A two-factor authentication system operated by Dutch bank ABN Amro has been compromised and money stolen from the online accounts of customers who fell for a phishing scam.
Two-factor authentication for online banking usually involves passwords and tokens which provide synchronised, constantly changing numbers to use as additional evidence of identity.
The security industry has promoted the tokens as a preventative measure against hacking for users of remote corporate or banking systems. However, experts have warned that they are still vulnerable to phishing attacks, where fraudulent emails lure recipients to bogus websites that are set up to gather security details.
Four customers who used two-factor authentication have been compensated by ABN Amro for undisclosed amounts taken from their bank accounts.
"We are taking this incident very seriously and, in addition to informing our clients, are also implementing all of the technical measures that are at our disposal to stop criminals in their tracks," said Johan van Hall of ABN Amro Netherlands. "Safe usage of home and office computers is an essential requirement for secure online banking, and we plan to remind our clients even more frequently and urgently than before of that fact."
Hackers sent the customers emails falsely claiming to be from ABN Amro. If recipients opened an attachment, software was installed on their machines without their knowledge. When customers visited their banking site, the software redirected them to a hacker-controlled mock site that requested their security details.
As soon as the hackers received these details they were able to log into a customer's account at the real ABN Amro site, before the expiry of the fob-generated number. They could then transfer the customer's money.
Security experts have warned that such "man in the middle" attacks cannot be prevented by security tokens.
At the E-Crime Congress in London last month, several experts spoke out about the limitations of the systems. "Even when all the banks have it [hackers] will still attack them," said Mikko Hypponen, chief research officer of security firm F-Secure, at the Congress. "We see them using 'man in the middle' already."
"There are a whole bunch of things that can go wrong with two-factor authentication," Ross Anderson, a professor of security engineering at Cambridge University, told the same conference. "Banks are resisting because their technical staff know that it will be expensive to introduce and will not be effective. Some banks will introduce it, it will be quickly broken and then quickly forgotten."
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