New attack techniques dubbed "Man in the Mobile" (MitMo) are allowing black hats to leverage malware placed on mobile devices to get around password verification systems that send codes via SMS text messages to users' phones for confirmation of identity.
"In a transaction verification system, the customer receives a text message with the transaction details and a code to enter back into the website -- only if the transaction details match the real transaction," explains Mickey Boodaei, CEO of Trusteer. "Transaction verification was considered a good solution to protect against [MitMo] attacks, where malware attempts to submit a transaction on behalf of the victim.
"However, MitMo completely bypasses this, as it controls the mobile device and can forward the verification text to the fraudsters and delete it from the device without letting the victim see it," Boodaei warns.
The expansion of Zeus' capabilities to carry out MitMo attacks is yet another step in the cat-and-mouse game that banking security professionals continue to play with hackers to ensure users are who they say they are.
"[Banks] will need to adjust to the reality that two-factor authentication will always be challenged by hackers. A compromised mobile phone is the same as a compromised PC," says Derek Manky, project manager for Fortinet's Cyber Security & Threat Research unit.
Banks need to find ways to educate users and help them secure their channels of authentication, Manky says. "End users may be aware of the fact that they can have their account information stolen from an infected PC and/or phishing attack, but likely won't think twice about mobile attacks at the moment," he warns.
While education is certainly an important component, Boodaei believes banks need to offer users a helping hand in securing those channels for authentication.
"Banks should use technologies to secure the communication between customers' computers and websites and between customers' mobile phones and websites," Boodaei says.
"This requires an additional layer of security on the computer and the mobile device, which can shield the communication and prevent malware from accessing financial data and login information," Boodaei continues. "Many banks, such as Santander, the Royal Bank of Scotland, HSBC, CIBC, SunTrust, and Fifth Third are already offering this extra layer of security."
Organizations might also need to think more closely about the type of out-of-band one-time-password technology they're using to boost authentication, experts say. For example, a system where the user directly replies to the SMS text through their phones -- rather than simply entering a code supplied by text back into the Web browser -- could be more secure. Or organizations could consider forgetting about texts altogether and choose to go with an old-fashioned phone call as the means for out-of-band verification.
"We're not aware of any attacks that defeat this mechanism," says Steve Dispensa, CTO and co-founder of PhoneFactor. "Because of the logical separation between voice and data functions on smartphones, phone calls are resistant to malware running on the phone."
Truly security-conscious organizations could even layer a further factor into that phone call if they choose to add voice biometrics checks into their verification calls. It's all a matter of priorities. As Dispensa puts it, even the types of out-of-band authentication that are vulnerable to these latest attacks are still more secure than many other classes of two-factor authentication that require less work to subvert.
"All token-based solutions, grid cards, etc., can be compromised through a single piece of malware," Dispensa observes. "New attacks, even in their most virulent forms, require two coordinated infections -- to the user's mobile phone and to their computer. This is substantially more difficult to achieve in practice."
"Legacy two-factor systems, such as security tokens, are fatally flawed and routinely compromised, since it only takes a single piece of malware to get around them," Dispensa cautions. "Out-of-band two-factor technology is the new best practice, and we expect to continue to see significant adoption. With 40-some percent of PCs infected with malware, using a phone for authentication is much more secure."
With more malware being spread to smartphones, however, this advantage might not last forever, experts say.
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