US court: passwords reasonable security for online banking

Posted by   Virus Bulletin on   Jun 10, 2011

Security question considered second authentication factor.

A US court has declared that a combination of passwords and 'security questions' is an ample way for banks to protect their customers' online banking accounts.

In May 2009, Patco, a Maine-based construction company became infected with the 'Zeus' (or 'Zbot') trojan which stole the company's online banking credentials. Patco lost 350,000 US dollars plus interest and sued its bank, Ocean Bank, to recover its losses. It claimed that the bank did not live up to the terms in its contract by letting the user login with barely more than a username and a password.

The magistrate acknowledged that the bank's security could be improved upon, but said that, technically, it used 'multi-factor authentication' as outlined in 2005 by the Federal Financial Institutions Examination Council (FFIEC). It is unlikely, however, that many security experts will agree: all that was needed to transfer money to another account was a username, a password and the answer to a 'security question', all of which can easily be stolen by a keylogger. The judge ruled that Patco could not provide sufficient evidence to prove that a keylogger had indeed been used.

Ironically, it was a 'security enhancement' implemented by the bank in 2008 that made it easier for the crooks to obtain the answers to these security questions. Until then, the questions had only been asked for transfers that appeared 'suspicious'. Since 2008, customers have been required to answer the security question for every transfer.

The judge mentioned in his decision that there is zero case law on what constitutes reasonable security for banks; hence the recommendation by the magistrate, if followed by a US district court, could set an important precedent. The FFIEC was set to release an updated guidance last year which was supposed to clarify the multi-layered defences needed against contemporary banking malware. However, this update was never issued.

More at Brian Krebs's security blog here

Posted on 10 June 2011 by Virus Bulletin

 Tags

banking usa legal
twitter.png
fb.png
linkedin.png
hackernews.png
reddit.png

 

Latest posts:

VB2021 localhost videos available on YouTube

VB has made all VB2021 localhost presentations available on the VB YouTube channel, so you can now watch - and share - any part of the conference freely and without registration.

VB2021 localhost is over, but the content is still available to view!

VB2021 localhost - VB's second virtual conference - took place last week, but you can still watch all the presentations.

VB2021 localhost call for last-minute papers

The call for last-minute papers for VB2021 localhost is now open. Submit before 20 August to have your paper considered for one of the slots reserved for 'hot' research!

New article: Run your malicious VBA macros anywhere!

Kurt Natvig explains how he recompiled malicious VBA macro code to valid harmless Python 3.x code.

New article: Dissecting the design and vulnerabilities in AZORult C&C panels

In a new article, Aditya K Sood looks at the command-and-control (C&C) design of the AZORult malware, discussing his team's findings related to the C&C design and some security issues they identified.

We have placed cookies on your device in order to improve the functionality of this site, as outlined in our cookies policy. However, you may delete and block all cookies from this site and your use of the site will be unaffected. By continuing to browse this site, you are agreeing to Virus Bulletin's use of data as outlined in our privacy policy.