Feeds

Cambridge security boffins slam banking card readers

'Optimised to fail'

Top three mobile application threats

Card readers for online banking are inherently insecure, according to a new study by Cambridge security researchers.

Researchers Saar Drimer, Steven J Murdoch and Ross Anderson found a number of serious security shortcomings after reverse engineering the underlying protocol (called the Chip Authentication Programme or CAP) that underpins hand-held card readers. Readers are typically used alongside customer's debit cards to generate one-time codes for online banking login and transaction authentication.

The devices are designed to thwart online banking fraud, but cost-saving measures have resulted in design compromises that have left customers open to risk of fraud.

The researchers' paper, Optimised to Fail: Card readers for online banking, presented at the Financial Cryptography 2009 conference on Thursday, explains the efforts to reduce the cost to the banks and the amount of typing done by customers have created the sort of security shortcomings akin to the introduction of Chip & PIN.

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.

The research was carried out by reverse-engineer hand-held card readers from UK banks NatWest and Barclays. Cryptographic problems uncovered by the Cambridge team include "reusing authentication tokens, overloading data semantics, and failing to ensure freshness of responses".

The researchers' paper, which details suggestions for increasing the security of readers, can be found here (pdf).

Previous work by the same Cambridge researchers including unpicking the security short-comings of Chip and PIN terminals, which are used to authorise card purchases in retail environments. This research highlighted the absence of encryption in the data exchanged between PIN entry devices and cards during transactions. ®

Combat fraud and increase customer satisfaction

More from The Register

next story
Obama allows NSA to exploit 0-days: report
If the spooks say they need it, they get it
Heartbleed exploit, inoculation, both released
File under 'this is going to hurt you more than it hurts me'
Canadian taxman says hundreds pierced by Heartbleed SSL skewer
900 social insurance numbers nicked, says revenue watchman
German space centre endures cyber attack
Chinese code retrieved but NSA hack not ruled out
Burnt out on patches this month? Oracle's got 104 MORE fixes for you
Mass patch for issues across its software catalog
Reddit users discover iOS malware threat
'Unflod Baby Panda' looks to snatch Apple IDs
Oracle working on at least 13 Heartbleed fixes
Big Red's cloud is safe and Oracle Linux 6 has been patched, but Java has some issues
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.