I’ve just given a talk on Risk and privacy implications of consumer payment innovation (slides) at the Federal Reserve Bank’s payments conference. There are many more attendees this year; who’d have believed that payment systems would ever become sexy? Yet there’s a lot of innovation, and regulators are starting to wonder. Payment systems now contain many non-bank players, from insiders like First Data, FICO and Experian to service firms like PayPal and Google. I describe a number of competitive developments and argue that although fraud may increase, so will welfare, so there’s no reason to panic. For now, bank supervisors should work on collecting better fraud statistics, so that if there ever is a crisis the response can be well-informed.
Posts filed under 'Banking security
Note: this research was also blogged today at the NY Times’ Bits technology blog.
I’ve personally been researching password statistics for a few years now (as well as personal knowledge questions) and our research group has a long history of research on banking security. In an upcoming paper at next weel’s Financial Cryptography conference written with Sören Preibusch and Ross Anderson, we’ve brought the two research threads together with the first-ever quantitative analysis of the difficulty of guessing 4-digit banking PINs. Somewhat amazingly given the importance of PINs and their entrenchment in infrastructure around the world, there’s never been an academic study of how people actually choose them. After modeling banking PIN selection using a combination of leaked data from non-banking sources and a massive online survey, we found that people are significantly more careful choosing PINs then online passwords, with a majority using an effectively random sequence of digits. Still, the persistence of a few weak choices and birthdates in particular suggests that guessing attacks may be worthwhile for an opportunistic thief. (more…)
Every Christmas we give our friends in the banking industry a wee present. Sometimes it’s the responsible disclosure of a vulnerability, which we publish the following February: 2007’s was PED certification, 2008’s was CAP while in 2009 we told the banking industry of the No-PIN attack. This year too we have some goodies in the hamper: watch our papers at Financial Crypto 2012.
In other years, we’ve had arguments with the bankers’ PR wallahs. In 2010, for example, their trade association tried to censor one of our students’ thesis. That saga also continues; Britain’s bankers tried once more to threaten us so we told them once more to go away. We have other conversations in progress with bankers, most of them thankfully a bit more constructive.
This year’s Christmas present is different: it’s a tale with a happy ending. Eve Russell was a fraud victim whom Barclays initially blamed for her misfortune, as so often happens, and the Financial Ombudsman Service initially found for the bank as it routinely does. Yet this was clearly not right; after many lawyers’ letters, two hearings at the ombudsman, two articles in The Times and a TV appearance on Rip-off Britain, Eve won. This is the first complete case file since the ombudsman came under the Freedom of Information Act; by showing how the system works, it may be useful to fraud victims in the future.
For your Christmas entertainment, we offer the bank statement which told Eve of the fraud; the initial exchange of letters between Eve’s lawyers and the bank; the ombudsman’s routine initial ruling against Eve, and her protest; the correspondence between the ombudsman and Barclays; Eve’s appeal and expert opinion; the verdict; and the offer of settlement. And let’s not forget the Thunder. A Merry Christmas to all!
We’ve been offered funding for a PhD student to work at the University of Cambridge Computer Laboratory on the security of mobile payments, starting in April 2012.
The objective is to explore how we can make mobile payment systems dependable despite the presence of malware. Research topics include the design of next-generation secure element hardware, trustworthy user interfaces, and mechanisms to detect and recover from compromise. Relevant skills include Android, payment protocols, human-computer interaction, hardware and software security, and cryptography.
As the sponsor wishes to start the project by April, we strongly encourage applications by 28 October 2011 (although candidates who do not need a visa to work in the UK might conceivably apply as late as early December). Enquiries should be directed to Ross Anderson.
About a moth ago I’ve presented at the Security Protocols Workshop a new idea to detect relay attacks, co-developed with Frank Stajano.
The idea relies on having a trusted box (which we call the T-Box as in the image below) between the physical interfaces of two communicating parties. The T-Box accepts 2 inputs (one from each party) and provides one output (seen by both parties). It ensures that none of the parties can determine the complete input of the other party.
Therefore by connecting 2 instances of a T-Box together (as in the case of a relay attack) the message from one end to the other (Alice and Bob in the image above) gets distorted twice as much as it would in the case of a direct connection. That’s the basic idea.
One important question is how does the T-Box operate on the inputs such that we can detect a relay attack? In the paper we describe two example implementations based on a bi-directional channel (which is used for example between a smart card and a terminal). In order to help the reader understand these examples better and determine the usefulness of our idea Mike Bond and I have created a python simulation. This simulation allows you to choose the type of T-Box implementation, a direct or relay connection, as well as other parameters including the length of the anti-relay data stream and detection threshold.
In these two implementations we have restricted ourselves to make the T-Box part of the communication channel. The advantage is that we don’t rely on any party providing the T-Box since it is created automatically by communicating over the physical channel. The disadvantage is that a more powerful attacker can sample the line at twice the speed and overcome our T-Box solution.
The relay attack can be used against many applications, including all smart card based payments. There are already several ideas, including distance bounding, for detecting relay attacks. However our idea brings a new approach to the existing methods, and we hope that in the future we can find a practical implementation of our solutions, or a good scenario to use a physical T-Box which should not be affected by a powerful attacker.
Sometime last week, Sony discovered that up to 77 M accounts on its PlayStation Network were compromised. Sony’s network was down for a week before they finally disclosed details yesterday. Unusually, there haven’t yet been any credible claims of responsibility for the hack, so we can only go on Sony’s official statements. The breach included names and addresses, passwords, and answers to personal knowledge questions, and possibly payment details. The risks of leaking payment card numbers are well-known, including fraudulent payment transactions and identity theft. Sony has responded by offering to provide free credit checks for affected customers and notifying major credit ratings bureaus with a list of affected customers. This hasn’t been enough for many critics, including a US Senator.
Still, this is far more than Sony has done regarding the leaked passwords. The risks here are very real—hackers can attempt to re-use the compromised passwords (possibly after inverting hashes using brute-force) at many other websites, including financial ones. There are no disclosure laws here though, and Sony has done nothing, not even disclosing the key technical details of how passwords were stored. The implications are very different if the passwords were stored in cleartext, hashed in a constant manner, or properly hashed and salted. Sony customers ought to know what really happened. Instead, towards the bottom of Sony’s FAQ they trail off mid sentence when discussing the leaked passwords:
Additionally, if you use the same user name or password for your PlayStation Network or Qriocity service account for other [no further text]
As we explored last summer, this is a serious market failure. Sony’s security breach has potentially compromised passwords at hundreds of other sites where its users re-use the same password and email address as credentials. This is a significant externality, but Sony bears no legal responsibility, and it shows. The options are never great once a breach has occurred, but Sony should at a minimum have promptly provided full details about their password storage, gave clear instructions to users to change their password at other sites, and notified at least the email providers of each account holder to instruct a forced password reset. The legal framework surrounding password breaches must catch up to that for financial breaches.
My paper Can We Fix the Security Economics of Federated Authentication? asks how we can deal with a world in which your mobile phone contains your credit cards, your driving license and even your car key. What happens when it gets stolen or infected?
Using one service to authenticate the users of another is an old dream but a terrible tar-pit. Recently it has become a game of pass-the-parcel: your newspaper authenticates you via your social networking site, which wants you to recover lost passwords by email, while your email provider wants to use your mobile phone and your phone company depends on your email account. The certification authorities on which online trust relies are open to coercion by governments – which would like us to use ID cards but are hopeless at making systems work. No-one even wants to answer the phone to help out a customer in distress. But as we move to a world of mobile wallets, in which your phone contains your credit cards and even your driving license, we’ll need a sound foundation that’s resilient to fraud and error, and usable by everyone. Where might this foundation be? I argue that there could be a quite surprising answer.
The paper describes some work I did on sabbatical at Google and will appear next week at the Security Protocols Workshop.
The bankers’ trade association has written to Cambridge University asking for the MPhil thesis of one of our research students, Omar Choudary, to be taken offline. They complain it contains too much detail of our No-PIN attack on Chip-and-PIN and thus “breaches the boundary of responsible disclosure”; they also complain about Omar’s post on the subject to this blog.
Needless to say, we’re not very impressed by this, and I made this clear in my response to the bankers. (I am embarrassed to see I accidentally left Mike Bond off the list of authors of the No-PIN vulnerability. Sorry, Mike!) There is one piece of Christmas cheer, though: the No-PIN attack no longer works against Barclays’ cards at a Barclays merchant. So at least they’ve started to fix the bug – even if it’s taken them a year. We’ll check and report on other banks later.
The bankers also fret that “future research, which may potentially be more damaging, may also be published in this level of detail”. Indeed. Omar is one of my coauthors on a new Chip-and-PIN paper that’s been accepted for Financial Cryptography 2011. So here is our Christmas present to the bankers: it means you all have to come to this conference to hear what we have to say!
Financial Cryptography and Data Security (FC 2011)
Bay Gardens Beach Resort, St. Lucia
February 28 — March 4, 2011
Financial Cryptography and Data Security is a major international forum for research, advanced development, education, exploration, and debate regarding information assurance, with a specific focus on commercial contexts. The conference covers all aspects of securing transactions and systems.
NB: Discounted hotel rate is available only until December 30, 2010
Anonymity and Privacy, Auctions and Audits, Authentication and Identification, Backup Authentication, Biometrics, Certification and Authorization, Cloud Computing Security, Commercial Cryptographic Applications, Transactions and Contracts, Data Outsourcing Security, Digital Cash and Payment Systems, Digital Incentive and Loyalty Systems, Digital Rights Management, Fraud Detection, Game Theoretic Approaches to Security, Identity Theft, Spam, Phishing and Social Engineering, Infrastructure Design, Legal and Regulatory Issues, Management and Operations, Microfinance and Micropayments, Mobile Internet Device Security, Monitoring, Reputation Systems, RFID-Based and Contactless Payment Systems, Risk Assessment and Management, Secure Banking and Financial Web Services, Securing Emerging Computational Paradigms, Security and Risk Perceptions and Judgments, Security Economics, Smartcards, Secure Tokens and Hardware, Trust Management, Underground-Market Economics, Usability, Virtual Economies, Voting Systems
Hotel room reduced rate cut-off: December 30, 2010
Reduced registration rate cut-off: January 21, 2011
Please send any questions to firstname.lastname@example.org
During my MPhil within the Computer Lab (supervised by Markus Kuhn) I developed a card-sized device (named Smart Card Detective – in short SCD) that can monitor Chip and PIN transactions. The main goal of the SCD was to offer a trusted display for anyone using credit cards, to avoid scams such as tampered terminals which show an amount on their screen but debit the card another (see this paper by Saar Drimer and Steven Murdoch). However, the final result is a more general device, which can be used to analyse and modify any part of an EMV (protocol used by Chip and PIN cards) transaction.
Using the SCD we have successfully shown how the relay attack can be mitigated by showing the real amount on the trusted display. Even more, we have tested the No PIN vulnerability (see the paper by Murdoch et al.) with the SCD. A reportage on this has been shown on Canal+ (video now available here).
After the “Chip and PIN is broken” paper was published some contra arguments referred to the difficulty of setting up the attack. The SCD can also show that such assumptions are many times incorrect.
More details on the SCD are on my MPhil thesis available here. Also important, the software is open source and along with the hardware schematics can be found in the project’s page. The aim of this is to make the SCD a useful tool for EMV research, so that other problems can be found and fixed.
Thanks to Saar Drimer, Mike Bond, Steven Murdoch and Sergei Skorobogatov for the help in this project. Also thanks to Frank Stajano and Ross Anderson for suggestions on the project.