Entries Tagged "two-factor authentication"

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Scandinavian Attack Against Two-Factor Authentication

I’ve repeatedly said that two-factor authentication won’t stop phishing, because the attackers will simply modify their techniques to get around it. Here’s an example where that has happened:

Scandinavian bank Nordea was forced to shut down part of its Web banking service for 12 hours last week following a phishing attack that specifically targeted its paper-based one-time password security system.

According to press reports, the scam targeted customers that access the Nordea Sweden Web banking site using a paper-based single-use password security system.

A blog posting by Finnish security firm F-Secure says recipients of the spam e-mail were directed to bogus Web sites but were also asked to enter their account details along with the next password on their list of one-time passwords issued to them by the bank on a “scratch sheet”.

From F-Secure’s blog:

The fake mails were explaining that Nordea is introducing new security measures, which can be accessed at www.nordea-se.com or www.nordea-bank.net (fake sites hosted in South Korea).

The fake sites looked fairly real. They were asking the user for his personal number, access code and the next available scratch code. Regardless of what you entered, the site would complain about the scratch code and asked you to try the next one. In reality the bad boys were trying to collect several scratch codes for their own use.

The Register also has a story.

Two-factor authentication won’t stop identity theft, because identity theft is not an authentication problem. It’s a transaction-security problem. I’ve written about that already. Solutions need to address the transactions directly, and my guess is that they’ll be a combination of things. Some transactions will become more cumbersome. It will definitely be more cumbersome to get a new credit card. Back-end systems will be put in place to identify fraudulent transaction patterns. Look at credit card security; that’s where you’re going to find ideas for solutions to this problem.

Unfortunately, until financial institutions are liable for all the losses associated with identity theft, and not just their direct losses, we’re not going to see a lot of these solutions. I’ve written about this before as well.

We got them for credit cards because Congress mandated that the banks were liable for all but the first $50 of fraudulent transactions.

EDITED TO ADD: Here’s a related story. The Bank of New Zealand suspended Internet banking because of phishing concerns. Now there’s a company that is taking the threat seriously.

Posted on October 25, 2005 at 12:49 PMView Comments

U.S. Regulators Require Two-Factor Authentication for Banks

Two-factor authentication is coming to U.S. banks:

Federal regulators will require banks to strengthen security for Internet customers through authentication that goes beyond mere user names and passwords, which have become too easy for criminals to exploit.

Bank Web sites are expected to adopt some form of “two-factor” authentication by the end of 2006, regulators with the Federal Financial Institutions Examination Council said in a letter to banks last week.

Here’s more details.

This won’t help. It’ll change the tactics of the criminals, but won’t make them go away. I’ve written about that already (the short version is that two-factor authentication won’t mitigate identity theft, because it’s not an authentication problem — it’s a problem with fraudulent transactions), and also about what will solve the problem.

Posted on October 19, 2005 at 2:51 PMView 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 AMView Comments

Social Engineering and the IRS

Social engineering is still very effective:

More than one-third of Internal Revenue Service (IRS) employees and managers
who were contacted by Treasury Department inspectors posing as computer technicians provided their computer login and changed their password, a government report said Wednesday.

This is a problem that two-factor authentication would significantly mitigate.

Posted on March 22, 2005 at 9:54 AMView 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 AMView Comments

Easy-to-Remember PINs

The UK is switching to a “chip and pin” system for credit card transactions. It’s been happening slowly, but by January (I’m not sure if it is the beginning of January or the end), every UK credit card will be a smart card.

This kind of system already exists in France and elsewhere. The cards have embedded chips. When you want to make a purchase, you stick your card in a slot and type your four-digit PIN on a keypad. (Presumably they will never turn off the magnetic stripe and signature system required for U.S. cards.)

One consumer fear over this process is about what happens if you forget your PIN. To allay fears, credit card companies have been placing newspaper advertisements suggesting that people change their PINs to an easy-to-remember number:

Keep forgetting your PIN?
It’s easy to change with chip and PIN.
To something more memorable like a birthday or your lucky numbers.

Don’t the credit card companies have anyone working on security?

The ad also goes on to say that you can change your PIN by phone, which has its own set of problems.

(I know that the cite I give doesn’t quote a primary source, but I also received the information from at least two readers, and one of them said that the advertisement was printed in the London Times.)

Posted on January 3, 2005 at 10:36 AMView Comments

Two-Factor Authentication with Cell Phones

Here’s a good idea:

ASB and Bank Direct’s internet banking customers will need to have their cellphone close to hand if they want to use the net to transfer more than $2500 into another account from December.

ASB technology and operations group general manager Clayton Wakefield announced the banks would be the first in New Zealand to implement a “two factor authentication” system to shut out online fraudsters, unveiling details of the service on Friday.

After logging on to internet banking, customers who want to remit more than $2500 into a third party account will receive an eight-digit text message to their cellphone, which they will need to enter online within three minutes to complete the transaction.

It’s more secure than a simple username and password. It’s easy to implement, with no extra hardware required (assuming your customers already have cellphones). It’s easy for the customers to understand and to do. What’s not to like?

Posted on November 23, 2004 at 9:41 AMView Comments

News

Last month I wrote: “Long and interesting review of Windows XP SP2, including a list of missed opportunities for increased security. Worth reading: The Register.” Be sure you read this follow-up as well:
The Register

The author of the Sasser worm has been arrested:
Computerworld
The Register
And been offered a job:
Australian IT

Interesting essay on the psychology of terrorist alerts:
Philip Zimbardo

Encrypted e-mail client for the Treo:
Treo Central

The Honeynet Project is publishing a bi-annual CD-ROM and newsletter. If you’re involved in honeynets, it’s definitely worth getting. And even if you’re not, it’s worth supporting this endeavor.
Honeynet

CIO Magazine has published a survey of corporate information security. I have some issues with the survey, but it’s worth reading.
IT Security

At the Illinois State Capitol, someone shot an unarmed security guard and fled. The security upgrade after the incident is — get ready — to change the building admittance policy from a “check IDs” procedure to a “sign in” procedure. First off, identity checking does not increase security. And secondly, why do they think that an attacker would be willing to forge/steal an identification card, but would be unwilling to sign their name on a clipboard?
The Guardian

Neat research: a quantum-encrypted TCP/IP network:
MetroWest Daily News
Slashdot
And NEC has its own quantum cryptography research results:
InfoWorld

Security story about the U.S. embassy in New Zealand. It’s a good lesson about the pitfalls of not thinking beyond the immediate problem.
The Dominion

The future of worms:
Computerworld

Teacher arrested after a bookmark is called a concealed weapon:
St. Petersburg Times
Remember all those other things you can bring on an aircraft that can knock people unconscious: handbags, laptop computers, hardcover books. And that dental floss can be used as a garrote. And, and, oh…you get the idea.

Seems you can open Kryptonite bicycle locks with the cap from a plastic pen. The attack works on what locksmiths call the “impressioning” principle. Tubular locks are especially vulnerable to this because all the pins are exposed, and tools that require little skill to use can be relatively unsophisticated. There have been commercial locksmithing products to do this to circular locks for a long time. Once you get the feel for how to do it, it’s pretty easy. I find Kryptonite’s proposed solution — swapping for a smaller diameter lock so a particular brand of pen won’t work — to be especially amusing.
Indystar.com
Wired
Bikeforums

I often talk about how most firewalls are ineffective because they’re not configured properly. Here’s some research on firewall configuration:
IEEE Computer

Reading RFID tags from three feet away:
Computerworld

AOL is offering two-factor authentication services. It’s not free: $10 plus $2 per month. It’s an RSA Security token, with a number that changes every 60 seconds.
PC World

Counter-terrorism has its own snake oil:
Quantum Sleeper

Posted on October 1, 2004 at 9:40 PMView Comments

News

Last month I wrote: “Long and interesting review of Windows XP SP2, including a list of missed opportunities for increased security. Worth reading: The Register.” Be sure you read this follow-up as well:
The Register

The author of the Sasser worm has been arrested:
Computerworld
The Register
And been offered a job:
Australian IT

Interesting essay on the psychology of terrorist alerts:
Philip Zimbardo

Encrypted e-mail client for the Treo:
Treo Central

The Honeynet Project is publishing a bi-annual CD-ROM and newsletter. If you’re involved in honeynets, it’s definitely worth getting. And even if you’re not, it’s worth supporting this endeavor.
Honeynet

CIO Magazine has published a survey of corporate information security. I have some issues with the survey, but it’s worth reading.
IT Security

At the Illinois State Capitol, someone shot an unarmed security guard and fled. The security upgrade after the incident is — get ready — to change the building admittance policy from a “check IDs” procedure to a “sign in” procedure. First off, identity checking does not increase security. And secondly, why do they think that an attacker would be willing to forge/steal an identification card, but would be unwilling to sign their name on a clipboard?
The Guardian

Neat research: a quantum-encrypted TCP/IP network:
MetroWest Daily News
Slashdot
And NEC has its own quantum cryptography research results:
InfoWorld

Security story about the U.S. embassy in New Zealand. It’s a good lesson about the pitfalls of not thinking beyond the immediate problem.
The Dominion

The future of worms:
Computerworld

Teacher arrested after a bookmark is called a concealed weapon:
St. Petersburg Times
Remember all those other things you can bring on an aircraft that can knock people unconscious: handbags, laptop computers, hardcover books. And that dental floss can be used as a garrote. And, and, oh…you get the idea.

Seems you can open Kryptonite bicycle locks with the cap from a plastic pen. The attack works on what locksmiths call the “impressioning” principle. Tubular locks are especially vulnerable to this because all the pins are exposed, and tools that require little skill to use can be relatively unsophisticated. There have been commercial locksmithing products to do this to circular locks for a long time. Once you get the feel for how to do it, it’s pretty easy. I find Kryptonite’s proposed solution — swapping for a smaller diameter lock so a particular brand of pen won’t work — to be especially amusing.
Indystar.com
Wired
Bikeforums

I often talk about how most firewalls are ineffective because they’re not configured properly. Here’s some research on firewall configuration:
IEEE Computer

Reading RFID tags from three feet away:
Computerworld

AOL is offering two-factor authentication services. It’s not free: $10 plus $2 per month. It’s an RSA Security token, with a number that changes every 60 seconds.
PC World

Counter-terrorism has its own snake oil:
Quantum Sleeper

Posted on October 1, 2004 at 9:40 PMView Comments

Sidebar photo of Bruce Schneier by Joe MacInnis.