The U.S. Treasury Department is rolling out a dual-factor authentication scheme to better secure its popular Treasury Direct online service.

During the past few years financial institutions, employees, and consumers were increasingly using Treasury Direct to manage their investments, which streamlined the agency’s business processes. As the number of online accounts grew and with hackers circling the Internet like vultures, the department decided it was time to go with stronger authentication than its previous single-factor system.

Treasury Direct lets businesses and consumers buy and sell Treasury Bills, Treasury Notes, Securities, and Savings Bonds online. It now has 700,000 account holders and $8 billion in assets. “With hackers’ techniques constantly evolving, we realized that single-factor identification, such as requiring a user to enter an account number and password, was not the level of security that we needed in our application,” says Michael McDougle, director of the Treasury Direct design staff.

So in the early spring of 2007, the agency began searching for a two-factor authentication solution, but with some unique challenges: Unlike a traditional financial institution, the government agency could not charge its customers to recoup the cost of the new product. So it had to come up with an inexpensive solution. Also, the agency runs a lean IT department and did not want to add significant management overhead. “We had some experience using tokens to authenticate our employees and knew how difficult they could be to deploy and maintain,” stated McDougle.

The token option was quickly eliminated. First, it was cost-prohibitive: The $7 to $8 dollar per token price tag was much higher than the agency could afford. Also, Treasury needed to comply with federal law, such as the Acquisition of Electronic and Information Technology Under Section 508 of the Rehabilitation Act, and to ensure the option they deployed could be used by individuals with disabilities. It was unclear just how they could make the tokens available to blind users, for instance.

The Treasury chose Entrust’s IdentityGuard system for its two-factor authentication. Users receive Bingo-like cards with thousands of passwords on them. Since their entries are determined by when they access Treasury Direct, the passwords constantly change and make it tough for hackers to crack. Another plus: It cost only 25 cents for each card, and the cards were available in Braille for the sight-impaired.

The authentication project was placed on a rapid application-development schedule, breaking the deployment process down into four-week cycles spread over the summer. IdentityGuard was integrated easily into Treasury Direct, according to the agency, but there were a few logistical challenges.

Customer support and distribution of the cards surfaced as one problem: The agency had trouble getting the cards to some of its clients. “The problem with the physical mail addresses that we had on file was once a user opened an account, we did not use it again, so a percentage of them were outdated,” McDougle says. The agency then ran an awareness campaign, sending email notes to users and telling them to update their physical mailing addresses so they could receive their IdentityGuard cards.

Some of the Treasury’s clients did not know how to use the new system. In addition, cards were being lost or damaged, so clients needed new ones. So the agency put a support team in place to help its customers.

There were some technical limitations as well: The Treasury Department found that the Entrust software was immature. “The system was not able to handle the volume of users that we were throwing at it,” McDougle says. The agency worked with Entrust to address that shortcoming in the system, which was up and running by last September.

Meanwhile, the agency is phasing in user deployment -- with the initial focus on its largest customers. (And new clients are automatically enrolled in the two-factor authentication system.) The Treasury expects the deployment to be completed in first quarter of next year. “Most of our users are quite happy with the new security cards, and we certainly think that is less likely now that any of our accounts will be compromised than it was before,” McDougle says.

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