMS and expects a reply via SMS. If you assume that all your customers have cell phones, then this results in a two-factor authentication process without extra hardware. And even better, the second authentication piece goes over a different communications channel than the first; eavesdropping is much, much harder.

But in this new world of active attacks, no one cares. An attacker using a man-in-the-middle attack is happy to have the user deal with the SMS portion of the log-in, since he can’t do it himself. And a Trojan attacker doesn’t care, because he’s relying on the user to log in anyway.

Two-factor authentication is not useless. It works for local login, and it works within some corporate networks. But it won’t work for remote authentication over the Internet. I predict that banks and other financial institutions will spend millions outfitting their users with two-factor authentication tokens. Early adopters of this technology may very well experience a significant drop in fraud for a while as attackers move to easier targets, but in the end there will be a negligible drop in the amount of fraud and identity theft.

This essay will appear in the April issue of Communications of the ACM.

Posted on March 15, 2005 at 7:54 AM • View Comments

T-Mobile Hack

For at least seven months last year, a hacker had access to T-Mobile’s customer network. He’s known to have accessed information belonging to 400 customers—names, Social Security numbers, voicemail messages, SMS messages, photos—and probably had the ability to access data belonging to any of T-Mobile’s 16.3 million U.S. customers. But in its fervor to report on the security of cell phones, and T-Mobile in particular, the media missed the most important point of the story: The security of much of our data is not under our control.

This is new. A dozen years ago, if someone wanted to look through your mail, they would have to break into your house. Now they can just break into your ISP. Ten years ago, your voicemail was on an answering machine in your house; now it’s on a computer owned by a telephone company. Your financial data is on Websites protected only by passwords. The list of books you browse, and the books you buy, is stored in the computers of some online bookseller. Your affinity card allows your supermarket to know what food you like. Data that used to be under your direct control is now controlled by others.

We have no choice but to trust these companies with our privacy, even though the companies have little incentive to protect that privacy. T-Mobile suffered some bad press for its lousy security, nothing more. It’ll spend some money improving its security, but it’ll be security designed to protect its reputation from bad PR, not security designed to protect the privacy of its customers.

This loss of control over our data has other effects, too. Our protections against police abuse have been severely watered down. The courts have ruled that the police can search your data without a warrant, as long as that data is held by others. The police need a warrant to read the e-mail on your computer; but they don’t need one to read it off the backup tapes at your ISP. According to the Supreme Court, that’s not a search as defined by the 4th Amendment.

This isn’t a technology problem, it’s a legal problem. The courts need to recognize that in the information age, virtual privacy and physical privacy don’t have the same boundaries. We should be able to control our own data, regardless of where it is stored. We should be able to make decisions about the security and privacy of that data, and have legal recourse should companies fail to honor those decisions. And just as the Supreme Court eventually ruled that tapping a telephone was a Fourth Amendment search, requiring a warrant—even though it occurred at the phone company switching office—the Supreme Court must recognize that reading e-mail at an ISP is no different.

This essay appeared in eWeek.

Posted on February 14, 2005 at 4:26 PM • View Comments

1 … 41 42 43 44 45 46

Sidebar photo of Bruce Schneier by Joe MacInnis.