Light Blue Touchpaper

Last week Facebook announced the end of regional networks for access control. The move makes sense: regional networks had no authentication so information available to them was easy to get with a fake account. Still, silently making millions of weakly-restricted profiles globally viewable raises some disturbing questions. If Terms of Service promise to only share data consistent with users’ privacy settings, but the available privacy settings change as features are added, what use are the terms as a legal contract? This is just one instance of a major problem for rapidly evolving web pages which rely on a static model of informed consent for data collection. Even “privacy fundamentalists” who are careful to read privacy policies and configure their privacy settings can’t be confident of their data’s future for three main reasons:

• Functionality Changes: Web 2.0 sites add features constantly, usually with little warning or announcement. Users are almost always opted-in for fear that features won’t get noticed otherwise. Personal data is shared before users have any chance to opt out. Facebook has done this repeatedly, opting users in to NewsFeed, Beacon, Social Ads, and Public Search Listings. This has generated a few sizeable backlashes, but Facebook maintains that users must try new features in action before they can reasonably opt out.
• Contractual Changes: Terms of Service documents can often be changed without notice, and users automatically agree to the new terms by continuing to use the service. In a study we’ll be publishing at WEIS next month evaluating 45 social networking sites, almost half don’t guarantee to announce changes to their privacy policies. Less than 10% of the sites commit to a mandatory notice period before implementing changes (typically a week or less). Realistically, at least 30 days are needed for fundamentalists to read the changes and cancel their accounts if they wish.
• Ownership Changes: As reported in the excellent survey of web privacy practices by the KnowPrivacy project at UC Berkeley, the vast majority (over 90%) of sites explicitly reserve the right to share data with ‘affiliates’ subject only to the affiliate’s privacy policy. Affiliate is an ambiguous term but it includes at least  parent companies and their subsidiaries. If your favourite web site gets bought out by an international conglomerate, your data is transferred to the new owners who can instantly start using it under their own privacy policy. This isn’t an edge case, it’s a major loophole: websites are bought and sold all the time and for many startups acquisition is the business model.

For any of these reasons, the terms under which consent was given can be changed without warning. Safely disclosing personal data on the web thus requires continuously monitoring sites for new functionality, updated terms of service, or mergers, and instantaneously opting out if you are no longer comfortable. This is impossible even for privacy fundamentalists with an infinite amount of patience and legal knowledge, rendering the old paradigm of informed consent for data collection unworkable for Web 2.0.

I’ve been writing a lot about privacy in social networks, and sometimes the immediacy gets lost during the more theoretical debates. Recently though I’ve been investigating a massive privacy breach on Facebook’s application platform which serves as a sobering case study. Even to me, the extent of unauthorised data flow I found and the cold economic motivations keeping it going were surprising. Facebook’s application platform remains a disaster from a privacy standpoint, dampening one of the more compelling features of the network.

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One of the defining features of Web 2.0 is user-uploaded content, specifically photos. I believe that photo-sharing has quietly been the killer application which has driven the mass adoption of social networks. Facebook alone hosts over 40 billion photos, over 200 per user, and receives over 25 million new photos each day. Hosting such a huge number of photos is an interesting engineering challenge. The dominant paradigm which has emerged is to host the main website from one server which handles user log-in and navigation, and host the images on separate special-purpose photo servers, usually on an external content-delivery network. The advantage is that the photo server is freed from maintaining any state. It simply serves its photos to any requester who knows the photo’s URL.

This setup combines the two classic forms of enforcing file permissions, access control lists and capabilities. The main website checks each request for a photo against an ACL, it then grants a capability to view a photo in the form of an obfuscated URL which can be sent to the photo-server. We wrote earlier about how it was possible to forge Facebook’s capability-URLs and gain unauthorised access to photos. Fortunately, this has been fixed and it appears that most sites use capability-URLs with enough randomness to be unforgeable. There’s another traditional problem with capability systems though: revocation. My colleagues Jonathan Anderson, Andrew Lewis, Frank Stajano and I ran a small experiment on 16 social-networking, blogging, and photo-sharing web sites and found that most failed to remove image files from their photo servers after they were deleted from the main web site. It’s often feared that once data is uploaded into “the cloud,” it’s impossible to tell how many backup copies may exist and where, and this provides clear proof that content delivery networks are a major problem for data remanence. (more…)

Last month we penned a highly-critical report of Facebook’s proposed terms of service and much-hyped “public review” process. We categorised them as “democracy theatre”, a publicity stunt intended to provide the appearance of community input without committing to real change. We included our report in Facebook’s official forum, and it was backed by the Open Rights Group as their official expert response as requested by Facebook. Last night, Facebook published their revised terms of service and unveiled their voting process, and our scepticism about the process has been confirmed. We’ve issued a press release summarising our opposition to the new terms.

Taking a look at the diff output from the revised terms, it’s clear that as we anticipated, no meaningful changes were made. All of the changes are superficial, in fact Section 2 is now slightly less clear and a few more shady definitions have been pushed to the back of the document. Facebook received hundreds of comments in addition to our report during the public review process, but their main response was a patronising FAQ document which dismissed user’s concerns as being merely misunderstandings of Facebook’s goodwill. Yet, Facebook still described their new terms as “reflecting comments from users and experts received during the 30-day comment period. ” We would challenge Facebook to point to a single revision which reflected a specific comment received.

The voting process is also problematic, as we predicted it would be. The new terms were announced and instantly put to a 7-day vote, hardly enough time to have a serious debate on the revised terms. Depending on your profile settings it can be quite hard to even find the voting interface. For some profiles it is prominently shown on one’s home page, for others it is hidden and can’t even be found through search. The voting interface was outsourced to a third-party developer called Wildfire Promotion Builder and has been frequently crashing in the first 12 hours of voting, despite a relatively low turnout (50,000 votes so far). This is particularly damning since the required quorum is 60 million votes over 7 days, meaning Facebook was unprepared technically to handle 1% of the required voting traffic.

The poorly done voting interface summarises the situation well. This process was never about democracy or openness, but about damage control from a major PR disaster. Truly opening the site up to user control is an interesting option and might be in Facebook’s long-term interest. They are also certainly within their rights as well to run their site as a dictatorship using the older, corporate-drafted terms of service. But it’s tough to swallow Facebook’s arrogant insistence that it’s engaging users, when it’s really doing no such thing.

Update, 24/04/2009: The vote ended yesterday. About 600,000 users voted, 0.3% of all users on the site and less than 1% of the required 30%. Over 25% of voters opposed the new terms of service, many of which can be interpreted as voting in protest. For Facebook, it was still a win, as they experienced mostly good press and have now had their new terms ratified.

The trial of Job v Halifax plc has been set down for April 30th at 1030 in the Nottingham County Court, 60 Canal Street, Nottingham NG1 7EJ. Alain Job is an immigrant from the Cameroon who has had the courage to sue his bank over phantom withdrawals from his account. The bank refused to refund the money, making the usual claim that its systems were secure. There’s a blog post on the cavalier way in which the Ombudsman dealt with his case. Alain’s case was covered briefly in Guardian in the run-up to a previous hearing; see also reports in Finextra here, here and (especially) here.

The trial should be interesting and I hope it’s widely reported. Whatever the outcome, it may have a significant effect on consumer protection in the UK. For years, financial regulators have been just as credulous about the banks’ claims to be in control of their information-security risk management as they were about the similar claims made in respect of their credit risk management (see our blog post on the ombudsman for more). It’s not clear how regulatory capture will (or can) be fixed in respect of credit risk, but it is just possible that a court could fix the consumer side of things. (This happened in the USA with the Judd case, as described in our submission to the review of the ombudsman service — see p 13.)

For further background reading, see blog posts on the technical failures of chip and PIN, the Jane Badger case, the McGaughey case and the failures of fraud reporting. Go back into the 1990s and we find the Halifax again as the complainant in R v Munden; John Munden was prosecuted for attempted fraud after complaining about phantom withdrawals. The Halifax couldn’t produce any evidence and he was acquitted.

When you transact with an EMV payment card (a “Chip and PIN” card), typical UK operation is for the bank to exchange three authentication “cryptograms”. First comes the request from the card (the ARQC), then comes the response from the bank (the ARPC) and finally the transaction certificate (TC). The idea with the transaction certificate is that the card signs off on the correct completion of the protocol, having received the response from the bank and accepted it. The resulting TC is supposed to be a sort of “proof of transaction”, and because it certifies the completion of the entire transaction at a technical level, one can presume that both the money was deducted and the goods were handed over. In an offline transaction, one can ask the card to produce a TC straight away (no AQRC and ARPC), and depending on various risk management settings, it will normally do so. So, what can you do with a TC?

Well, the TC is sent off to the settlment and clearing system, along with millions of others, and there it sits in the transaction logs. These logs get validated as part of clearing and the MAC is checked (or it should be). In practice the checks may get deferred until there is a dispute over a transaction (i.e. a human complains). The downside is, if you don’t check all TCs, you can’t spot offline fraud in the chip and pin system. Should a concerned party dispute a transaction, the investigation team will pull the record, and use a special software tool to validate the TC - objective proof that the card was involved.

Another place the TC gets put is on your receipt. An unscientific poll of my wallet reveals 13 EMV receipts with TCs present (if you see a hex string like D3803D679B33F16E8 you’ve found it) and 7 without - 65% of my receipts have one. The idea is that the receipt can stand as a cryptographic record of the transaction, should the banks logs fail or somehow be munged.

But there is a bit of a problem: sometimes there isn’t enough space for all the data. It’s a common problem: Mr. Fermat had a truly marvellous proof of a proposition but it wouldn’t fit in the margin, and unfortunately while the cryptogram fits on the receipt, you can’t check a MAC without knowing the input data, and EMV terminal software developers have a pretty haphazard approach to including this on the receipts… after all, paper costs money!

Look at the following receipts. Cab-Inn Aarhus has the AID, the ATC and various other input goodies to the MAC (sorry if I’m losing you in EMV technicalities); Ted Baker has the TC, the CVMR, the TSI, TVR and IACs (but no ATC), and the Credit Agricole cash withdrawal has the TC and little else. One doesn’t want to be stuck like Andrew Wiles spending seven years guessing the input data! Only at one shop have I seen the entire data required on the receipt (including CID et al) and it was (bizarrely) from a receipt for a Big Mac at McDonalds!

Now in case of dispute one can brute force the missing data and guess up to missing 40 bits of data or so without undue difficulty. And there is much wrangling (indeed the subject of previous and current legal actions) about exactly what data should be provided, whether the card UDKs should be disclosed to both sides in a dispute, and generally what constitutes adequate proof.


A “fake” transaction certificate

But most worrying is something I observed last week, making a credit card purchase for internet access at an Airport: a fake transaction certificate. I can tell its a fake because it firstly its the wrong length, and secondly, it’s online — I only typed in my card number, and never plugged my card into a smartcard reader. Now I can only assume that some aesthetically minded developer decided that the online confirmation needed a transaction certificate so took any old hex field and just dumped it. It could be an innocent mistake. But whether or not the “margin was too small” to contain this TC, its a sad reflection on the state of proof in EMV when cryptographic data fields only appear for decorative purposes. Maybe some knowledgeable reader can shed some light on this?

You may remember a big PR flap last month about Facebook’s terms of service, followed by Facebook backing down and promising to involve users in a self-governing process of drafting their future terms. This is an interesting step with little precedent amongst commercial web sites. Facebook now has enough users to be the fifth largest nation on earth (recently passing Brazil), and operators of such immense online societies need to define a cyber-government which satisfies their users while operating lawfully within a multitude of jurisdictional boundaries, as well as meeting their legal obligations to the shareholders who own the company.

Democracy is an intriguing approach, and it is encouraging that Facebook is considering this path. Unfortunately, after some review my colleagues and I are left thoroughly disappointed by both the new documents and the specious democratic process surrounding them. We’ve outlined our arguments in a detailed report, the official deadline for commentary is midnight tonight.

The non-legally binding Statement of Principles outline an admirable set of goals in plain language, which was refreshing. However, these goals are then undermined for a variety of legal and business reasons by the “Statement of Rights and Responsibilities“, which would effectively be the new Terms of Service. For example, Facebook demands that application developers comply with user’s privacy settings which it doesn’t provide access to, states that users should have “programmatic access” and then bans users from interacting with the site via “automated means,” and states that the service will transcend national boundaries while banning users from signing up if they live in a country embargoed by the United States.

The stated goal of fairness and equality is also lost. The Statement of Rights and Responsibilities primarily assigns rights to Facebook and responsibilities on users, developers, and advertisers. Facebook still demands a broad license to all user content, shifts all responsibility for enforcing privacy onto developers, and sneakily disclaims itself of all liability. Yet it demands an unrealistic set of obligations: a literal reading of the document requires users to get explicit permission from other users before viewing their content. Furthermore, they have applied the banking industry’s well-known trick of shifting liability to customers, binding users to not do anything to “jeopardize the security of their account,” which can be used to dissolve the contract.

The biggest missed opportunity, however, is the utter failure to provide a real democratic process as promised. Users are free to comment on terms, but Facebook is under no obligation to listen. Facebook’s official group for comments contains a disorganised jumble of thousands of comments, some insightful and many inane. It is difficult to extract intelligent analysis here. Under certain conditions a vote can be called, but this is hopelessly weakened: it only applies to certain types of changes, the conditions of the vote are poorly specified and subject to manipulation by Facebook, and in fact they reserve the right to ignore the vote for “administrative reasons.”

With a nod to Bruce Schneier, we call such steps “democracy theatre.” It seems the goal is not to actually turn governance over to users, but to use the appearance of democracy and user involvement to ward off future criticism. Our term may be new, but this trick is not, it has been used by autocratic regimes around the world for decades.

Facebook’s new terms represent a genuine step forward with improved clarity in certain areas, but an even larger step backward in using democracy theatre to cover the fact that Facebook is a business and its ultimate accountability is to its shareholders. The outrage over the previous terms was real and it was justified, social networks mean a great deal to their users, and they want to have a real say.  Since Facebook appears unwilling to actually do so, though, we would be remiss to allow them to deflect user’s anger with flowery language and a sham democratic process. For this reason we cannot support the new terms.

[UPDATE: Our report has been officially backed by the Open Rights Group]

Database State is a report we’ve written for the Joseph Rowntree Reform Trust on the failings of public-sector IT in Britain, and how to fix them. There’s press coverage in the Guardian, the Mail, the Independent, and the Telegraph.

Today the Government “launches” its National Fraud Strategy. I qualify the verb because none of the quality papers seems to be running the story, and the press releases have not yet appeared on the websites of the Attorney General or the Ministry of Justice.

And well might Baroness Scotland be ashamed. The Strategy is a mishmash of things that are being done already with one new initiative - a National Fraud Reporting Centre, to be run by the City of London Police. This is presumably intended to defuse the Lords’ criticisms of the current system whereby fraud must be reported to the banks, not to the police. As our blog has frequently reported, banks dump liability for fraud on customers by making false claims about system security and imposing unreasinable terms and conditions. This is a regulatory failure: the FSA has been just as gullible in accepting the banking industry’s security models as they were about accepting its credit-risk models. (The ombudsman has also been eager to please.)

So what’s wrong with the new arrangements? Quite simply, the National Fraud Reporting Centre will nestle comfortably alongside the City force’s Dedicated Cheque and Plastic Crime Unit, which investigates card fraud but is funded by the banks. Given this disgraceful arrangement, which is more worthy of Uzbekistan than of Britain, you have to ask how eager the City force will be to investigate offences that bankers don’t want investigated, such as the growing number of insider frauds and chip card cloning? And how vigorously will City cops investigate their paymasters for the fraud of claiming that their systems are secure, when they’re not, in order to avoid paying compensation to defrauded accountholders? The purpose of the old system was to keep the fraud figures artificially low while enabling the banks to control such investigations as did take place. And what precisely has changed?

The lessons of the credit crunch just don’t seem to have sunk in yet. The Government just can’t kick the habit of kowtowing to bankers.

A number of UK banks are distributing hand-held card readers for authenticating customers, in the hope of stemming the soaring levels of online banking fraud. As the underlying protocol — CAP — is secret, we reverse-engineered the system and discovered a number of security vulnerabilities. Our results have been published as “Optimised to fail: Card readers for online banking”, by Saar Drimer, Steven J. Murdoch, and Ross Anderson.

In the paper, presented today at Financial Cryptography 2009, we discuss the consequences of CAP having been optimised to reduce both the costs to the bank and the amount of typing done by customers. While the principle of CAP — two factor transaction authentication — is sound, the flawed implementation in the UK puts customers at risk of fraud, or worse.

When Chip & PIN was introduced for point-of-sale, the effective liability for fraud was shifted to customers. While the banking code says that customers are not liable unless they were negligent, it is up to the bank to define negligence. In practice, the mere fact that Chip & PIN was used is considered enough. Now that Chip & PIN is used for online banking, we may see a similar reduction of consumer protection.

Further information can be found in the paper and the talk slides.