Krebs on Security

Inside a Porn-Pimping Spam Botnet

June 15, 2017

For several months I’ve been poking at a decent-sized spam botnet that appears to be used mainly for promoting adult dating sites. Having hit a wall in my research, I decided it might be good to publish what I’ve unearthed so far to see if this dovetails with any other research out there.

In late October 2016, an anonymous source shared with KrebsOnSecurity.com a list of nearly 100 URLs that — when loaded into a Firefox browser — each displayed what appeared to be a crude but otherwise effective text-based panel designed to report in real time how many “bots” were reporting in for duty.

Here’s a set of archived screenshots of those counters illustrating how these various botnet controllers keep a running tab of how many “activebots” — hacked servers set up to relay spam — are sitting idly by and waiting for instructions.

One of the more than 100 panels linked to the same porn spamming operation. In October 2016, these 100 panels reported a total of 1.2 million active bots operating simultaneously.

At the time, it was unclear to me how this apparent botnet was being used, and since then the total number of bots reporting in each day has shrunk considerably. During the week the above-linked screen shots were taken, this botnet had more than 1.2 million zombie machines or servers reporting each day (that screen shot archive includes roughly half of the panels found). These days, the total number of servers reporting in to this spam network fluctuates between 50,000 and 100,000.

Thanks to a tip from an anti-spam activist who asked not to be named, I was able to see that the botnet appears to be busy promoting a seemingly endless network of adult dating Web sites connected to just two companies: CyberErotica, and Deniro Marketing LLC (a.k.a. AmateurMatch).

As affiliate marketing programs go, CyberErotica stretches way back — perhaps to the beginning. According to TechCrunch, CyberErotica is said to have launched the first online affiliate marketing firm in 1994.

In 2001, CyberErotica’s parent firm Voice Media settled a lawsuit with the U.S. Federal Trade Commission, which alleged that the adult affiliate program was misrepresenting its service as free while it dinged subscribers for monthly charges and made it difficult for them to cancel.

In 2010, Deniro Marketing found itself the subject of a class-action lawsuit that alleged the company employed spammers to promote an online dating service that was overrun with automated, fake profiles of young women. Those allegations ended in an undisclosed settlement after the judge in the case tossed out the spamming claim because the statute of limitations on those charges had expired.

What’s unusual (and somewhat lame) about this botnet is that — through a variety of botnet reporting panels that are still displaying data — we can get live, real-time updates about the size and status of this crime machine. No authentication or credentials needed. So much for operational security!

The “mind map” pictured below contains enough information for nearly anyone to duplicate this research, and includes the full Web address of the botnet reporting panels that are currently online and responding with live updates. I was unable to load these panels in a Google Chrome browser (perhaps the XML data on the page is missing some key components), but they loaded fine in Mozilla Firefox.

But a note of caution: I’d strongly encourage anyone interested in following my research to take care before visiting these panels, preferably doing so from a disposable “virtual” machine that runs something other than Microsoft Windows.

That’s because spammers are usually involved in the distribution of malicious software, and spammers who maintain vast networks of apparently compromised systems are almost always involved in creating or at least commissioning the creation of said malware. Worse, porn spammers are some of the lowest of the low, so it’s only prudent to behave as if any and all of their online assets are actively hostile or malicious.

A “mind map” tracing some of the research mentioned in this post.

Continue reading →

Microsoft, Adobe Ship Critical Fixes

June 13, 2017

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Microsoft today released security updates to fix almost a hundred flaws in its various Windows operating systems and related software. One bug is so serious that Microsoft is issuing patches for it on Windows XP and other operating systems the company no longer officially supports. Separately, Adobe has pushed critical updates for its Flash and Shockwave players, two programs most users would probably be better off without.

brokenwindows According to security firm Qualys, 27 of the 94 security holes Microsoft patches with today’s release can be exploited remotely by malware or miscreants to seize complete control over vulnerable systems with little or no interaction on the part of the user.

Microsoft this month is fixing another serious flaw (CVE-2017-8543) present in most versions of Windows that resides in the feature of the operating system which handles file and printer sharing (also known as “Server Message Block” or the SMB service).

SMB vulnerabilities can be extremely dangerous if left unpatched on a local (internal) corporate network. That’s because a single piece of malware that exploits this SMB flaw within a network could be used to replicate itself to all vulnerable systems very quickly.

It is this very “wormlike” capability — a flaw in Microsoft’s SMB service — that was harnessed for spreading by WannaCry, the global ransomware contagion last month that held files for ransom at countless organizations and shut down at least 16 hospitals in the United Kingdom.

According to Microsoft, this newer SMB flaw is already being exploited in the wild. The vulnerability affects Windows Server 2016, 2012, 2008 as well as desktop systems like Windows 10, 7 and 8.1.

The SMB flaw — like the one that WannaCry leveraged — also affects older, unsupported versions of Windows such as Windows XP and Windows Server 2003. And, as with that SMB flaw, Microsoft has made the unusual decision to make fixes for this newer SMB bug available for those older versions. Users running XP or Server 2003 can get the update for this flaw here.

“Our decision today to release these security updates for platforms not in extended support should not be viewed as a departure from our standard servicing policies,” wrote Eric Doerr, general manager of Microsoft’s Security Response Center.

“Based on an assessment of the current threat landscape by our security engineers, we made the decision to make updates available more broadly,” Doerr wrote. “As always, we recommend customers upgrade to the latest platforms. “The best protection is to be on a modern, up-to-date system that incorporates the latest defense-in-depth innovations. Older systems, even if fully up-to-date, lack the latest security features and advancements.”

The default browsers on Windows — Internet Explorer or Edge — get their usual slew of updates this month for many of these critical, remotely exploitable bugs. Qualys says organizations using Microsoft Outlook should pay special attention to a newly patched bug in the popular mail program because attackers can send malicious email and take complete control over the recipient’s Windows machine when users merely view a specially crafted email in Outlook. Continue reading →

Following the Money Hobbled vDOS Attack-for-Hire Service

June 6, 2017

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A new report proves the value of following the money in the fight against dodgy cybercrime services known as “booters” or “stressers” — virtual hired muscle that can be rented to knock nearly any website offline.

Last fall, two 18-year-old Israeli men were arrested for allegedly running vDOS, perhaps the most successful booter service of all time. The young men were detained within hours of being named in a story on this blog as the co-proprietors of the service (KrebsOnSecurity.com would later suffer a three-day outage as a result of an attack that was alleged to have been purchased in retribution for my reporting on vDOS).

The vDos home page.

That initial vDOS story was based on data shared by an anonymous source who had hacked vDOS and obtained its private user and attack database. The story showed how the service made approximately $600,000 over just two of the four years it was in operation. Most of those profits came in the form of credit card payments via PayPal.

But prior to vDOS’s takedown in September 2016, the service was already under siege thanks to work done by a group of academic researchers who teamed up with PayPal to identify and close accounts that vDOS and other booter services were using to process customer payments. The researchers found that their interventions cut profits in half for the popular booter service, and helped reduce the number of attacks coming out of it by at least 40 percent.

At the height of vDOS’s profitability in mid-2015, the DDoS-for-hire service was earning its proprietors more than $42,000 a month in PayPal and Bitcoin payments from thousands of subscribers. That’s according to an analysis of the leaked vDOS database performed by researchers at New York University.

As detailed in August 2015’s “Stress-Testing the Booter Services, Financially,” the researchers posed as buyers of nearly two dozen booter services — including vDOS — in a bid to discover the PayPal accounts that booter services were using to accept payments. In response to their investigations, PayPal began seizing booter service PayPal accounts and balances, effectively launching their own preemptive denial-of-service attacks against the payment infrastructure for these services.

Those tactics worked, according to a paper the NYU researchers published today (PDF) at the Weis 2017 workshop at the University of California, San Diego.

“We find that VDoS’s revenue was increasing and peaked at over $42,000/month for the month before the start of PayPal’s payment intervention and then started declining to just over $20,000/month for the last full month of revenue,” the paper notes.

subscribers The NYU researchers found that vDOS had extremely low costs, and virtually all of its business was profit. Customers would pay up front for a subscription to the service, which was sold in booter packages priced from $5 to $300. The prices were based partly on the overall number of seconds that an attack may last (e.g., an hour would be 3,600 worth of attack seconds).

In just two of its four year in operation vDOS was responsible for launching 915,000 DDoS attacks, the paper notes. In adding up all the attack seconds from those 915,000 DDoS attacks, the researchers found vDOS was responsible for 48 “attack years” — the total amount of DDoS time faced by the victims of vDOS. Continue reading →

OneLogin: Breach Exposed Ability to Decrypt Data

June 1, 2017

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OneLogin, an online service that lets users manage logins to sites and apps from a single platform, says it has suffered a security breach in which customer data was compromised, including the ability to decrypt encrypted data.

Headquartered in San Francisco, OneLogin provides single sign-on and identity management for cloud-base applications. OneLogin counts among its customers some 2,000 companies in 44 countries, over 300 app vendors and more than 70 software-as-a-service providers.

A breach that allowed intruders to decrypt customer data could be extremely damaging for affected customers. After OneLogin customers sign into their account, the service takes care of remembering and supplying the customer’s usernames and passwords for all of their other applications.

In a brief blog post Wednesday, OneLogin chief information security officer Alvaro Hoyos wrote that the company detected unauthorized access to OneLogin data.

“Today we detected unauthorized access to OneLogin data in our US data region. We have since blocked this unauthorized access, reported the matter to law enforcement, and are working with an independent security firm to determine how the unauthorized access happened and verify the extent of the impact of this incident. We want our customers to know that the trust they have placed in us is paramount.”

“While our investigation is still ongoing, we have already reached out to impacted customers with specific recommended remediation steps and are actively working to determine how best to prevent such an incident from occurring in the future and will update our customers as these improvements are implemented.”

OneLogin’s blog post includes no other details, aside from a reference to the company’s compliance page. The company has not yet responded to request for comment. However, Motherboard has obtained a copy of a message OneLogin reportedly sent to its customers about the incident, and that missive contains a critical piece of information:

“Customer data was compromised, including the ability to decrypt encrypted data,” reads the message OneLogin sent to customers.

According to Motherboard, the message also directed customers to a list of required steps to minimize any damage from the breach, such as generating new API keys and OAuth tokens (OAuth being a system for logging into accounts), creating new security certificates as well as credentials; recycling any secrets stored in OneLogin’s Secure Notes feature; and having end-users update their passwords.

Gartner Inc. financial fraud analyst Avivah Litan said she has long discouraged companies from using cloud-based single sign-on services, arguing that they are the digital equivalent to an organization putting all of its eggs in one basket.

“It’s just such a massive single point of failure,” Litan said. “And this breach shows that other [cloud-based single sign-on] services are vulnerable, too. This is a big deal and it’s disruptive for victim customers, because they have to now change the inner guts of their authentication systems and there’s a lot of employee inconvenience while that’s going on.”

KrebsOnSecurity will likely update this story throughout the day as more details become available.

Update 7:54 p.m ET: OneLogin posted an update to its blog with more details about the breach:

“Our review has shown that a threat actor obtained access to a set of AWS keys and used them to access the AWS API from an intermediate host with another, smaller service provider in the US. Evidence shows the attack started on May 31, 2017 around 2 am PST. Through the AWS API, the actor created several instances in our infrastructure to do reconnaissance. OneLogin staff was alerted of unusual database activity around 9 am PST and within minutes shut down the affected instance as well as the AWS keys that were used to create it.”

Customer impact

“The threat actor was able to access database tables that contain information about users, apps, and various types of keys. While we encrypt certain sensitive data at rest, at this time we cannot rule out the possibility that the threat actor also obtained the ability to decrypt data. We are thus erring on the side of caution and recommending actions our customers should take, which we have already communicated to our customers.”

Credit Card Breach at Kmart Stores. Again.

May 31, 2017

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For the second time in less than three years, Kmart Stores is battling a malware-based security breach of its store credit card processing systems. kmart

Last week I began hearing from smaller banks and credit unions who said they strongly suspected another card breach at Kmart. Some of those institutions received alerts from the credit card companies about batches of stolen cards that all had one thing in common: They were all used at Kmart locations.

Asked to respond to rumors about a card breach, Kmart’s parent company Sears Holdings said some of its payment systems were infected with malicious software:

“We recently became aware that Sears Holdings was a victim of a security incident involving unauthorized credit card activity following certain customer purchases at some of our Kmart stores. We immediately launched a thorough investigation and engaged leading third party forensic experts to review our systems and secure the affected part of our network.”

“Our Kmart store payment data systems were infected with a form of malicious code that was undetectable by current anti-virus systems and application controls. Once aware of the new malicious code, we quickly removed it and contained the event. We are confident that our customers can safely use their credit and debit cards in our retail stores.”

Based on the forensic investigation, NO PERSONAL identifying information (including names, addresses, social security numbers, and email addresses) was obtained by those criminally responsible. However, we believe certain credit card numbers have been compromised. Nevertheless, in light of our EMV compliant point of sale systems, which rolled out last year, we believe the exposure to cardholder data that can be used to create counterfeit cards is limited. There is also no evidence that kmart.com or Sears customers were impacted.”

Sears spokesman Chris Brathwaite said the company is not commenting on how many of Kmart’s 735 locations nationwide may have been impacted or how long the breach is believed to have persisted, saying the investigation is ongoing.

“Given the criminal nature of this attack, Kmart is working closely with federal law enforcement authorities, our banking partners, and IT security firms in this ongoing investigation,” Sears Holdings said in its statement. “We are actively enhancing our defenses in light of this new form of malware. Data security is of critical importance to our company, and we continuously review and improve the safeguards that protect our data in response to changing technology and new threats.”

In October 2014, Sears announced a very similar breach in which the company also stressed that the data stolen did not include customer names, email addresses or other personal information. Continue reading →

Trump’s Dumps: ‘Making Dumps Great Again’

May 26, 2017

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It’s not uncommon for crooks who peddle stolen credit cards to seize on iconic American figures of wealth and power in the digital advertisements for their shops that run incessantly on various cybercrime forums. Exhibit A: McDumpals, a hugely popular carding site that borrows the Ronald McDonald character from McDonald’s and caters to bulk buyers. Exhibit B: Uncle Sam’s dumps shop, which wants YOU! to buy American. Today, we’ll look at an up-and-coming stolen credit card shop called Trump’s-Dumps, which invokes the 45th president’s likeness and promises to make credit card fraud great again.

trumpsdumps

One reason thieves who sell stolen credit cards like to use popular American figures in their ads may be that a majority of their clients are people in the United States. Very often we’re talking about street gang members in the U.S. who use their purchased “dumps” — the data copied from the magnetic stripes of cards swiped through hacked point-of-sale systems — to make counterfeit copies of the cards. They then use the counterfeit cards in big-box stores to buy merchandise that they can easily resell for cash, such as gift cards, Apple devices and gaming systems.

When most of your clientele are street thugs based in the United States, it helps to leverage a brand strongly associated with America because you gain instant brand recognition with your customers. Also, a great many of these card shops are run by Russians and hosted at networks based in Russia, and the abuse of trademarks closely tied to the U.S. economy is a not-so-subtle “screw you” to American consumers.

In some cases, the guys running these card shops are openly hostile to the United States. Loyal readers will recall the stolen credit card shop “Rescator” — which was the main source of cards stolen in the Target, Home Depot and Sally Beauty breaches (among others) — was tied to a Ukrainian man who authored a nationalistic, pro-Russian blog which railed against the United States and called for the collapse of the American economy.

In deconstructing the 2014 breach at Sally Beauty, I interviewed a former Sally Beauty corporate network administrator who said the customer credit cards being stolen with the help of card-stealing malware installed on Sally Beauty point-of-sale devices that phoned home to a domain called “anti-us-proxy-war[dot]com.”

Trump’s Dumps currently advertises more than 133,000 stolen credit and debit card dumps for sale. The prices range from just under $10 worth of Bitcoin to more than $40 in Bitcoin, depending on which bank issued the card, the cardholder’s geographic location, and whether the cards are tied to premium, prepaid, business or executive accounts.

A “state of the dumps” address on Trump’s-Dumps.

Continue reading →

MolinaHealthcare.com Exposed Patient Records

May 25, 2017

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Earlier this month, KrebsOnSecurity featured a story about a basic security flaw in the Web site of medical diagnostics firm True Health Group that let anyone who was logged in to the site view all other patient records. In that story I mentioned True Health was one of three major healthcare providers with similar website problems, and that the other two providers didn’t even require a login to view all patient records. Today we’ll examine a flaw that was just fixed by Molina Healthcare, a Fortune 500 company that until recently was exposing countless patient medical claims to the entire Internet without requiring any authentication.

molinalogo In April 2017 I received an anonymous tip from a reader who said he’d figured out that just by changing a single number in the Web address when accessing his recent medical claim at MolinaHealthcare.com he could then view any and all other patient claims.

More alarmingly, the link he was given to access his claim with Molina was accessible to anyone who had the link; no authentication was required to view it. Nor was any authentication required to view any other records that could be accessed by fiddling with the numbers after the bit at the end of Molinahealthcare.com address (e.g., claimID=123456789).

In other words, having access to a single hyperlink to a patient record would allow an attacker to enumerate and download all other claims. The source showed me screenshots of his medical records at Molina, and how when he changed a single number in the URL it happily displayed another patient’s records.

The records did not appear to include Social Security numbers, but they do include patient names, addresses and dates of birth, as well as potentially sensitive information that may point to specific diseases, such as medical procedure codes and any prescribed medications. Continue reading →

Should SaaS Companies Publish Customers Lists?

May 22, 2017

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A few weeks back, HR and financial management firm Workday.com sent a security advisory to customers warning that crooks were sending targeted malware phishing attacks at customers. At the same time, Workday is publishing on its site a list of more than 800 companies that use its services, making it relatively simple for attackers to chose their targets. This post examines whether it makes sense for software-as-a-service (SaaS) companies to publish lists of their customers when those customers are actively under siege from phishers impersonating the SaaS provider.

At its most basic, security always consists of trade-offs. Many organizations find a natural tension between marketing and security. The security folks warn that publishing too much information about how the company does business and with whom makes it way too easy for phishers and other scammers to target your customers.

A screenshot of a phishing lure used to target Workday customers.

The marketing folks, quite naturally, often have a different perspective: The benefits of publishing partner data far outweigh the nebulous risks that someone may abuse this information.

So the question is, at what point does marketing take a backseat to security at SaaS firms when their customers are being phished? Is it even reasonable to think that determined attackers would be deterred if they had to pore through press releases and other public data to find a target list?

When I first approached Workday in researching this column, I did so in regard to an alert they emailed customers earlier this month. In the alert, Workday warned that customers using single-factor authentication to access Workday were being targeted by email phishing campaigns. The company said there was no evidence to suggest the phishing a result of the Workday service or infrastructure, but rather it was the result of phishing emails where individuals at customer organizations shared login credentials with a malicious third party. In short, they’d been phished.

A portion of the phishing alert that Workday sent to its customers.

Workday advised customers to take advantage of the company’s two-factor authentication systems, and to enable secondary approvals for all important transactions.

All good advice, but I also challenged the company that it maybe wasn’t the best idea to also publish a tidy list of more than 800 customers on its Web site. I also noted that Workday’s site makes it simple to find an HTML template for targeted phishing campaigns. Just take one of the companies listed on its site and enter the name in the Workday Sign-in search page. Selecting Netflix from the list of Workday customers, for example, we can find Netflix’s login page:

Netflix’s sign-in page at Workday.com.

That link opens up a page that allows Netflix customers to login to Workday using Google’s OAuth system for linking third-party apps to Google accounts. It’s a good thing we haven’t recently seen targeted phishing attacks that mimic this precise process to hijack Google accounts.

Oh wait, something very similar just happened earlier this month. In the first week of May, phishers began sending Google Docs phishing campaigns via Gmail disguised as an offer to share a document. Recipients who fell for the ruse ended up authorizing an app from Google’s OAuth authentication interface — i.e., handing crooks direct access to their accounts.

Before I go further, let me just say that it is not my intention to single out Workday in this post: There are plenty of other companies in its exact same position. The question I want to explore is at what point does marketing get trumped by security? For me, the juxtaposition between Workday’s warning and its priming the pump for phishers at the same time seemed off.

Workday wasn’t swayed by my logic, and they referred me to an industry analyst for the finer points of that perspective. Michael Krigsman, a tech analyst and host at cxotalk.com, said he often advises smaller companies that may be less sophisticated in their marketing strategies to publish a list of customers on their home pages.

“Even when it comes to larger companies like Workday, they’re selling so many seats that this information is highly public knowledge and very easy to get,” Krigsman said. “If you’re interested in Workday’s customer lists, for example, you can easily find that out because Workday puts out press releases, their customers put out press releases, and this gets picked up in the trade press.” Continue reading →

Private Eye Allegedly Used Leaky Goverment Tool in Bid to Find Tax Data on Trump

May 22, 2017

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In March 2017, KrebsOnSecurity warned that thieves who perpetrate tax refund fraud with the U.S. Internal Revenue Service were leveraging a widely-used online student loan tool to find critical data on consumers that allows them to claim huge refunds with the IRS in someone else’s name. This week, it emerged that a Louisiana-based private investigator is being charged with using the same online tool to glean tax data on then-presidential candidate Donald J. Trump.

A story today at Diverseeducation.com points to court filings in the U.S. District Court for the Middle District of Louisiana, in which local private eye Jordan Hamlett is accused by federal prosecutors of abusing an automated tool at the U.S. Department of Education website that is designed to make it easier for families to complete the Education Department’s Free Application for Federal Student Aid (FAFSA) — a lengthy form that serves as the starting point for students seeking federal financial assistance to pay for college or career school.

Grand jury findings in a sealed case against Louisiana private investigator Jordan Hamlett.

In November 2016, Hamlett — the owner of Baton Rouge-based Averlock Investigations — was indicted on felony charges of trying to glean then President-Elect Trump’s “adjusted gross income,” or AGI, using the FAFSA online tool. In the United States, the AGI is an individual’s total gross income minus specific deductions. Diverse Education’s Jamaal Abdul-Alim cites sources saying the accused may have been trying to get Trump’s tax records.

In any event, he failed, according to prosecutors. Last month, the IRS announced that the Education Department was disabling the FAFSA lookup tool because it was being abused by tax fraudsters.

According to Diverse Education, hints about the case against Hamlett came out earlier this month in an IRS oversight hearing before the U.S. House committee on oversight and government reform. At that hearing, “Timothy P. Camus, deputy inspector general for investigations at the Treasury Inspector General for Tax Administration, or TIGTA, alluded to the Hamlett case but did not mention Hamlett by name, nor did he indicate that then-presidential candidate Trump was the target,” Abdul-Alim writes. “Instead, Camus only mentioned that TIGTA ‘detected an attempted access to the AGI of a prominent individual.'”

Attempts to reach Hamlett for comment have been unsuccessful so far, and the complaint against him remains sealed. However, KrebsOnSecurity obtained a response on Nov. 10, 2016 from U.S. Attorney J. Walter Green that lays out the basic facts in the case. A copy of that document is here (PDF).

It’s interesting to note that this wasn’t the only time U.S. government authorities detected someone trying to access Trump’s AGI information. According to the government’s response, the alleged unauthorized attempt at Trump’s AGI data being attributed to Hamlett occurred on Sept. 13, 2016.

In TIGTA Deputy Inspector General Camus’ testimony to the House committee (PDF), he said his office detected a second attempt to access the same “prominent individual’s” AGI data via the FAFSA online lookup in November 2016, although the testimony doesn’t say whether that attempt was successful.

Amazingly, it wasn’t until an IRS employee on February 27, 2017 complained that his personal data was stolen via the FAFSA tool that the IRS moved to restrict online access to the service, according to response to committee questioning from IRS Chief Information Officer S. Gina Garza. Continue reading →

Fraudsters Exploited Lax Security at Equifax’s TALX Payroll Division

May 18, 2017

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Identity thieves who specialize in tax refund fraud had big help this past tax year from Equifax, one of the nation’s largest consumer data brokers and credit bureaus. The trouble stems from TALX, an Equifax subsidiary that provides online payroll, HR and tax services. Equifax says crooks were able to reset the 4-digit PIN given to customer employees as a password and then steal W-2 tax data after successfully answering personal questions about those employees.

In a boilerplate text sent to several affected customers, Equifax said the unauthorized access to customers’ employee tax records happened between April 17, 2016 and March 29, 2017.

Beyond that, the extent of the fraud perpetrated with the help of hacked TALX accounts is unclear, and Equifax refused requests to say how many consumers or payroll service customers may have been impacted by the authentication weaknesses.

Equifax's TALX -- now called Equifax Workforce Solutions -- aided tax thieves by relying on outdated and insufficient consumer authentication methods.

Equifax’s subsidiary TALX — now called Equifax Workforce Solutions — aided tax thieves by relying on outdated and insufficient consumer authentication methods.

Thanks to data breach notification laws in nearly all U.S. states now, we know that so far at least five organizations have received letters from Equifax about a series of incidents over the past year, including defense contractor giant Northrop Grumman; staffing firm Allegis Group; Saint-Gobain Corp.; Erickson Living; and the University of Louisville.

A snippet from TALX’s letter to the New Hampshire attorney general (PDF) offers some insight into the level of security offered by this wholly-owned subsidiary of Equifax. In it, lawyers for TALX downplay the scope of the breach even as they admit the company wasn’t able to tell exactly how much unauthorized access to tax records may have occurred.

“TALX believes that the unauthorized third-party(ies) gained access to the accounts primarily by successfully answering personal questions about the affected employees in order to reset the employees’ pins (the password to the online account portal),” wrote Nicholas A. Oldham, an attorney representing TALX. “Because the accesses generally appear legitimate (e.g., successful use of login credentials), TALX cannot confirm forensically exactly which accounts were, in fact, accessed without authorization, although TALX believes that only a small percentage of these potentially affected accounts were actually affected.”

ANALYSIS

Generally. Forensically. Exactly. Potentially. Actually. Lots of hand-waving from the TALX/Equifax suits. But Equifax should have known better than to rely on a simple PIN for a password, says Avivah Litan, a fraud analyst with Gartner Inc.

“That’s so 1990s,” Litan said. “It’s pretty unbelievable that a company like Equifax would only protect such sensitive data with just a PIN.”

Litan said TALX should have required customers to use stronger two-factor authentication options, such as one-time tokens sent to an email address or mobile device (as Equifax now says TALX is doing — at least with those we know were notified about possible employee account abuse).

The big consumer credit bureaus like Equifax, Experian, Innovis and Trans Union are all regulated by the Fair Credit Reporting Act (FCRA), which strives to promote accuracy, fairness and privacy for data used by consumer reporting agencies. But Litan said there are no federal requirements that credit bureaus use stronger authentication for access to consumer data — such as two-factor authentication.

“There’s about 500 percent more protection for credit card data right now than there is for identity data,” Litan said. “And yet I don’t know of one document from the federal government that spells out how these credit bureaus and other companies have to protect PII (personally identifiable information).” Continue reading →

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