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This ad, for a Uni-ball pen that’s hard to erase, is kind of surreal. They’re using fear to sell pens—again—but it’s the wrong fear. They’re confusing check-washing fraud, where someone takes a check and changes the payee and maybe the amount, with identity theft. And how can someone steal money from me by erasing and changing information on a tax form? Are they going to cause my refund check to be sent to another address? This is getting awfully Byzantine.
There are three reasons for breach notification laws. One, it’s common politeness that when you lose something of someone else’s, you tell him. The prevailing corporate attitude before the law—”They won’t notice, and if they do notice they won’t know it’s us, so we are better off keeping quiet about the whole thing”—is just wrong. Two, it provides statistics to security researchers as to how pervasive the problem really is. And three, it forces companies to improve their security.
That last point needs a bit of explanation. The problem with companies protecting your data is that it isn’t in their financial best interest to do so. That is, the companies are responsible for protecting your data, but bear none of the costs if your data is compromised. You suffer the harm, but you have no control—or even knowledge—of the company’s security practices. The idea behind such laws, and how they were sold to legislators, is that they would increase the cost—both in bad publicity and the actual notification—of security breaches, motivating companies to spend more to prevent them. In economic terms, the law reduces the externalities and forces companies to deal with the true costs of these data breaches.
So how has it worked?
Earlier this year, three researchers at the Heinz School of Public Policy and Management at Carnegie Mellon University—Sasha Romanosky, Rahul Telang and Alessandro Acquisti—tried to answer that question. They looked at reported data breaches and rates of identity theft from 2002 to 2007, comparing states with a law to states without one. If these laws had their desired effects, people in states with notification laws should experience fewer incidences of identity theft. The result: not so much. The researchers found data breach notification laws reduced identity theft by just 2 percent on average.
I think there’s a combination of things going on. Identity theft is being reported far more today than five years ago, so it’s difficult to compare identity theft rates before and after the state laws were enacted. Most identity theft occurs when someone’s home or work computer is compromised, not from theft of large corporate databases, so the effect of these laws is small. Most of the security improvements companies made didn’t make much of a difference, reducing the effect of these laws.
The laws rely on public shaming. It’s embarrassing to have to admit to a data breach, and companies should be willing to spend to avoid this PR expense. The problem is, in order for this to work well, public shaming needs the cooperation of the press. And there’s an attenuation effect going on. The first major breach after the first state disclosure law was in February 2005 in California, when ChoicePoint sold personal data on 145,000 people to criminals. The event was big news, ChoicePoint’s stock tanked, and it was shamed into improving its security.
Next, LexisNexis exposed personal data on 300,000 individuals, and then Citigroup lost data on 3.9 million. The law worked; the only reason we knew about these security breaches was because of the law. But the breaches came in increasing numbers, and in larger quantities. Data breach stories felt more like “crying wolf” and soon, data breaches were no longer news.
Today, the remaining cost is that of the direct mail campaign to notify customers, which often turns into a marketing opportunity.
I’m still a fan of these laws, if only for the first two reasons I listed. Disclosure is important, but it’s not going to solve identity theft. As I’ve written previously, the reason theft of personal information is common is that the data is valuable once stolen. The way to mitigate the risk of fraud due to impersonation is not to make personal information difficult to steal, it’s to make it difficult to use.
Disclosure laws only deal with the economic externality of data owners protecting your personal information. What we really need are laws prohibiting financial institutions from granting credit to someone using your name with only a minimum of authentication.
This is the second half of a point/counterpoint with Marcus Ranum. Marcus’s essay is here.
Impersonation isn’t new. In 1556, a Frenchman was executed for impersonating Martin Guerre and this week hackers impersonated Barack Obama on Twitter. It’s not even unique to humans: mockingbirds, Viceroy butterflies, and the mimic octopus all use impersonation as a survival strategy. For people, detecting impersonation is a hard problem for three reasons: we need to verify the identity of people we don’t know, we interact with people through “narrow” communications channels like the telephone and Internet, and we want computerized systems to do the verification for us.
Traditional impersonation involves people fooling people. It’s still done today: impersonating garbage men to collect tips, impersonating parking lot attendants to collect fees, or impersonating the French president to fool Sarah Palin. Impersonating people like policemen, security guards, and meter readers is a common criminal tactic.
These tricks work because we all regularly interact with people we don’t know. No one could successfully impersonate your brother, your best friend, or your boss, because you know them intimately. But a policeman or a parking lot attendant? That’s just someone with a badge or a uniform. But badges and ID cards only help if you know how to verify one. Do you know what a valid police ID looks like? Or how to tell a real telephone repairman’s badge from a forged one?
Still, it’s human nature to trust these credentials. We naturally trust uniforms, even though we know that anyone can wear one. When we visit a Web site, we use the professionalism of the page to judge whether or not it’s really legitimate—never mind that anyone can cut and paste graphics. Watch the next time someone other than law enforcement verifies your ID; most people barely look at it.
Impersonation is even easier over limited communications channels. On the telephone, how can you distinguish someone working at your credit card company from someone trying to steal your account details and login information? On e-mail, how can you distinguish someone from your company’s tech support from a hacker trying to break into your network—or the mayor of Paris from an impersonator? Once in a while someone frees himself from jail by faxing a forged release order to his warden. This is social engineering: impersonating someone convincingly enough to fool the victim.
These days, a lot of identity verification happens with computers. Computers are fast at computation but not very good at judgment, and can be tricked. So people can fool speed cameras by taping a fake license plate over the real one, fingerprint readers with a piece of tape, or automatic face scanners with—and I’m not making this up—a photograph of a face held in front of their own. Even the most bored policeman wouldn’t fall for any of those tricks.
This is why identity theft is such a big problem today. So much authentication happens online, with only a small amount of information: user ID, password, birth date, Social Security number, and so on. Anyone who gets that information can impersonate you to a computer, which doesn’t know any better.
Despite all of these problems, most authentication systems work most of the time. Even something as ridiculous as faxed signatures work, and can be legally binding. But no authentication system is perfect, and impersonation is always possible.
This lack of perfection is okay, though. Security is a trade-off, and any well-designed authentication system balances security with ease of use, customer acceptance, cost, and so on. More authentication isn’t always better. Banks make this trade-off when they don’t bother authenticating signatures on checks under amounts like $25,000; it’s cheaper to deal with fraud after the fact. Web sites make this trade-off when they use simple passwords instead of something more secure, and merchants make this trade-off when they don’t bother verifying your signature against your credit card. We make this trade-off when we accept police badges, Best Buy uniforms, and faxed signatures with only a cursory amount of verification.
Good authentication systems also balance false positives against false negatives. Impersonation is just one way these systems can fail; they can also fail to authenticate the real person. An ATM is better off allowing occasional fraud than preventing legitimate account holders access to their money. On the other hand, a false positive in a nuclear launch system is much more dangerous; better to not launch the missiles.
Decentralized authentication systems work better than centralized ones. Open your wallet, and you’ll see a variety of physical tokens used to identify you to different people and organizations: your bank, your credit card company, the library, your health club, and your employer, as well as a catch-all driver’s license used to identify you in a variety of circumstances. That assortment is actually more secure than a single centralized identity card: each system must be broken individually, and breaking one doesn’t give the attacker access to everything. This is one of the reasons that centralized systems like REAL-ID make us less secure.
Finally, any good authentication system uses defense in depth. Since no authentication system is perfect, there need to be other security measures in place if authentication fails. That’s why all of a corporation’s assets and information isn’t available to anyone who can bluff his way into the corporate offices. That is why credit card companies have expert systems analyzing suspicious spending patterns. And it’s why identity theft won’t be solved by making personal information harder to steal.
We can reduce the risk of impersonation, but it will always be with us; technology cannot “solve” it in any absolute sense. Like any security, the trick is to balance the trade-offs. Too little security, and criminals withdraw money from all our bank accounts. Too much security and when Barack Obama calls to congratulate you on your reelection, you won’t believe it’s him.
This essay originally appeared in The Wall Street Journal.
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.
Kip Hawley, head of the TSA, has responded to my airport security penetration testing, published in The Atlantic.
Unfortunately, there’s not really anything to his response. It’s obvious he doesn’t want to admit that they’ve been checking ID’s all this time to no purpose whatsoever, so he just emits vague generalities like a frightened squid filling the water with ink. Yes, some of the stunts in article are silly (who cares if people fly with Hezbollah T-shirts?) so that gives him an opportunity to minimize the real issues.
Watch-lists and identity checks are important and effective security measures. We identify dozens of terrorist-related individuals a week and stop No-Flys regularly with our watch-list process.
It is simply impossible that the TSA catches dozens of terrorists every week. If it were true, the administration would be trumpeting this all over the press—it would be an amazing success story in their war on terrorism. But note that Hawley doesn’t exactly say that; he calls them “terrorist-related individuals.” Which means exactly what? People so dangerous they can’t be allowed to fly for any reason, yet so innocent they can’t be arrested—even under the provisions of the Patriot Act.
And if Secretary Chertoff is telling the truth when he says that there are only 2,500 people on the no-fly list and fewer than 16,000 people on the selectee list—they’re the ones that get extra screening—and that most of them live outside the U.S., then it is just plain impossible that the TSA identifies “dozens” of these people every week. The math just doesn’t make sense.
And I also don’t believe this:
Behavior detection works and we have 2,000 trained officers at airports today. They alert us to people who may pose a threat but who may also have items that could elude other layers of physical security.
It does work, but I don’t see the TSA doing it properly. (Fly El Al if you want to see it done properly.) But what I think Hawley is doing is engaging in a little bit of psychological manipulation. Like sky marshals, the real benefit of behavior detection isn’t whether or not you do it but whether or not the bad guys believe you’re doing it. If they think you are doing behavior detection at security checkpoints, or have sky marshals on every airplane, then you don’t actually have to do it. It’s the threat that’s the deterrent, not the actual security system.
This doesn’t impress me, either:
Items carried on the person, be they a ‘beer belly’ or concealed objects in very private areas, are why we are buying over 100 whole body imagers in upcoming months and will deploy more over time. In the meantime, we use hand-held devices that detect hydrogen peroxide and other explosives compounds as well as targeted pat-downs that require private screening.
Optional security measures don’t work, because the bad guys will opt not to use them. It’s like those air-puff machines at some airports now. They’re probably great at detecting explosive residue off clothing, but every time I have seen the machines in operation, the passengers have the option whether to go through the lane with them or another lane. What possible good is that?
The closest thing to a real response from Hawley is that the terrorists might get caught stealing credit cards.
Using stolen credit cards and false documents as a way to get around watch-lists makes the point that forcing terrorists to use increasingly risky tactics has its own security value.
He’s right about that. And, truth be told, that was my sloppiest answer during the original interview. Thinking about it afterwards, it’s far more likely is that someone with a clean record and a legal credit card will buy the various plane tickets.
This is new:
Boarding pass scanners and encryption are being tested in eight airports now and more will be coming.
Ignoring for a moment that “eight airports” nonsense—unless you do it at every airport, the bad guys will choose the airport where you don’t do it to launch their attack—this is an excellent idea. The reason my attack works, the reason I can get through TSA checkpoints with a fake boarding pass, is that the TSA never confirms that the information on the boarding pass matches a legitimate reservation. If all TSA checkpoints had boarding pass scanners that connected to the airlines’ computers, this attack would not work. (Interestingly enough, I noticed exactly this system at the Dublin airport earlier this month.)
Stopping the “James Bond” terrorist is truly a team effort and I whole-heartedly agree that the best way to stop those attacks is with intelligence and law enforcement working together.
This isn’t about “Stopping the ‘James Bond’ terrorist,” it’s about stopping terrorism. And if all this focus on airports, even assuming it starts working, shifts the terrorists to other targets, we haven’t gotten a whole lot of security for our money.
FYI: I did a long interview with Kip Hawley last year. If you haven’t read it, I strongly recommend you do. I pressed him on these and many other points, and didn’t get very good answers then, either.
EDITED TO ADD (10/28): Kip Hawley responds in comments. Yes, it’s him.
EDITED TO ADD (11/17): Another article on those boarding pass verifiers.
Shhhh. Don’t tell the terrorists:
The U.S. Department of Homeland Security wrote a letter to Labbé in 2004, saying he had been placed on their watch list after falling victim to identity theft. At the time, the department said there was no way for his name to be removed.
Although Labbé wrote letters to the U.S. department, his efforts were in vain, prompting him to legally change his name.
“So now, my official name is François Mario Labbé,” he said.
“Then you have to change everything: driver’s license, social insurance, medicare, credit card—everything.”
Although it’s not a big change from Mario Labbé, he said it’s been enough to foil the U.S. customs computers.
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.)
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.
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.
Sidebar photo of Bruce Schneier by Joe MacInnis.