Recently a man sued AT&T because his one time password was sent to the wrong phone, causing him to lose $24M in “cryptocurrency.” To punish them, he asked for $200M in punitive damages. This led to headlines talking about the “dangers” of relying upon SMS to deliver one time passwords.
These are not so much ”dangers” as they are ”limitations.” ”Nothing useful can be said about the security of a mechanism except in the context of a specific application and environment.” All security measures have limitations. Perfect security has infinite cost; we must not let it become the enemy of good security.
While one time passwords, whether sent from the server or generated at the client, are orders of magnitude more secure than reusable passwords, they still have limitations. They must be properly associated with the user or his account. Like most security measures, and as in this case, this association is vulnerable to social engineering attacks.
Some of you may have tried to register a new SIM or move an existing phone number from one device to another. You can testify that it can be a pain; the carriers have stringent security procedures in place to resist fraudulent changes to your account. However, they have hundreds of agents handling provisioning requests and they are trained to be customer friendly. In pursuit of this, they can be expected to make mistakes. That is a limitation of using your phone and its number as part of your authentication scheme.
Note that if you do not get a one time password, or a phone call, or even a paper bank statement that you are expecting, you may have been compromised. Note also that the carriers are not the only targets of these ”social engineering” attacks. The attackers may try to get your account holder to change the phone number, e-mail or street address in your account record from your number to theirs. That is why responsible account holders will send you an out-of-band confirmation of all changes to your account record to both the old and the new address. Even hard tokens may be vulnerable to these attacks because the account holder must be able to respond to lost tokens by allowing you to register a new token. Again, not so much a danger as a limitation. Keep in mind that just twenty years ago, the scam was to request a postal address change.
While I use SMS for Google, Dropbox, PayPal, Amazon, my credit union, and my banks, I use a token for my brokerage and retrirement accounts. Note all of these offer me choice of SMS or tokens. ”Horses for courses.” Rest assured that I would not use SMS for $24M. In fact, I would never put all that in one account.
Even as users, we need to know the limitations of the things that we depend upon for security. As security professionals, responsible for choosing, applying, and operating these mechanisms, it is mandatory.