PayPal's second factor authentication (2FA) protection can be mitigated through mobile device interfaces that allow fraudsters to steal funds with a victim's username and password, Duo Security researchers say.
The bypass, crimped but not eradicated by client side patches, existed because the PayPal iOS and Android mobile app infrastructure could be tricked into ignoring the existence of 2FA controls in place on users accounts.
PayPal's apps did not support 2FA and generated error messages directing users to use the web site when users attempted to log into accounts with the protection measure in place.
Duo Labs senior security researcher Zack Lanier created a 2FA bypass Python script that tapped into two PayPal application programming interfaces which handled account authentication and money transfer.
"PayPal's two factor authentication is somewhat moot," Lanier said.
"As a broader point, two factor authentication is of course a really good thing, but implementation flaws like this give rise to vulnerabilities that really subvert and impact that strong protection."
Lanier found that the response sent from PayPal servers when mobile users attempted to log in could be manipulated to mark the existence of 2fa as false.
"We developed a proof-of-concept exploit to leverage this lack of 2fa enforcement, interfacing with the PayPal API directly and effectively mimicking the PayPal mobile app as though it were accessing a non-2FA account," he wrote in a disclosure post.
"The exploit communicates with two separate PayPal API services — one to authenticate (only with primary credentials), and another to transfer money to a destination account."
He told ThreatPost that attack destroyed the 2fa "warm and fuzzy" feeling and suggested public PayPal username and password account dumps could make enticing targets.
PayPal's work-around prevented the retrieval of user wallet data but did not squash the core bypass which remains open. The payment company planned to push a permanent fix later this week.
Complete technical details were available on the Duo Labs blog.
PayPal has contacted us to say:
"We want to emphasize that all PayPal accounts remain secure. The workaround identified by the researcher is related to an extra layer of security (2FA) some customers have chosen to add to their PayPal account. Customers who do not use the PayPal security key (physical card or SMS codes) as an additional step to log into their accounts are not impacted in any way."
It added, "If you have chosen to add 2FA to your PayPal account, your account also remains secure and 2FA will continue to operate as usual on the vast majority of PayPal product experiences. Even though 2FA is an additional layer of authentication, PayPal does not depend on 2FA to keep accounts secure."
PayPal said it has "disabled the ability" for customers that chose 2FA to log in to their PayPal account on the PayPal mobile app and on certain other mobile apps".
Punters can still Tog in to their PayPal account on a mobile device by visiting the PayPal mobile web site. ®