364 posts categorized "Data Breaches" Feed

Uber: Data Breach Affected 57 Million Users. Some Say A Post Breach Coverup, Too

Uber logo Uber is in the news again. And not in a good way. The popular ride-sharing service experienced a data breach affecting 57 million users. While many companies experience data breaches, regulators say Uber went further and tried to cover it up.

First, details about the data breach. Bloomberg reported:

"Hackers stole the personal data of 57 million customers and drivers... Compromised data from the October 2016 attack included names, email addresses and phone numbers of 50 million Uber riders around the world, the company told Bloomberg on Tuesday. The personal information of about 7 million drivers was accessed as well, including some 600,000 U.S. driver’s license numbers..."

Second, details about the coverup:

"... the ride-hailing firm ousted its chief security officer and one of his deputies for their roles in keeping the hack under wraps, which included a $100,000 payment to the attackers... At the time of the incident, Uber was negotiating with U.S. regulators investigating separate claims of privacy violations. Uber now says it had a legal obligation to report the hack to regulators and to drivers whose license numbers were taken. Instead, the company paid hackers to delete the data and keep the breach quiet."

Geez. Not tell regulators about a breach? Not tell affected users? 48 states have data breach notification laws requiring various levels of notifications. Consumers need notice in order to take action to protect themselves and their sensitive personal and payment information.

Third, Uber executives learned about the breach soon thereafter:

"Kalanick, Uber’s co-founder and former CEO, learned of the hack in November 2016, a month after it took place, the company said. Uber had just settled a lawsuit with the New York attorney general over data security disclosures and was in the process of negotiating with the Federal Trade Commission over the handling of consumer data. Kalanick declined to comment on the hack."

Reportedly, breach victims with stolen drivers license information will be offered free credit monitoring and identity theft services. Uber said that no Social Security numbers and credit card information was stolen during the breach, but one wonders if Uber and its executives can be trusted.

The company has a long history of sketchy behavior including the 'Greyball' worldwide program by executives to thwart code enforcement inspections by governments, dozens of employees fired or investigated for sexual harassment, a lawsuit descrbing how the company's mobile app allegedly scammed both riders and drivers, and privacy abuses with the 'God View' tool. TechCrunch reported that Uber:

"... reached a settlement with [New York State Attorney General] Schneiderman’s office in January 2016 over its abuse of private data in a rider-tracking system known as “God View” and its failure to disclose a previous data breach that took place in September 2014 in a timely manner."

Several regulators are investigating Uber's latest breach and alleged coverup. CNet reported:

"The New York State Attorney General has opened an investigation into the incident, which Uber made public Tuesday. Officials for Connecticut, Illinois and Massachusetts also confirmed they're investigating the hack. The New Mexico Attorney General sent Uber a letter asking for details of the hack and how the company responded. What's more, Uber appears to have broken a promise made in a Federal Trade Commission settlement not to mislead users about data privacy and security, a legal expert says... In addition to its agreement with the FTC, Uber is required to follow laws in New York and 47 other states that mandate companies to tell people when their drivers' license numbers are breached. Uber acknowledged Tuesday it had a legal requirement to disclose the breach."

The Financial Times reported that the U.K. Information Commissioner's Office is investigating the incident, along with the National Crime Agency and the National Cyber Security Centre. New data protection rules will go into effect in May, 2018 which will require companies to notify regulators within 72 hours of a cyber attack, or incur fines of up to 20 million Euro-dollars or 4 percent of annual global revenues.

Let's summarize the incident. It seems that a few months after settling a lawsuit about a data breach and its data security practices, the company had another data breach, paid the hackers to keep quiet about the breach and what they stole, and then allegedly chose not to tell affected users nor regulators about it, as required by prior settlement agreements, breach laws in most states, and breach laws in some international areas. Geez. What chutzpah!

What are your opinions of the incident? Can Uber and its executives be trusted?


Considerations For Consumers Affected By The Equifax Breach

Earlier this month, Discover sent me a replacement credit card. The letter with the replacement card stated:

"Notice of Data Breach
What happened: we recently learned your Discover card account might have been part of a data breach. Please know, this breach did not involve Discover card systems.
What we are doing to resolve: we are issuing you a new card with a new account number, security code, and expiration date to reduce the possibility of fraud on your account... So as a safety precaution, we are issuing you a new card to protect your Discover card account information from being misused"

Good. I like the proactive protection, and hope that the retailer absorbed the costs of replacement cards for all affected consumers like me. However, the letter from Discover didn't identify the retailer. I called Discover's customer service hotline. The phone representative wouldn't identify the retailer, either. I'd shopped at four retail stores during the past month, and assumed it was one of them. It wasn't.

Equifax logo On Saturday, I received via postal mail a breach notification letter from Equifax dated October 23, 2017:

"We are writing with regard to the cybersecurity incident Equifax announced on September 7, 2017. At Equifax, our priorities with regard to this incident are transparency and continuing to provide timely, reassuring support to every consumer. You are receiving this letter because the credit or debit card number used to pay for a freeze service, credit score, or disclosure of your Equifax credit file was accessed. We have no evidence that your credit file itself was accessed."

So, confirmation that it was Equifax's fault. What to make of this? Keep reading.

First, thanks Equifax for the postal mail notice. However, this isn't timely communication. Why? Equifax considers it's September 7th press release timely communication. How many consumers read Equifax press releases? Did you? My guess, most don't.

Thankfully, I read online newspapers and was aware of the breach soon after Equifax's September 7th announcement. Yet, my postal letter from Equifax arrived seven weeks after its September 7th press release (and almost three months after it first discovered the breach on July 29).  This incident is a reminder for consumers not to rely upon postal mail for breach notices. Many states' breach notice laws allow for companies to post public notices online in websites and/or in newspaper advertisements. This allows companies to skip (the expense of) mailing individual breach notices via postal mail.

The October 23rd Equifax breach letter also stated:

"On September 7, 2017, Equifax notified U.S. customers of the data security incident, including that 143 million U.S. consumers were impacted. On October 2, 2017, following the completion of the forensic portion of the investigation of the incident, Equifax announced that the review determined that approximately 2.5 million additional U.S. consumers were potentially impacted. Equifax also announced that credit card numbers for approximately 209,000 consumers and certain dispute documents, which included personal identifying information, for approximately 182, 000 consumers were accessed."

So, I am one of the "lucky" 209,000 consumers in the United States whose payment information was exposed stolen in addition to other sensitive personal information. Thanks Equifax for failing to protect my sensitive personal -- and payment -- information you are entrusted to protect.

Second, to upgrade earlier this year from slow, antiquated DSL to fiber broadband from Verizon, I used my credit card to pay for a temporary lift of the security freeze on my Equifax credit report. Why did Equifax retain my payment information for this transaction? Why did it retain that payment information in a complete and UN-encrypted format?

Discover's Frequently Asked Questions page for merchants advises merchants to do the following to protect consumers' highly sensitive payment card information:

"Tips for protecting customer information: a) Truncate all credit card information; b) Avoid storing CID data in your records or within sales data; c) Secure your site; d) Store data securely; e) Protect your data with firewalls; f) Limit authorized use and require passwords; g) Avoid storing customer or credit card information on your web server
Refer to your Merchant Operating Regulations for further card-not-present (CNP) requirements for the submission of sales."

So, it seems that Equifax failed to follow Discover's data security guidelines for merchants. (Browse privacy guidelines for merchants by other card issuers.) I do not have any ongoing services or subscriptions with Equifax, so there seems to be no need for it to retain my full credit card payment information. Not good. I called the Equifax customer service hotline. The phone representative could not explain why Equifax retained my payment information. Not good.

Third, Equifax failed to customize the letter for my situation. In 2008, I placed security freezes on my credit reports at Equifax, Experian, and TransUnion. So, Equifax already knows I have a security freeze in place, and failed to customize the letter accordingly. Rather than explain what applies to customers in my situation, instead the letter repeated the same general fraud-prevention advice for all consumers: how to contact the FTC, visit annualcreditreport.com for free copies of credit reports, file a police report if a victim of identity theft, place a fraud alert or security freeze on my credit reports for protections, and how to lift/remove an existing security freeze. Not good.

This was fast becoming a crappy customer experience.

Fourth, while on the phone with Equifax's customer service I asked if the TrustedID Premier credit monitoring service it ofered would work with the security freezes in place at all three credit reporting agencies. The phone representative said yes, but that the "credit file lock feature" would not work. What's that? According to the Equifax FAQ page:

"What is the difference between a credit file lock and a security freeze?
At their most basic level, both prevent new creditors from accessing your Equifax credit report, unless you give permission or take an action such as removing, unlocking or lifting the freeze or lock. Both a security freeze and a credit file lock help prevent a lender or other creditor from accessing a consumer’s credit report to open unauthorized new accounts.

  • Security freezes were created in the early 2000’s, are subject to regulation by each state and use a PIN based system for authentication.
  • Credit file locks were created more recently, are mobile-enabled and use modern authentication techniques, such as username and passwords and one-time passcodes for better user experience."

So, the "credit file lock" feature is new and different from a security freeze. The new feature allows mobile users to easily and quickly unlock/lock your Equifax credit reports. That seems beneficial for consumers needing frequent and quick access to credit. According to the FAQ page, the new feature will be "free, for life." The above description gives the impression that security freezes are antiquated.

To further understand this new feature, I visited the TrustedID Premier Privacy Policy page, which stated:

"The types of personal information we collect and share depend on the product or service you have with us. This information can include: Social Security number and credit card information; Payment history and transaction history; Credit scores and credit history"

The "depend on the product or service you have" seems vague and broad. Just tell me! Plus, "transaction history" could include geo-location: where you bought something since some purchases are made at brick-and-mortar retail stores. It could also include when and where you use the "credit file lock" feature. So, even though the policy doesn't explicitly mention geo-location data collection, it seems wise to assume that it does. For the new "credit file lock" feature to work on your phone, it probably needs to know your location -- where you and your phone are.

So, this new feature seems to be a slick way for Equifax to collect (and archive) location data about when, where, the duration, and frequency of consumers' travels in the physical world -- something it couldn't get previously through the traditional security freeze process. Remember, any app on your smartphone can collect location data.

Plus, the "credit file lock" feature won't work with a security freeze in place. According to the customer service representative, consumers need to remove a security freeze for the credit file lock feature to work. This is a new, important wrinkle which consumers must understand in order to make informed decisions.

The representative said it would be free to remove the security freeze on my Equifax credit report in order to use the new feature. I asked if the TrustedID Premier service Equifax offers would work with credit reports from Innovis. The rep said no. The duration of my phone call was long since the representative needed to place me on hold and check with others in order to answer my questions. This did not instill confidence.

Plus, this lengthy question-and-answer page about Equifax's services indicates that many consumers (and perhaps some Equifax customer service representatives) don't fully understand the differences between security freezes, credit file locks, and other service features.

Fifth, the letter from Equifax did not mention any of the new threats nor the additional protection steps consumers must take, both of which you can read about in this October 10th blog post. Even though I've written about privacy, data breaches and credit monitor for the past 10+ years, like you there are new things to learn. It seems that Equifax is hoping that breach victims will take the easy route: enroll in TrustedID Premier -- which is free for now, but will likely cost you later.

Overall, for me it was a crappy post-breach customer experience with Equifax. I expected better -- better data security and a better post-breach support. Plenty of news articles have documented the security problems, failures, and post-breach problems with Equifax's breach site.

What are your opinions? What do you think of the new credit file lock feature? If you've used it, share your experience in the comments section below the image.

Overview of features. TrustedID Premier service. Click to view larger version


Security Researcher Finds Unprotected Voter Files Online Affecting Up To 1.8 Million Chicagoans

While looking for unprotected data in cloud storage services, a security researcher found unprotected information for as many as 1.8 million voters in Chicago. CBS Chicago reported:

"It was Friday Aug. 11 in Silicon Valley. John Hendren, a marketing representative for IT security firm UpGuard, was looking for insecure data in the cloud. He randomly plugged in "Chicago … db," for “Chicago database,” and hit the jackpot. He found names, addresses, birth dates, driver’s license numbers and the last four digits of Social Security numbers for up to 1.8 million Chicago voters..."

How the breach happened:

"Chicago’s vendor is ES&S, out of Omaha, Nebraska. The company has been paid more than $5 million since 2014 by the Chicago Board of Elections. The company placed the data folder on Amazon Web Services (AWS) with the wrong security settings, Tom Burt, the firm’s CEO, recently told Chicago officials. Burt says managers missed the gaffe, and the database remained online for six months, until UpGuard found it. Company officials say they don’t believe the information ended up on the “dark web” for identity thieves to attain..."

The CBE's breach notice (Adobe PDF) provided a more complete list of the data elements exposed:

"... The personal information contained in the back-up files included voter names, addresses, and dates of birth, and many voters’ driver’s license and State ID numbers and the last four digits of Social Security numbers. Upon discovery of the Incident, ES&S promptly took the AWS server off-line, secured the back-up files, and commenced a forensics investigation. ES&S also hired two specialized third-party vendors to conduct searches to determine whether any personal information stored on the back-up files was available on the Dark Web. The results of ES&S’ investigations have not uncovered any evidence that any voter’s personal information stored on the AWS server was misused..."

This is bad for several reasons. First, the data elements exposed or stolen are enough for cyber criminals to do sufficient damage to breach victims. Second, just because the post-breach investigation didn't find misuse of data doesn't mean there wasn't any. It simply means they didn't find any misuse.

Third, it would be unwise to assume that the breach wasn't that bad because only the last 4 digits of Social Security numbers were exposed. Security researchers have known for a long time that Social Security numbers are easy to guess:

"... a crook need only figure out where and when you were born--information often easily found on social networking sites like Facebook--to guess your number in as few as 1000 tries... Social Security numbers were never meant to be used for widespread identification. They were conceived solely to track taxes and benefits... Every Social Security number starts with three digits known as an "area number." Smaller states might have only one, whereas New York, for example, has 85. The next two digits are "group numbers," which can be anything from 01-99, but don't correspond to anything specific. The last four digits, the "serial number," are assigned sequentially..."

So, it's long past time to stop using the last four digits of Social Security numbers as identification. Fourth, the incident makes one wonder when -- if ever -- the unprotected data folder would have been discovered by ES&S or CBE, if the security researcher hadn't found it. That's unsettling. It calls into question the security methods and managerial oversight at ES&S.

This isn't the first breach at the Chicago Board of Elections (CBE). A CBE breach in 2012 exposed the sensitive personal information of at least 1,000 voters, after initial reports estimated the number of affected voters at 1.7 million. Before that, the CBE faced several lawsuits in 2007 claiming negligence after:

"... it distributed more than 100 computer disks containing Social Security numbers and other personal data on more than 1.3 million voters to alderman and ward committee members."

Reportedly, in 2016 foreign cyber criminals hacked the Illinois Board of Elections' voter registration system. A similar attack happened in Arizona. The main takeaway: voter registration databases are high-value targets.

So, strong data security measures and methods seem wise; if not necessary. The latest incident makes one wonder about: a) the data security language and provisions in CBE's outsourcing contract with ES&S, and b) the agency's vendor oversight.

Will Chicago residents demand better data security? I hope so. What do you think?


Whole Foods Says Data Breach 'Resolved'

Whole Foods Market logo During the weekend, Whole Foods Markets announced in a customer notification update that it had "resolved" a recent data breach involving the unauthorized access of customers' payment information in certain stores. The customer notification update stated:

"Whole Foods Market has resolved the incident previously announced on September 28, 2017, involving unauthorized access of payment card information used at certain venues such as tap rooms and full table-service restaurants located within some stores. These venues use a different point of sale system than the company’s primary store checkout systems, and payment cards used at the primary store checkout systems were not affected. Whole Foods Market learned of the unauthorized access on September 23, 2017. The company conducted an investigation, obtained the help of a leading cyber security forensics firm, and contacted law enforcement. Whole Foods Market replaced these point of sale systems for payment card transactions and stopped the unauthorized activity..."

Reportedly, the breach included about 100 locations. The company operates about 473 stores nationwide.

The breach method used by criminals and the types of payment information accessed:

"The investigation determined that unauthorized software was present on the point of sale system at certain venues. The software copied payment card information—which could have included payment card account number, card expiration date, internal verification code, and cardholder name—of customers who used a payment card at these venues at dates that vary by venue but are no earlier than March 10, 2017 and no later than September 28, 2017."

Earlier this year, Amazon acquired Whole Foods for about $13.7 billion. Whole Foods said that Amazon.com systems do not connect to the payment systems at Whole Foods stores, and that transactions on the Amazon.com site were not affected. An October 20, 2017 press release repeated most of the same information as the customer notification.

Besides the replacement of affected point-of-sale terminals, the customer notification did not elaborate about exactly how the breach was "resolved," how the malware was installed in the terminals, nor how the resolution will keep this type of breach from happening again. Often, a resolution includes the hardening of certain computer systems, improved malware detection software, improved managerial oversight, and/or the training of employees. This seems especially important for retail stores with multiple, exposed payment terminals.

Within the Whole Foods website, its September 28, 2017 press release headline links to the same October 20th customer information update. It seems the company deleted the September press release. Why do this? It makes it difficult for readers to determine what's new or changed since the September 28 disclosure.

Plus, hacking details matter. As readers of this blog know, unattended, free-standing payment terminals in retail stores have long been high-value targets for criminals armed with skimming devices. Was the malware introduced locally (e.g., manually by a person) at each terminal or centrally through the company's computer network? Sadly, the update did not explain. Hopefully, future updates will.

Until then, it's hard for customers to trust that the breach was fully "resolved." Replacing the affected terminals is no guarantee that the malware won't be re-introduced into the replacement terminals. If I continue to shop there, I'll use cash. What do you think?


Equifax Reported 15.2 Million Records Of U.K. Persons Exposed

Equifax logo Yesterday, Equifax's United Kingdom (UK) unit released a press release about the credit reporting agency's massive data breach and the number of breach victims. A portion of the statement:

"It has always been Equifax’s intention to write to those consumers whose information had been illegally compromised, but it would have been inappropriate and irresponsible of us to do so before we had absolute clarity on what data had been accessed. Following the completion of an independent investigation into the attack, and with agreement from appropriate investigatory authorities, Equifax has begun corresponding with affected consumers.

We would like to take this opportunity to emphasize that Equifax correspondence will never ask consumers for money or cite personal details to seek financial information, and if they receive such correspondence they should not respond. For security reasons, we will not be making any outbound telephone calls to consumers. However, customers can call our Freephone number on 0800 587 1584 for more information.

Today Equifax can confirm that a file containing 15.2m UK records dating from between 2011 and 2016 was attacked in this incident. Regrettably this file contained data relating to actual consumers as well as sizeable test data-sets, duplicates and spurious fields... we have been able to place consumers into specific risk categories and define the services to offer them in order to protect against those risks and send letters to offer them Equifax and third-party safeguards with instructions on how to get started. This work has enabled us to confirm that we will need to contact 693,665 consumers by post... The balance of the 14.5m records potentially compromised may contain the name and date of birth of certain UK consumers. Whilst this does not introduce any significant risk to these people Equifax is sorry that this data may have been accessed."

Below is the tabular information of risk categories from the Equifax UK announcement:

Consumer groups Remedial action
12,086 consumers who had an email address associated with their Equifax.co.uk account in 2014 accessed

14,961 consumers who had portions of their Equifax.co.uk membership details such as username, password, secret questions and answers and partial credit card details - from 2014 accessed

29,188 consumers who had their driving license number accessed

We will offer Equifax Protect for free. This is an identity protection service which monitors personal data. Products and services from third party organizations will also be offered at no cost to consumers. In addition to the services set-out above, further information will be outlined in the correspondence.

637,430 consumers who had their phone numbers accessed Consumers who had a phone number accessed will be offered a leading identity monitoring service for free.

Some observations seem warranted.

First, the announcement was vague about whether the 15.2 million U.K. persons affected were included in the prior breach total, or in addition to the prior total. Second, the U.K. unit will send written breach notices to all affected consumers via postal mail, while the U.S. unit refused. The U.K. unit did the right thing, so their users are confused by and don't have to access a hastily built site to see if they were affected.

Third, given the data elements stolen some U.K. breach victims are vulnerable to additional frauds and threats like breach victims in the USA.

Kudos to the Equifax U.K. unit for the postal breach notices and for clearly stating the above risk categories.


Consequences And New Threats From The Massive Equifax Breach

Equifax logo To protect themselves and their sensitive information, many victims of the massive Equifax data breach have signed up for the free credit monitoring and fraud resolution services Equifax arranged. That's a good start. Some victims have gone a step further and placed Fraud Alerts or Security Freezes on their credit reports at Equifax, Experian, and TransUnion. That's good, too. But, is that enough?

The answer to that question requires an understanding of what criminals can do with the sensitive information accessed stolen during the Equifax breach. Criminals can commit types of fraud which credit monitoring, credit report alerts, and freezes cannot stop. Consumer Reports (CR) explained:

"Freezing your credit report specifically at Equifax will also prevent crooks from registering as you at the government website, my Social Security, and block them from attempting to steal your Social Security benefits. But taking these steps won't protect you against every identity fraud threat arising from the Equifax data breach."

Sadly, besides credit and loan fraud the Equifax breach exposed breach victims to tax refund fraud, health care fraud, and driver's license (identity) fraud. This is what makes the data breach particularly nasty. CR also listed the data elements criminals use with each type of fraud:

"With your Social Security number, crooks can file false income tax returns in your name, take bogus deductions, and steal the resulting refund. More than 14,000 fraudulent 2016 tax returns, with $92 million in unwarranted refunds, were detected and stopped by the Internal Revenue Service (IRS) as of last March... Data from the Equifax breach can be used to steal your benefits from private health insurance, Medicare, or Medicaid when the identity thief uses your coverage to pay for his own medical treatment and prescriptions... Using your driver’s license number, identity thieves can create bogus driver’s licenses and hang their moving violations on you...."

The CR article suggested several ways for consumers to protect themselves from each type of fraud: a) request an Identity Protection PIN number from the IRS; b) request copies of your medical file from your providers and review your MIB Consumer File each year; and c) request a copy of your driving license record and get your free annual consumer report from ChexSystemsCertegy, and TeleCheck -  the three major check verification companies.

Never considered reviewing your tax account with the IRS? You can. Never heard of a Consumer MIB File? I'm not surprised. Most people haven't. I encourage consumers to read the entire CR article. While at the CR site, read their review of TrustedID Premier service which Equifax arranged for breach victims. It's an eye-opener.

Do these solutions sound like a lot of preventative work? They are. You have Equifax to thank for that. Will Equifax help breach victims with the time and effort required to research and implement the solutions CR recommended? Will Equifax compensate breach victims for the costs incurred with these solutions? These are questions breach victims should ask Equifax and TrustedID Premier.

Consumers and breach victims are slowly learning the consequences of a data breach are extensive. The consequences include time, effort, money, and aggravation. You might say breach victims have been mugged. Worse, consumers are saddled the burden from the consequences. That isn't fair. The companies making money by selling consumers' credit reports and information should be responsible for the burdens. Things are out of balance.

What are your opinions?


Update: All Yahoo Accounts Hacked During Its Data Breach in 2013

Verizon Oath logo Yahoo, now within Verizon's Oath business unit, announced on Tuesday an update in the the number of accounts hacked during its massive data breach in 2013. The announcement stated:

"... [Yahoo] is providing notice to additional user accounts affected by an August 2013 data theft previously disclosed by the company on December 14, 2016. At that time, Yahoo disclosed that more than one billion of the approximately three billion accounts existing in 2013 had likely been affected... Subsequent to Yahoo's acquisition by Verizon, and during integration, the company recently obtained new intelligence and now believes, following an investigation with the assistance of outside forensic experts, that all Yahoo user accounts were affected by the August 2013 theft... Yahoo is sending email notifications to the additional affected user accounts..."

That's 3 billion accounts hacked! It almost boggles the mind. Consumers with questions should also visit the Yahoo 2013 Account Security Page which has been updated with information released this week. Key information about the breach and consumers' data stolen:

"On December 14, 2016, Yahoo announced that, based on its analysis of data files provided by law enforcement, the company believed that an unauthorized party stole data associated with certain user accounts in August 2013... the stolen user account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords and, in some cases, encrypted or un-encrypted security questions and answers. The investigation indicates that the information that was stolen did not include passwords in clear text, payment card data, or bank account information. Payment card data and bank account information are not stored in the system the company believes was affected... No additional notifications regarding the cookie forging activity are being sent in connection with this update..."

Obviously, affected users should change their passwords, security questions, and security answers -- if they haven't already. Some consumers are confused about whether e-mail breach announcements they have received are authentic and truly from Yahoo. The tech company advised:

"... email from Yahoo about this issue will display the Yahoo icon Purple Y icon when viewed through the Yahoo website or Yahoo Mail app. Importantly, the email does not ask you to click on any links or contain attachments and does not request your personal information. If an email you received about this issue prompts you to click on a link, download an attachment, or asks you for information, the email was not sent by Yahoo and may be an attempt to steal your personal information. Avoid clicking on links or downloading attachments from such suspicious emails."

Uncertain users should also check the official Yahoo breach notices by country. In June of this year, Verizon completed its acquisition of Yahoo! Inc. and announced then:

"Verizon has combined these assets with its existing AOL business to create a new subsidiary, Oath, a diverse house of more than 50 media and technology brands that engages more than a billion people around the world. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, BUILD Studios, Yahoo Finance, Yahoo Mail and more, with a mission to build brands people love."

Reportedly, the Oath portfolio will include products, services, and apps covering content partnerships, virtual reality (VR), artificial intelligence (AI), and the Internet of Things (IoT).

In March of this year, the U.S. Department of Justice announced the indictment by a grand jury of four defendants, including two officers of the Russian Federal Security Service (FSB), for computer hacking, economic espionage and other criminal offenses related to the massive hack of millions of Yahoo webmail accounts.

The announcement this week by Yahoo is a reminder of the importance of post-breach investigations and how long these investigations can take to uncover complete details about the hack. It is unwise to assume that everything is known at the time of the initial breach notification. It is also unwise to assume that companies can immediately improve their data security and systems after a massive breach.


Equifax: 2.5 Million More Persons Affected By Massive Data Breach

Equifax logo Equifax disclosed on Monday, October 2, that 2.5 more persons than originally announced were affected by its massive data breach earlier this year. According to the Equifax breach website:

"... cybersecurity firm Mandiant has completed the forensic portion of its investigation of the cybersecurity incident disclosed on September 7 to finalize the consumers potentially impacted... The completed review determined that approximately 2.5 million additional U.S. consumers were potentially impacted, for a total of 145.5 million. Mandiant did not identify any evidence of additional or new attacker activity or any access to new databases or tables. Instead, this additional population of consumers was confirmed during Mandiant’s completion of the remaining investigative tasks and quality assurance procedures built into the investigative process."

The September breach announcement said that persons outside the United States may have been affected. The October 2nd update addressed that, too:

"The completed review also has concluded that there is no evidence the attackers accessed databases located outside of the United States. With respect to potentially impacted Canadian citizens, the company previously had stated that there may have been up to 100,000 Canadian citizens impacted... The completed review subsequently determined that personal information of approximately 8,000 Canadian consumers was impacted. In addition, it also was determined that some of the consumers with affected credit cards announced in the company’s initial statement are Canadian. The company will mail written notice to all of the potentially impacted Canadian citizens."

So, things are worse than originally announced in September: more United States citizens affected, fewer Canadian citizens affected overall but more Canadians' credit card information exposed, and we still don't know the number of United Kingdom residents affected:

"The forensic investigation related to United Kingdom consumers has been completed and the resulting information is now being analyzed in the United Kingdom. Equifax is continuing discussions with regulators in the United Kingdom regarding the scope of the company’s consumer notifications...

And, there's this statement by Paulino do Rego Barros, Jr., the newly appointed interim CEO (after former CEO Richard Smith resigned):

"... As this important phase of our work is now completed, we continue to take numerous steps to review and enhance our cybersecurity practices. We also continue to work closely with our internal team and outside advisors to implement and accelerate long-term security improvements..."

To review? That means Equifax has not finished the job of making its systems and websites more secure with security fixes based upon how the attackers broke in, which identify attacks earlier, and which prevent future breaches. As bad as this sounds, the reality is probably worse.

After testimony before Congress by former Equifax CEO Richard Smith, Wired documented "six fresh horrors" about the breach and the leisurely approach by the credit reporting agency's executives. First, this about the former CEO:

"... during Tuesday's hearing, former CEO Smith added that he first heard about "suspicious activity" in a customer-dispute portal, where Equifax tracks customer complaints and efforts to correct mistakes in their credit reports, on July 31. He moved to hire cybersecurity experts from the law firm King & Spalding to start investigating the issue on August 2. Smith claimed that, at that time, there was no indication that any customer's personally identifying information had been compromised. As it turns out, after repeated questions from lawmakers, Smith admitted he never asked at the time whether PII being affected was even a possibility. Smith further testified that he didn't ask for a briefing about the "suspicious activity" until August 15, almost two weeks after the special investigation began and 18 days after the initial red flag."

Didn't ask about PII? Geez! PII describes the set of data elements which are the most sensitive information about consumers. It's the business of being a credit reporting agency. Waited 2 weeks for a briefing? Not good either. And, that is a most generous description since some experts question whether the breach actually started in March -- about four months before the July event.

Wired reported the following about Smith's Congressional testimony and the March breach:

"Attackers initially got into the affected customer-dispute portal through a vulnerability in the Apache Struts platform, an open-source web application service popular with corporate clients. Apache disclosed and patched the relevant vulnerability on March 6... Smith said there are two reasons the customer-dispute portal didn't receive that patch, known to be critical, in time to prevent the breach. The first excuse Smith gave was "human error." He says there was a particular (unnamed) individual who knew that the portal needed to be patched but failed to notify the appropriate IT team. Second, Smith blamed a scanning system used to spot this sort of oversight that did not identify the customer-dispute portal as vulnerable. Smith said forensic investigators are still looking into why the scanner failed."

Geez! Sounds like a managerial failure, too. Nobody followed up with the unnamed persons responsible for patching the portal? And Equifax executives took a leisurely (and perhaps lackadaisical) approach to protecting sensitive information about consumers:

"When asked by representative Adam Kinzinger of Illinois about what data Equifax encrypts in its systems, Smith admitted that the data compromised in the customer-dispute portal was stored in plaintext and would have been easily readable by attackers... It’s unclear exactly what of the pilfered data resided in the portal versus other parts of Equifax’s system, but it turns out that also didn’t matter much, given Equifax's attitude toward encryption overall. “OK, so this wasn’t [encrypted], but your core is?” Kinzinger asked. “Some, not all," Smith replied. "There are varying levels of security techniques that the team deploys in different environments around the business."

Geez! So, we now have confirmation that the "core" information -- the most sensitive data about consumers -- in Equifax's databases is only partially encrypted.

Context matters. In January of this year, the Consumer Financial Protection Bureau (CFPB) took punitive action against TransUnion and Equifax for deceptive marketing practices involving credit scores and related subscription services. That action included $23.1 million in fines and penalties.

Thanks to member of Congress for asking the tough questions. No thanks to Equifax executives for taking lackadaisical approaches to data security. (TransUnion, Innovis, and Experian executives: are you watching? Learning what mistakes not to repeat?) Equifax has lost my trust.

Until Equifax hardens its systems (I prefer NSA-level hardness), it shouldn't be entrusted with consumers' sensitive personal and payment information. Consumers should be able to totally opt out of credit reporting agencies that fail with data security. This would allow the marketplace to govern things and stop the corporate socialism benefiting credit reporting agencies.

What are your opinions?

[Editor's note: this post was amended on October 7 with information about the CFPB fines.]


Bloomberg: Equifax Had A Data Breach In March, Too. More Questions Result

Equifax logo According to news reports, Equifax experienced another data breach earlier this year before the massive data breach it announced on September 7th where criminals gained unauthorized access to Equifax's systems and computers from May through then end of July, 2017. Bloomberg reported:

"Equifax Inc. learned about a major breach of its computer systems in March -- almost five months before the date it has publicly disclosed, according to three people familiar with the situation... Equifax hired the security firm Mandiant on both occasions and may have believed it had the initial breach under control, only to have to bring the investigators back when it detected suspicious activity again on July 29, two of the people said..."

Two major data breaches? What's happening? A news report by Bank Info Security may clarify things:

"... the Bloomberg story is "attempting to connect two separate cybersecurity events and suggesting the earlier event went unreported." Instead, Equifax says the breach described by Bloomberg was a "security incident involving a payroll-related service." The incident, which Equifax refers to as the "March event," was reported to customers, affected individuals and regulators, as well as covered by the media, it says. "Mandiant has investigated both events and found no evidence that these two separate events or the attackers were related."

Equifax appears to refer a breach involving TALX its payroll, human resources, and tax services subsidiary formally known as Equifax Workforce Solutions. The Bank Info Security news report explained:

"In early March, Equifax began notifying individuals whose employers use TALX for payroll services that it had detected unauthorized access to its web-based portal. Employees use the TALX portal to access their W-2, which is the annual income reporting form that U.S. employees need to file their federal tax return. That's also a key document for fraudsters, because it puts them one step closer to being able to fraudulently file and claim a tax refund in someone else's name.

In the March attack, hackers had luck accessing TALX accounts by guessing registered users' personal questions, according to Equifax's breach notifications. By answering the questions correctly, fraudsters were able to reset a PIN needed to access an account. With the fresh PIN, they were able to obtain an electronic copy of victims' W-2. The unauthorized access incidents occurred between April 17, 2016, and March 29, 2017, Equifax says..."

It's frightening that the TALX breach went undetected for almost a year. Also, the Krebs On Security blog reported in May about the Equifax-TALX breach. However, the Bloomberg news report explored another hacking method criminals might have used in March:

"... one goal of the attackers was to use Equifax as a way into the computers of major banks, according to a fourth person familiar with the matter. This person said a large Canadian bank has determined that hackers claiming to sell celebrity profiles from Equifax on the dark web -- information that appears to be fraudulent, or recycled from other breaches -- did in fact steal the username and password for an application programming interface, or API, linking the bank’s back-end servers to Equifax.

According to the person and a Sept. 14 internal memo reviewed by Bloomberg, the gateway linked a test and development site used by the bank’s wealth management division to Equifax, allowing the two entities to share information digitally."

So, there was a breach in March. Was it the TALX hack, the hack via a bank, both, or something else? If the Bloomberg report is accurate, then the post-breach consequences listed probably apply:

"... will complicate the company’s efforts to explain a series of unusual stock sales by Equifax executives. If it’s shown that those executives did so with the knowledge that either or both breaches could damage the company, they could be vulnerable to charges of insider trading... New questions about Equifax’s timeline are also likely to become central to the crush of lawsuits being filed against the Atlanta-based company. Investigators and consumers alike want to know how a trusted custodian of so many Americans’ private data could let hackers gain access to the most important details of financial identity... the revelation of an earlier breach will likely raise questions for the company’s beleaguered executives over whether that [March] investigation was sufficiently thorough or if it was closed too soon. For example, Equifax has said that the hackers entered the company’s computer banks the second time through a flaw in the company’s web software that was known in March but not patched until the later activity was detected in July."

If true, then consumers are left with more questions: which bank(s)? What fixes have been implemented so this doesn't happen again? Why wasn't this disclosed sooner? How many consumers were affected? Exactly how did the hackers gain access? Was it the same or a different group of hackers? Which consumers' data elements were accessed/stolen?

The cynic in me wonders if Equifax executives are using its TALX breach as cover -- to avoid having to admit to another massive (and embarrassing) data breach.

Regardless of which news report is accurate, there are plenty of reasons for consumers to feel uneasy about Equifax's breach(es), data security protections, and breach notifications. Equifax is a custodian of extremely valuable and sensitive information about consumers. It makes money selling that information to potential lenders, and consumers have a right to have their questions answered fully.

Maybe the various investigations and inquiry by 31 states will provide answers for consumers. Or maybe Congress needs to hold hearings. It's been done before. What do you think?


31 States Sent Joint Letter Demanding Equifax Provide Free Services And Better Support For Consumers

On Friday, September 15, the attorneys general in several states sent a joint letter to Equifax as a result of the credit reporting agency's response to a massive data breach affecting about 143 million persons in the United States. The participating attorneys general are concerned about the impacts and costs to consumers. They want Equifax to respond better to the needs of consumers, extend the duration of the sign-up period for breach victims, and waive the fees of certain services. Perhaps most importantly, they are concerned about Equifax benefiting unjustly due to a situation it created.

The joint letter explained:

"... Chief among the issues causing confusion and concern are the inclusion of terms of service that required consumers to waive their rights, the offer of competing fee-based and free credit monitoring services by Equifax, and the charges consumers incur for a security freeze with other credit monitoring companies like Experian, TransUnion, and Innovis.

Initially, in order to enroll in the free credit monitoring that Equifax offered to all Americans, it appeared that Equifax attached certain conditions to the offer, including mandatory arbitration, among other things. The fact that Equifax’s own conduct created the need for these services demands that they be offered to consumers without tying the offer to complicated terms of service that may require them to forgo certain rights. It was not until after urging from our offices and public condemnation that Equifax withdrew these objectionable terms from its offer of free credit monitoring.

We remain concerned that Equifax continues to market its fee-based services to consumers affected by its data breach. Consumers who view Equifax’s homepage are offered both Equifax fee-based credit monitoring services, as well as its services offered at no cost. Again, at the urging of our offices and following criticism in the media, Equifax made its offer of free credit monitoring services more prominent so that it can be more easily found by consumers. Although these changes are an improvement over the site’s original offering, which presented a much less prominent link when compared to Equifax’s fee-based offering, they do not address all of our concerns.

We believe continuing to offer consumers a fee-based service in addition to Equifax’s free monitoring services will serve to only confuse consumers who are already struggling to make decisions on how to best protect themselves in the wake of this massive breach. We object to Equifax seemingly using its own data breach as an opportunity to sell services to breach victims. Selling a fee-based product that competes with Equifax’s own free offer of credit monitoring services to victims of Equifax’s own data breach is unfair, particularly if consumers are not sure if their information was compromised.

Equifax cannot reap benefits from confused consumers who are likely only visiting Equifax’s homepage because they are concerned about whether the breach affects them and their families. If there is any substantial benefit consumers can obtain by purchasing the fee-based services over the free credit monitoring, then we strongly suggest that Equifax upgrade its free credit monitoring service to provide equivalent protection. On the other hand, if the services are equivalent, then we fail to understand why Equifax continues to offer its fee-based services to those affected by the breach if equivalent services are obtainable at no cost. Either way, we request that Equifax disable links to its fee-based services until the sign-up period for the free service has ended. Additionally, the cutoff date of November 21, 2017 for consumers to avail themselves of the free services provided appears to us to be rather short-sighted and we suggest that date be extended to at least January 31, 2018.

Our offices are also receiving complaints from proactive consumers who have requested a security freeze. Although Equifax is not charging consumers a fee for its own security freeze service, these consumers are furious that they have been forced to pay for a security freeze with other companies, such as Experian and TransUnion, when this privacy breach was no fault of their own. We agree with these consumers that it is indefensible that they be forced to pay fees to fully protect themselves from the fallout of Equifax’s data breach.

Accordingly, we believe Equifax should, at a minimum, be taking steps to reimburse consumers who incur fees to completely freeze their credit..."

The participating attorneys general are from Alabama, Arizona, Connecticut, Delaware, Georgia, Hawaii, Illinois, Idaho, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, North Dakota, Oklahoma, Ohio, Oregon, South Carolina, South Dakota, Pennsylvania, Virginia, West Virginia, and the District of Columbia. Read the announcement by Christopher S. Porrino, the State of New Jersey Attorney General. A copy of the joint letter is also available here (Adobe PDF).


The Equifax Breach: Several Investigations Underway

The Office of the Attorney General (AG) for the State of Nevada announced yesterday an investigation into the Equifax data breach. About 143 million persons were affected. The announcement stated:

"The breach, which took place from mid-May through July of this year, neglected to keep important personal identifying information safe and allowed hackers to access names, Social Security numbers, birth dates, addresses and even some driver’s license numbers. As a result of this breach, approximately 209,000 individuals throughout the country are estimated to have had their credit card numbers stolen."

Nevada AG Adam Paul Laxalt said:

"As a part of my commitment to safeguard the identities and personal information of Nevadans, my office will be working diligently with other states to investigate the cause of the Equifax breach... I encourage Nevadans to contact Equifax to determine whether their data was compromised, and to consider taking additional steps to protect themselves."

The statement did not mention the other states the Nevada AG's Office is working with. Residents of Nevada should read the announcement which lists specific actions consumers in that state should take to protect themselves.

The Attorney General for the State of New York announced on September 8 both an investigation into the Equifax data breach and a consumer alert:

"Under New York law, businesses with New York customers are required to inform customers and the Attorney General’s Office about security breaches that have placed personal information in jeopardy. The Attorney General’s Office investigates data breaches to determine if customers were properly notified of the breach and if the entity had appropriate safeguards in place to protect customers’ data..."

The consumer alert portion of the announcement:

"1) Check your credit reports from Equifax, Experian, and TransUnion by visiting annualcreditreport.com. Accounts or activity that you do not recognize could indicate identity theft. This is a free service; 2) Consider placing a credit freeze on your files. A credit freeze makes it harder for someone to open a new account in your name. It will not prevent a thief from using any of your existing accounts; 3) Monitor your existing credit card and bank accounts closely for unauthorized charges. Call the credit card company or bank immediately about any charges you do not recognize; and 4) Since Social Security numbers were affected, there is risk of tax fraud. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Consider filing your taxes early and pay close attention to correspondence from the IRS."

Annulacreditreport.com is the official site for free credit reports.  The U.S. Federal Trade Commission (FTC) issued new rules in 2010 which addressed consumer confusion in the marketplace about sites offering free credit reports. When using unofficial sites, some consumers found the "free" credit reports weren't truly free because they included expensive subscriptions to credit monitoring services.

On September 11, the New York AG's issued a warning about cyber attacks resulting from the Equifax breach:

"In addition to taking measures to protect their credit cards and bank accounts, New Yorkers should also think twice before clicking on any suspicious [e-mail] links claiming to be from Equifax or financial institutions... Hackers are resourceful criminals who are constantly looking to exploit any vulnerabilities... New Yorkers should be on the lookout for these possible attacks: a) Phishing emails that claim to be from Equifax where you can check if your data was compromised; b) Phishing emails that claim there is a problem with a credit card, your credit record, or other personal financial information; c) Calls from scammers that claim they are from your bank or credit union..."

Also, the Los Angeles Times confirmed an investigation by the U.S. Federal Trade Commission (FTC):

"The FTC’s disclosure of an ongoing probe is highly unusual, underscoring the enormous stakes involved in the incident affecting what amounts to half the country."

The news report cited comments by Peter Kaplan, the agency’s acting director of public affairs. So far, little is known which aspects of the breach the FTC is investigating.

No doubt, there is more news to come.


Equifax Data Breach: 11 Reasons Why It Is Worse Than You Think

Equifax logo Equifax, one of the three major credit reporting agencies, announced on September 7 a massive data breach where criminals accessed the company's computer systems. How bad is it? It is instructive to analyze the text of Equifax's breach announcement:

"... a cybersecurity incident potentially impacting approximately 143 million U.S. consumers. Criminals exploited a U.S. website application vulnerability to gain access to certain files. Based on the company's investigation, the unauthorized access occurred from mid-May through July 2017. The company has found no evidence of unauthorized activity on Equifax's core consumer or commercial credit reporting databases.

The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver's license numbers. In addition, credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed."

First, this is huge. Do the math 143 million persons is about 44 percent of the United States population of 325 million on July 4, 2017. So, almost half of the population was affected. Not good. But, there's more to this than size.

Second, the announcement stated "approximately." So, the true number could be lower or higher. The vagueness suggests that Equifax doesn't really know exactly how many consumers were affected. Not good. And, other details support this assumption that Equifax really doesn't know.

Third, the announcement stated "accessed." During the 10+ years I've written this blog, I've read dozens or hundreds of breach announcements. Many use this term. While the term may accurately describe what's Equifax knows, it also can be misleading. Criminals don't access companies' systems simply to window-shop or read files. They access systems to download and steal valuable information they can either use to make money, or resell to others. It's what online criminals do.

Fourth, the data elements accessed stolen allow criminals to do a lot of damage. That might include: a) obtain fraudulent loans or credit in breach victims' names; b) impersonate breach victims (it's called pretexting) to access online accounts; c) with online access withdraw money from victims' bank accounts; and much more. With online access, criminals can change passwords and take over victims' accounts effectively locking out victims.

Fifth, the breach investigation isn't finished:

"Equifax discovered the unauthorized access on July 29 of this year and acted immediately to stop the intrusion. The company promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted. Equifax also reported the criminal access to law enforcement and continues to work with authorities. While the company's investigation is substantially complete, it remains ongoing and is expected to be completed in the coming weeks."

The announcement didn't state when Equifax expected the investigation to be finished. Days? Weeks? Months? Not good.

Equifax hired an outside, independent technology firm to investigate its breach. That's what companies usually do during their post-breach response. This tiny bit of good news is quickly overshadowed by the bad. Without a completed breach investigation, Equifax can't really know whether the breach was caused by a technical systems problem, employee error, management oversight lapses, a sloppy or incompetent subcontractor, something else, or a combination of items. Only after a completed breach investigation can Equifax implement one or several fixes so this won't happen again. Not good.

Sixth, without knowing how criminals accessed their systems it is unlikely Equifax also can't know with certainty what data elements about consumers were stolen. More data elements could have been stolen, perhaps entire credit reports. Not good.

Seventh, it seems that Equifax's intrusion detection systems failed. Just look at the timeline. The breach started in mid-May and Equifax discovered it near the end of July. So, criminals had at least 2 full months to steal whatever they could find. Not good. Plus, after discovering the breach it would take Equifax another 5 weeks later to announce it. Why the delays? The breach announcement doesn't explain why. Not good.

Eighth, Equifax seems to take shortcuts with its breach notification:

"Equifax has established a dedicated website, www.equifaxsecurity2017.com, to help consumers determine if their information has been potentially impacted and to sign up for credit file monitoring and identity theft protection."

Setting up a website to convey breach updates to consumers is a good thing, but using the site to notify consumers about the breach is not good for two reasons: a) the site requires consumers to enter many of the same sensitive, valuable data elements criminals want to steal; and b) it forces consumers to trust that the breach site is secure, when we know that the breach investigation is incomplete. This is a breach notification failure.

In the 10+ years I've written this blog, trustworthy companies notify breach victims via postal mail. Why won't Equifax notify all breach victims directly via postal mail? It has consumers' residential addresses in its databases. (That is a benefit for its lending customers.) So, the lack of data is not an excuse. Plus, the credit reporting agency is willing to notify some consumers directly:

"In addition to the website, Equifax will send direct mail notices to consumers whose credit card numbers or dispute documents with personal identifying information were impacted."

Rather than notify all breach victims directly, Equifax seems to want to take shortcuts. Maybe it is to save money, laziness, or poor decisions by its executives. The announcement doesn't explain why, so consumers are left to draw their own conclusions. Not good.

Ninth, technologists have questioned the security of Equifax's new breach site. Ars Technica reported:

"... the website www.equifaxsecurity2017.com/, which Equifax created to notify people of the breach, is highly problematic for a variety of reasons. It runs on a stock installation WordPress, a content management system that doesn't provide the enterprise-grade security required for a site that asks people to provide their last name and all but three digits of their Social Security number. The TLS certificate doesn't perform proper revocation checks. Worse still, the domain name isn't registered to Equifax, and its format looks like precisely the kind of thing a criminal operation might use to steal people's details..."

Reportedly, the domain name registration problem was fixed on Sunday. Still, Equifax's post-breach response appears amateurish. Meanwhile, data security problems persisted in its main website. According to Ars Technica:

"... in the hours immediately following the breach disclosure, the main Equifax website was displaying debug codes, which for security reasons, is something that should never happen on any production server, especially one that is a server or two away from so much sensitive data. A mistake this serious does little to instill confidence company engineers have hardened the site against future devastating attacks."

So, Equifax hasn't completed its breach investigation, doesn't know how its systems were hacked, has vulnerabilities in its main site, but wants consumers to trust that its breach site is secure. Not good.

Tenth, the Equifax announcement promoted its credit monitoring service (emphasis added):

"Equifax has established a dedicated website... to help consumers determine if their information has been potentially impacted and to sign up for credit file monitoring and identity theft protection. The offering, called TrustedID Premier, includes 3-Bureau credit monitoring of Equifax, Experian and TransUnion credit reports; copies of Equifax credit reports; the ability to lock and unlock Equifax credit reports; identity theft insurance; and Internet scanning for Social Security numbers - all complimentary to U.S. consumers for one year."

One year? Are Equifax executives serious? Stolen consumers' credentials don't magically lose value after one year. Criminals will use stolen credentials (e.g., name, address, Social Security Number, birth date, etc.) as long as they can. Criminals will resell stolen data to other criminals as long as the data has value. In my opinion, Equifax should provide complimentary lifetime credit monitoring indefinitely to all breach victims.

Why lifetime? Because the data elements accessed stolen have ongoing value. The cynical part of me wonders if some finance executives have done the math. As long as credit reporting agency executives believe that one year of free credit monitoring will appease breach victims, it's cheaper to pay that cost (plus a few out-of-court settlements), rather than implement more robust data security.

Eleventh, there is a history of questionable decisions by Equifax executives. In 2007, it paid a $2.7 million fine for violating federal credit laws. In 2009, it paid a $65,000 fine to the state of Indiana for violating the state's security freeze law. In 2012, Equifax and some of its customers paid $1.6 million to settle allegations of improper list sales. Earlier this year, Equifax and TransUnion paid $23.1 million to settle allegations of deceptive advertising about credit scores.

This history provides some context to news reports that three Equifax executives sold about $1.8 million in stock after the breach was discovered and before the public breach announcement. Equifax stock fell about 13 percent after the breach announcement. The company said on Thursday that these executives didn't know about the intrusion when they sold shares. Even if true, the optics of this look absolutely terrible.

The whole sordid affair should be a reminder to consumers that we are the product. Credit reporting agencies' true customers are lenders - the companies that lend money and make loans to consumers. Equifax makes its money selling credit reports to lenders.

What to make of this? I see several considerations for consumers:

  1. Assume the worst. Every time you hear or read the word "accessed" by Equifax, replace it with "stolen." Then, make your data security decisions accordingly.
  2. If you don't trust the security of Equifax's breach site, then call the company instead via the hotline listed in the breach announcement (preferably using a landline phone) to see if you are affected.
  3. Carefully consider the advantages and disadvantages of Equifax's offer of free credit monitoring and identity theft protection. Equifax has been criticized for forcing arbitration on consumers who accept the free credit monitoring offer. In a September 11th update in its breach site, Equifax reversed course and said the arbitration clause and class-action waiver don't apply in this incident. Regardless, read the fine print before signing up. They may try to re-insert it later. If you don't know what it is, learn about arbitration. A variety of companies have inserted these clauses into their user agreements policies. You'll need to learn about arbitration anyway in order to make informed purchase decisions about other products and services.
  4. If you don't need credit, consider a Security Freeze to lock down your Equifax credit reports. Then, Equifax can't sell your credit report to lenders. You can do this at all three major credit reporting agencies. I did this several years ago after a data breach by a former employer. Know that a Security Freeze is not a cure-all, since it won't stop data breaches and it won't stop all forms of identity theft and fraud. To learn more, this blog has plenty of information about credit reporting agencies, credit monitoring services, fraud alerts for your credit reports, and security freezes.
  5. If you dislike Equifax's post-breach response, then contact your elected officials and demand that they pressure Equifax to do the right thing: a) notify all breach victims directly via postal mail; and b) implement better data security.
  6. Equifax's post-breach response makes me question whether the company is really up to the data security task -- it's responsibility -- to adequately protect consumers' sensitive information. All credit reporting agencies are high-value targets by criminals. If Equifax's executives didn't understand this before, they should now -- and take actions to demonstrate to consumers they realize the seriousness of the breach. Words are not enough.
  7. Consumers lack choices. Citizens cannot opt in nor opt out of the data collection by credit reporting agencies. (Consumers can opt out of pre-approved credit offers, but can't opt out of the data collection. There's a difference.) Also, the Equifax breach highlights the hypocrisy of pundits and politicians who object to the mandate within Obamacare (e.g., the Affordable Care Act) legislation -- some called it socialism -- while remaining remain silent about a similarly socialistic mandate with credit reporting.

While writing a post recently about misdeeds at Wells Fargo, I asked the question: "How much damage can one bank do?" Now, I find myself asking a similar question about Equifax: "How much damage can one company do?" Credit and lending are essential to the United States economy. In my opinion, all credit reporting agencies should have NSA-level data security for their networks and computer systems. The data they archive is that critical.

And: if you can't protect it, don't collect it. It's that simple.

As more issues emerge about this breach, I will address them in subsequent posts. What are your opinions of the Equifax breach? Did you lock down your credit reports with a Security Freeze?


$5.5 Million Settlement Agreement Between Nationwide Insurance And 32 States

Nationwide Mutual Insurance Company logo Last week, 32 states inked a settlement agreement with Nationwide Mutual Insurance for the insurance company's data breach in 2012. The Attorney General's Office for the Commonwealth of Massachusetts participated in the agreement, and explained in an announcement: that the data breach reach in 2012 was:

"... allegedly caused by Nationwide’s failure to apply a critical software security patch. The breach resulted in the loss of personal information belonging to 1.27 million consumers, with nearly 950 in Massachusetts, including their social security numbers, driver’s license numbers, credit scoring information, and other personal data. The lost personal information was collected by Nationwide in order to provide insurance quotes to consumers applying for insurance. AG Healey’s Office is not aware of any fraud or identity theft involving Massachusetts residents related to this data breach."

Other states participating in the settlement agreement include the Attorneys General of Alaska, Arizona, Arkansas, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, and the District of Columbia. Terms of the settlement agreement require Nationwide to:

"... both generally update its security practices and to ensure that it keeps software up-to-date, including timely applying patches and other updates to its software. Nationwide must also hire a technology officer responsible for monitoring and managing software and application security updates, including supervising employees responsible for evaluating and coordinating the maintenance, management, and application of all security patches and software and application security updates.

Many of the consumers whose data was lost as a result of the data breach were consumers who never became Nationwide’s insureds, but whose information was retained by the company in order to provide the consumers re-quotes at a later date. The settlement requires Nationwide to be more transparent about its data collection practices by requiring it to disclose to consumers that it retains their personal information even if they do not become its customers."

950 Massachusetts residents were affected. Massachusetts' share of the payment is $100,000. Massachusetts Attorney General (AG) Maura Healey said in a statement:

"People shopping for financial products should be assured that companies collecting their personal information will protect it no matter what... Nationwide knew their software was vulnerable to hacking but did not promptly address it, leaving sensitive data vulnerable to identity thieves. This settlement holds the company accountable for subjecting our residents to this avoidable risk."

2,810 New York residents were affected. New York State's share of the payment is $107,736. New York State AG Eric T. Schneiderman said:

"Nationwide demonstrated true carelessness while collecting and retaining information from prospective customers, needlessly exposing their personal data in the process... This settlement should serve as a reminder that companies have a responsibility to protect consumers’ personal information regardless of whether or not those consumers become customers..."

774 Connecticut residents were affected. Connecticut's share of the payment is $256,559. Connecticut AG George Jepsen said:

"Connecticut law requires that anyone in possession of another person's personal information safeguard that data... It is critically important that companies take seriously the maintenance of their computer software systems and their data security protocols..."


Data Breach Exposes Information Of Millions Of Verizon Customers

Verizon logo A data breach at Verizon has exposed the sensitive information of millions of customers. ZD Net reported:

"As many as 14 million records of subscribers who called the phone giant's customer services in the past six months were found on an unprotected Amazon S3 storage server controlled by an employee of NICE Systems, a Ra'anana, Israel-based company. The data was downloadable by anyone with the easy-to-guess web address."

Many businesses use cloud services vendors  -- Amazon Web Services and other vendors -- to outsource the storage of customers' information in online databases. While the practice isn't new, a problem is that customers aren't always informed of the business practice using their sensitive information.

Founded in 1986, NICE Systems has 3,500 employees, serves about 25,000 customers in 150 countries, and provides services to 85 percent of Fortune 100 companies. The exact number of affected Verizon customers is disputed.

The security firm Upguard found the unprotected cloud-based storage server:

"Upguard's Cyber Risk Team can now report that a mis-configured cloud-based file repository exposed the names, addresses, account details, and account personal identification numbers (PINs) of as many as 14 million US customers of telecommunications carrier Verizon, per analysis of the average number of accounts exposed per day in the sample that was downloaded. The cloud server was owned and operated by telephonic software and data firm NICE Systems, a third-party vendor for Verizon. (UPDATE: July 12, 3 PM PST - Both NICE Systems and Verizon have since confirmed the veracity of the exposure, while a Verizon spokesperson has claimed that only 6 million customers had data exposed)."

Whether the total number of breach victims is 6 or 14 million customers, neither is good. The phrase "account details" is troubling. That could mean anything from e-mail addresses to payment information to residential addresses, or more.

Upguard's announcement added:

"Beyond the risks of exposed names, addresses, and account information being made accessible via the S3 bucket’s URL, the exposure of Verizon account PIN codes used to verify customers, listed alongside their associated phone numbers, is particularly concerning. Possession of these account PIN codes could allow scammers to successfully pose as customers in calls to Verizon, enabling them to gain access to accounts—an especially threatening prospect, given the increasing reliance upon mobile communications for purposes of two-factor authentication.

Finally, this exposure is a potent example of the risks of third-party vendors handling sensitive data... Third-party vendor risk is business risk; sharing access to sensitive business data does not offload this risk, but merely extends it to the contracted partner, enabling cloud leaks to stretch across several continents and involve multiple enterprises."

Agreed. This outsourcing business practice may be profitable for all companies involved, but the outsourcing practice does not decrease the risks. Not good. Mis-configured cloud servers should not happen. Not good. The event raises the question: when has this happened before, but went undetected?

Verizon released a statement about the incident:

"... an employee of one of our vendors put information into a cloud storage area and incorrectly set the storage to allow external access. We have been able to confirm that the only access to the cloud storage area by a person other than Verizon or its vendor was a researcher who brought this issue to our attention. In other words, there has been no loss or theft of Verizon or Verizon customer information.

By way of background, the vendor was supporting an approved initiative to help us improve a residential and small business wireline self-service call center portal and required certain data for the project. The overwhelming majority of information in the data set had no external value, although there was a limited amount of personal information included, and in particular, there were no Social Security numbers or Verizon voice recordings in the cloud storage area.

To further clarify, the data supports a wireline portal and only includes a limited number of cell phone numbers for customer contact purposes. In addition, to the extent PINs were included in the data set, the PINs are used to authenticate a customer calling our wireline call center, but do not provide online access to customer accounts..."

Typically, after a breach companies hire independent security experts to investigate breaches and the contributing causes. Verizon's announcement did not state who, if anyone, it hired to perform a post-breach investigation nor when. So, according to Verizon: no big deal. No problem. Hmmmmm.

Reportedly, Upguard notified Verizon about the breach on June 13, and the breach was fixed on June 22. Upguard added:

"The long duration of time between the initial June 13th notification to Verizon by UpGuard of this data exposure, and the ultimate closure of the breach on June 22nd, is troubling."

Troubling, indeed. What took Verizon (and/or Nice Systems) so long? Verizon's statement didn't say. And what is Verizon (and/or NICE Systems) doing so this type of breach doesn't happen again? I look forward to upcoming explanations by both companies.

Readers: what are your opinions of this data breach? Of how long it took Verizon to fix things? Of the outsourcing practice? Verizon customers:

  • Is Verizon doing enough to protect your sensitive data?
  • Should affected customers be notified directly?
  • Have you received a breach notice from Verizon? If so, share some of its details.

Massive Data Breach By RNC Contractor Exposed Information Of 198 Million Voters

GOP logo A massive data breach by a contractor hired by the Republican National Committee (RNC) has exposed the personal information of 198 million likely voters. The breach happened after a contractor, Deep Root Analytics, accidentally left the database files unprotected on an internet-connected computer server. The Hill reported:

"The databases were part of 25 terabytes of files contained in an Amazon cloud account that could be browsed without logging in. The account was discovered by researcher Chris Vickery of the security firm UpGuard. The files have since been secured."

Deep Root Analytics logo Deep Root Analytics helps a variety of clients, including political organizations, advertisers, and advocacy groups, identify custom audiences for television advertising -- in this instance, likely voters. Reportedly, the data elements exposed include full names, birth dates, residential addresses, and persons' positions on a variety of topics:

"... 46 different issues ranging from "how likely it is the individual voted for Obama in 2012, whether they agree with the Trump foreign policy of 'America First' and how likely they are to be concerned with auto manufacturing as an issue..."

The files exposed during the breach also identified another contractor hired by the RNC, Target Point, which experts conclude:

"... compiled and shared the data with Deep Root. Another folder appears to reference Data Trust, another contracted firm."

At press time, Target Point had not made any statements on its website. Deep Root issued this statement:

"Deep Root Analytics has become aware that a number of files within our online storage system were accessed without our knowledge. Deep Root Analytics builds voter models to help enhance advertiser understanding of TV viewership. The data accessed was not built for or used by any specific client. It is our proprietary analysis to help inform local television ad buying.

The data that was accessed was, to the best of our knowledge proprietary information as well as voter data that is publicly available and readily provided by state government offices. Since this event has come to our attention, we have updated the access settings and put protocols in place to prevent further access. We take full responsibility for this situation.

Deep Root Analytics maintains industry standard security protocols. We built our systems in keeping with these protocols and had last evaluated and updated our security settings on June 1, 2017.

We are conducting an internal review and have retained cyber security firm Stroz Friedberg to conduct a thorough investigation. Through this process, which is currently underway, we have learned that access was gained through a recent change in access settings since June 1. We accept full responsibility, will continue with our investigation, and based on the information we have gathered thus far, we do not believe that our systems have been hacked."

So, Deep Root wasn't aware of this breach until an outside security expert found it. Nor does the company seem certain about exactly what data elements were exposed/accessed by unauthorized persons. Not good. It makes one wonder what other undiscovered breaches may have happened.

Perhaps more troubling, the company's statement differs from news reports about the data elements exposed/accessed. The company's statement mentioned "publicly available" data, while news reports mentioned sensitive, non-public data. Hopefully, the results of Deep Root's internal breach investigation will clarify things. And, if sensitive information was truly exposed/stolen, hopefully Deep Root will do the right thing: notify breach victims and offer free credit monitoring services for at least two years.

This was not the first data breach of voter-related database data. A CouchDB breach in June 2016 exposed the sensitive information of 154 million voters. Both breaches seem to raise the question about whether political organizations, and the contractors they hire, adequately protect consumers' sensitive personal information.

Many consider this Deep Root data breach the largest voter breach ever. Yes, the data breach was undeniably massive. Why? Two measurement approaches highlight the fact.

First, the Quick Facts page at the U.S. Census Bureau site lists the population of the United States on July 1, 2015 at 321, 418,820 persons. Of those, 22.9 percent were under the age of 18. With a little "rough" math, one can calculate the population aged 18 or older at 247,813,910 persons. So, the Deep Root breach represented about 61.6 percent of the total population or 79.9 percent of the voting age population. That's almost 4 of every 5 adults aged 18 or older.

Second, the breach ranks near the largest when compared to notable data breaches during the past few years:

Regarding the AJLA portal breach earlier this year, the Privacy Rights Clearinghouse reported 1.7 million breach victims in Idaho and 430,000 in Oklahoma. Given this, the true number of breach victims is likely far higher.

What are your opinions about the Deep Root breach? Do political organizations, and the contractors they hire, adequately protect citizens' sensitive information? And, if not, what should be done?

When citizens vote, they expect privacy -- not just within voting booths. So, too, regarding the personal information and opinions data describing their voting. Arguably, voting data is different than other types of consumer information. And there is legal precedent for treating selected consumer information differently. Example: a set of privacy laws govern health care data. Perhaps, you have heard of the term: Protected Health Information (PHI). If data mining companies can't protect voters' data, then we just might need new laws to protect voting-related data: PVI = Protected Voting Information.

When data about voters is compromised (e.g., exposed and/or accessed), that is a strike at the heart of our democracy. Example: the bad guys could pressure voters using stolen information. Does the big-data/data-mining industry require oversight? Does Congress need to intervene to protect our democratic elections? What are your opinions about PVI?

[Correction: an earlier version of this blog post mentioned a database. Files were exposed, not a database nor an RNC database.]


Russian Cyber Attacks Against US Voting Systems Wider Than First Thought

Cyber attacks upon electoral systems in the United States are wider than originally thought. The attacks occurred in at least 39 states. The Bloomberg report described online attacks in Illinois as an example:

"... investigators found evidence that cyber intruders tried to delete or alter voter data. The hackers accessed software designed to be used by poll workers on Election Day, and in at least one state accessed a campaign finance database. Details of the wave of attacks, in the summer and fall of 2016... In early July 2016, a contractor who works two or three days a week at the state board of elections detected unauthorized data leaving the network, according to Ken Menzel, general counsel for the Illinois board of elections. The hackers had gained access to the state’s voter database, which contained information such as names, dates of birth, genders, driver’s licenses and partial Social Security numbers on 15 million people, half of whom were active voters. As many as 90,000 records were ultimately compromised..."

Politicians have emphasized that the point of the disclosures isn't to embarrass any specific state, but to alert the public to past activities and to the ongoing threat. The Intercept reported:

"Russian military intelligence executed a cyberattack on at least one U.S. voting software supplier and sent spear-phishing emails to more than 100 local election officials just days before last November’s presidential election, according to a highly classified intelligence report obtained by The Intercept.

The top-secret National Security Agency document, which was provided anonymously to The Intercept and independently authenticated, analyzes intelligence very recently acquired by the agency about a months-long Russian intelligence cyber effort against elements of the U.S. election and voting infrastructure. The report, dated May 5, 2017, is the most detailed U.S. government account of Russian interference in the election that has yet come to light."

Spear-fishing is the tactic criminals use by sending malware-laden e-mail messages to targeted individuals, whose names and demographic details may have been collected from social networking sites and other sources. The spam e-mail uses those details to pretend to be valid e-mail from a coworker, business associate, or friend. When the target opens the e-mail attachment, their computer and network are often infected with malware to collect and transmit log-in credentials to the criminals; or to remotely take over the targets' computers (e.g., ransomware) and demand ransom payments. Stolen log-in credentials are how criminals steal consumers' money by breaking into online bank accounts.

The Intercept report explained how the elections systems hackers adopted this tactic:

"... the Russian plan was simple: pose as an e-voting vendor and trick local government employees into opening Microsoft Word documents invisibly tainted with potent malware that could give hackers full control over the infected computers. But in order to dupe the local officials, the hackers needed access to an election software vendor’s internal systems to put together a convincing disguise. So on August 24, 2016, the Russian hackers sent spoofed emails purporting to be from Google to employees of an unnamed U.S. election software company... The spear-phishing email contained a link directing the employees to a malicious, faux-Google website that would request their login credentials and then hand them over to the hackers. The NSA identified seven “potential victims” at the company. While malicious emails targeting three of the potential victims were rejected by an email server, at least one of the employee accounts was likely compromised, the agency concluded..."

Experts believe the voting equipment company targeted was VR Systems, based in Florida. Reportedly, it's electronic voting services and equipment are used in eight states. VR Systems posted online a Frequently Asked Questions document (adobe PDF) about the cyber attacks against elections systems:

"Recent reports indicate that cyber actors impersonated VR Systems and other elections companies. Cyber actors sent an email from a fake account to election officials in an unknown number of districts just days before the 2016 general election. The fraudulent email asked recipients to open an attachment, which would then infect their computer, providing a gateway for more mischief... Because the spear-phishing email did not originate from VR Systems, we do not know how many jurisdictions were potentially impacted. Many election offices report that they never received the email or it was caught by their spam filters before it could reach recipients. It is our understanding that all jurisdictions, including VR Systems customers, have been notified by law enforcement agencies if they were a target of this spear-phishing attack... In August, a small number of phishing emails were sent to VR Systems. These emails were captured by our security protocols and the threat was neutralized. No VR Systems employee’s email was compromised. This prevented the cyber actors from accessing a genuine VR Systems email account. As such, the cyber actors, as part of their late October spear-phishing attack, resorted to creating a fake account to use in that spear-phishing campaign."

It is good news that VR Systems protected its employees' e-mail accounts. Let's hope that those employees were equally diligent about protecting their personal e-mail accounts and home computers, networks, and phones. We all know employees that often work from home.

The Intercept report highlighted a fact about life on the internet, which all internet users should know: stolen log-in credentials are highly valued by criminals:

"Jake Williams, founder of computer security firm Rendition Infosec and formerly of the NSA’s Tailored Access Operations hacking team, said stolen logins can be even more dangerous than an infected computer. “I’ll take credentials most days over malware,” he said, since an employee’s login information can be used to penetrate “corporate VPNs, email, or cloud services,” allowing access to internal corporate data. The risk is particularly heightened given how common it is to use the same password for multiple services. Phishing, as the name implies, doesn’t require everyone to take the bait in order to be a success — though Williams stressed that hackers “never want just one” set of stolen credentials."

So, a word to the wise for all internet users: don't use the same log-in credentials at multiple site. Don't open e-mail attachments from strangers. If you weren't expecting an e-mail attachment from a coworker/friend/business associate, call them on the phone first and verify that they indeed sent an attachment to you. The internet has become a dangerous place.


Attorneys General In Several States Announce Settlement Agreements With Target

Target Bullseye logo The Office of the Attorney General (AG) for the Commonwealth of Massachusetts announced on Wednesday that the state will receive $625,000 as part of the settlement agreement with Target Corporation. The settlement agreement, which includes 47 states plus the District of Colombia, resolves claims by states about the retailer's massive data breach in 2013.

Card issuers had also sued the retailer. Target settled with Visa in August, 2015 to resolve claims in which 110 million consumers' records were stolen, including 40 million credit- and debit-card numbers. Also, debit card PIN numbers were stolen.

The announcement by Massachusetts AG Maura Healey explained:

"The investigation found that the stolen credentials were used to exploit weaknesses in Target’s system, which allowed the attackers to access a customer service database, install malware on the system and then capture data from credit or debit card transactions at Target stores (including stores in Massachusetts) from Nov. 27, 2013 to Dec. 15, 2013. The stolen data included consumers’ full names, telephone numbers, email addresses, mailing addresses, payment card numbers, expiration dates, security codes, and encrypted debit PINs... The breach affected more than 41 million customer payment card accounts and contact information for more than 60 million customers nationwide. In Massachusetts, the breach compromised information from approximately 947,000 customer payment card accounts and other personally-identifying information of about 1.5 million Massachusetts residents."

Terms of the settlement require Target:

"... to develop, implement and maintain a comprehensive information security program and to employ an executive or officer who is responsible for executing the plan. The company is required to hire an independent, qualified third-party to conduct a comprehensive security assessment... to maintain and support software on its network; to maintain appropriate encryption policies, particularly as pertains to cardholder and personal information data; to segment its cardholder data environment from the rest of its computer network; and to undertake steps to control access to its network, including implementing password rotation policies and two-factor authentication for certain accounts."

California will receive $1.4 million from the settlement. New York AG Eric T. Schneiderman said about the settlement agreement:

"New Yorkers need to know that when they shop, their data will be protected... This settlement marks an important win for New Yorkers – bringing over $635,000 into the state, in addition to the free credit monitoring services for those impacted by the data breach, and key security improvements to help protect Target consumers moving forward."

Yes, indeed. Shoppers everywhere need to know their data will be protected.

Besides Massachusetts, New York and California, the other states participating in this settlement include Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and the District of Columbia.

AL.com reported:

"Alabama won't be cashing in on the largest multi-state data breach settlement in history, however. The reason, according to the Alabama Attorney General's Office, is the absence of a state law that requires entities to notify customers whose information could have been exposed in a breach and then take steps to remediate any injuries.

"Alabama is one of the few states in the nation that is not a party to the recent Target settlement because our state does not have data breach notification law," said Mike Lewis, Communications Director for the Office of the Alabama Attorney General."

Connecticut and Illinois led the states' investigation. The participating states have not yet announced how the settlement money will be distributed.

[Editor's Note: a prior version of this blog post did not include the report by AL.com.]


4 Charged, Including Russian Government Agents, In Massive Yahoo Hack

Department of Justice logo The U.S. Department of Justice (DOJ) announced yesterday that a grand jury in the Northern District of California has indicted four defendants, including two officers of the Russian Federal Security Service (FSB), for computer hacking, economic espionage and other criminal offenses related to the massive hack of millions of Yahoo webmail accounts. The charges were announced by Attorney General Jeff Sessions of the U.S. Department of Justice, Director James Comey of the Federal Bureau of Investigation (FBI), Acting Assistant Attorney General Mary McCord of the National Security Division, U.S. Attorney Brian Stretch for the Northern District of California and Executive Assistant Director Paul Abbate of the FBI’s Criminal, Cyber, Response and Services Branch.

The announcement described how the defendants, beginning in January 2014:

"... unauthorized access to Yahoo’s systems to steal information from about at least 500 million Yahoo accounts and then used some of that stolen information to obtain unauthorized access to the contents of accounts at Yahoo, Google and other webmail providers, including accounts of Russian journalists, U.S. and Russian government officials and private-sector employees of financial, transportation and other companies. One of the defendants also exploited his access to Yahoo’s network for his personal financial gain, by searching Yahoo user communications for credit card and gift card account numbers, redirecting a subset of Yahoo search engine web traffic so he could make commissions and enabling the theft of the contacts of at least 30 million Yahoo accounts to facilitate a spam campaign."

The four defendants are:

  1. Dmitry Aleksandrovich Dokuchaev, 33, a Russian national and resident
  2. Igor Anatolyevich Sushchin, 43, a Russian national and resident,
  3. Alexsey Alexseyevich Belan, aka “Magg,” 29, a Russian national and resident, and
  4. Karim Baratov (a/k/a "Kay," "Karim Taloverov," and "Karim Akehmet Tokbergenov") 22, a Canadian and Kazakh national and a resident of Canada.

Several lawsuits have resulted from the Yahoo breach including a shareholder lawsuit alleging a breach of fiduciary duty by the directors of the tech company, and a class-action regarding stolen credit card payment information.

Attorney General Sessions said about the charges against four defendants:

"Cyber crime poses a significant threat to our nation’s security and prosperity, and this is one of the largest data breaches in history... But thanks to the tireless efforts of U.S. prosecutors and investigators, as well as our Canadian partners, today we have identified four individuals, including two Russian FSB officers, responsible for unauthorized access to millions of users’ accounts. The United States will vigorously investigate and prosecute the people behind such attacks..."

FBI Director said:

"... we continue to pierce the veil of anonymity surrounding cyber crimes... We are shrinking the world to ensure that cyber criminals think twice before targeting U.S. persons and interests."

Acting Assistant Attorney General McCord said:

"The criminal conduct at issue, carried out and otherwise facilitated by officers from an FSB unit that serves as the FBI’s point of contact in Moscow on cybercrime matters, is beyond the pale... hackers around the world can and will be exposed and held accountable. State actors may be using common criminals to access the data they want..."


WikiLeaks Claimed CIA Lost Control Of Its Hacking Tools For Phones And Smart TVs

Central Intelligence Agency logo A hacking division of the Central Intelligence Agency (CIA) has collected an arsenal of hundreds of tools to control a variety of smartphones and smart televisions, including devices made by Apple, Google, Microsoft, Samsung and others. The Tuesday, March 7 press release by WikiLeaks claimed this lost arsenal during its release of:

"... 8,761 documents and files from an isolated, high-security network situated inside the CIA's Center for Cyber Intelligence in Langley, Virginia... Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA. The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive."

WikiLeaks used the code name "Vault 7" to identify this release of its first set of documents, and claimed its source for the documents was a former government hacker or contractor. It also said that its source wanted to encourage a public debate about the CIA's capabilities, which allegedly overlap with the National Security Agency (NSA) causing waste.

The announcement also included statements allegedly describing the CIA's capabilities:

"CIA malware and hacking tools are built by EDG (Engineering Development Group), a software development group within CCI (Center for Cyber Intelligence), a department belonging to the CIA's DDI (Directorate for Digital Innovation)... By the end of 2016, the CIA's hacking division, which formally falls under the agency's Center for Cyber Intelligence (CCI), had over 5000 registered users and had produced more than a thousand hacking systems, trojans, viruses, and other "weaponized" malware... The CIA's Mobile Devices Branch (MDB) developed numerous attacks to remotely hack and control popular smart phones. Infected phones can be instructed to send the CIA the user's geolocation, audio and text communications as well as covertly activate the phone's camera and microphone. Despite iPhone's minority share (14.5%) of the global smart phone market in 2016, a specialized unit in the CIA's Mobile Development Branch produces malware to infest, control and exfiltrate data from iPhones and other Apple products running iOS, such as iPads."

CIA's capabilities reportedly include the "Weeping Angel" program:

"... developed by the CIA's Embedded Devices Branch (EDB), which infests smart TVs, transforming them into covert microphones, is surely its most emblematic realization. The attack against Samsung smart TVs was developed in cooperation with the United Kingdom's MI5/BTSS. After infestation, Weeping Angel places the target TV in a 'Fake-Off' mode, so that the owner falsely believes the TV is off when it is on. In 'Fake-Off' mode the TV operates as a bug, recording conversations in the room and sending them over the Internet to a covert CIA server."

Besides phones and smart televisions, WikiLeaks claimed the agency seeks to hack internet-connect autos and vehicles:

"As of October 2014 the CIA was also looking at infecting the vehicle control systems used by modern cars and trucks. The purpose of such control is not specified, but it would permit the CIA to engage in nearly undetectable assassinations."

No doubt that during the coming weeks and months security experts will analyze the documents for veracity. The whole situation is reminiscent of the disclosures in 2013 about broad surveillance programs by the National Security Agency (NSA). You can read more about yesterday's disclosures by WikiLeaks at the Guardian UK, CBS News, the McClatchy DC news wire, and at Consumer Reports.


FTC Lawsuit Claims D-Link Products Have Inadequate Security

Do you use D-Link modem/routers or routers? Do you have or plan to buy smart home appliances or electronics (a/k/a the Internet of Things or IoT) you want to connect via your home WiFi network to these or other brand routers? Are you concerned about the security of IoT devices? If you answered yes to any of these questions, then today's blog post is for you.

The U.S. Federal Trade Commission (FTC) has filed a complaint against Taiwan-based D-Link Corporation and its U.S. subsidiary alleging the tech company didn't do enough to make its products secure from hacking. The FTC announcement stated that its complaint alleged:

"... that D-Link failed to take reasonable steps to secure its routers and Internet Protocol (IP) cameras, potentially compromising sensitive consumer information, including live video and audio feeds from D-Link IP cameras... D-Link promoted the security of its routers on the company’s website, which included materials headlined “EASY TO SECURE” and “ADVANCED NETWORK SECURITY.” But despite the claims made by D-Link, the FTC alleged, the company failed to take steps to address well-known and easily preventable security flaws, such as: a) "hard-coded" login credentials integrated into D-Link camera software -- such as the username “guest” and the password “guest” -- that could allow unauthorized access to the cameras’ live feed; b) a software flaw known as “command injection” that could enable remote attackers to take control of consumers’ routers by sending them unauthorized commands over the Internet; c) the mishandling of a private key code used to sign into D-Link software, such that it was openly available on a public website for six months; and d) leaving users’ login credentials for D-Link’s mobile app unsecured in clear, readable text on their mobile devices, even though there is free software available to secure the information."

Besides the D-Link shopping site, the company's products are available at many online stores, including Best Buy, Target, Walmart, and Amazon. The FTC complaint (Adobe PDF) stated 5 Counts describing in detail the alleged security lapses, some of  which allegedly contradict advertising claims. The redacted complaint did not list specific product model numbers. Apple Insider reported:

"The security lapses also extended to mobile apps offered by D-Link to access and manage IP cameras and routers from a smartphone or tablet."

If these allegations are true, then item "C" is troubling. it raises questions about how and why a private key code were available on a public, unprotected server and for so long. It raises questions why this information wasn't encrypted. Access codes on a public server may help government intelligence agencies perform their tasks, but it suggests insufficient security for consumers. Access codes and login credentials are the holy grail for criminals. This is the information they seek in order to hack accounts and hijack devices.

Consumers connect via home routers a variety of IoT or smart devices: security systems, cameras, baby monitors, thermostats, home electronics, home appliances, toys, lawn mowers, and more. If true, the vulnerabilities could allow criminals to case home furnishings, eavesdrop on conversations, watch residents' patterns and discover when they are away from home, disable security systems, access tax and financial records, redirect users' Internet usage to fraudulent sites, and more.

The risks are real. A prior blog post discussed some of the security issues with IoT devices. Home routers have been hijacked and used to shut down targeted sites. ZDNet warned in May 2015:

"According to a report released by cybersecurity firm Incapsula on Wednesday, lax security practices concerning small office and home office (SOHO) routers has resulted in tens of thousands of routers becoming hijacked -- ending up as slave systems in the botnet network. Distributed denial-of-service (DDoS) attacks are a common way to disrupt networks and online services. The networks are often made up of compromised PCs, routers and other devices. Attackers control the botnet through a command and control center (C&C) in order to flood specific domains with traffic... ISPs, vendors and users themselves -- who do not lay down basic security foundations such as changing default passwords and keeping networks locked -- have likely caused the slavery of "hundreds of thousands [...] more likely millions" of routers now powering DDoS botnets which can cause havoc for both businesses and consumers..."

And a December 7, 2016 report by Incapsula listed about 18 vendors, including D-Link, that were susceptible to the Mirai malware used by botnets. So, the threat is real. Home routers have already been hijacked by bad guys to attack sites.

D-Link posted on its site a response to the FTC complaint:

"D-Link Systems, Inc. will vigorously defend itself against the unwarranted and baseless charges made by the Federal Trade Commission (FTC)... D-Link Systems maintains a robust range of procedures to address potential security issues, which exist in all Internet of Things (IOT) devices. Notably, the complaint does not allege any breach of a D-Link Systems device. Instead, the FTC speculates that consumers were placed “at risk” to be hacked, but fails to allege, as it must, that actual consumers suffered or are likely to suffer actual substantial injuries."

That response raises more questions. Breaches involve unauthorized persons accessing computers and/or networks. Clearly, botnets are collections of hijacked devices controlled by unauthorized persons using malware. The Incapsula reports clearly documented this. So, how are hijacked home routers and IoT devices with malware not breaches? And, botnets are designed to attack targeted sites, and not necessarily the hijacked routers and devices. So, the "actual substantial injuries" argument falls apart.

Aware consumers don't want their smart televisions, refrigerators, dishwashers, home security systems, baby monitors, cameras, and other devices hijacked by bad guys. The whole situation seems to provide two important reminders for consumers: 1) protect your IoT devices, and 2) be informed shoppers.

Protecting your IoT devices means changing the default passwords, especially on your routers and disabling remote access features. Informed shoppers Inquire before purchase about software security updates for IoT devices. Are those updates included in the product price, available in a separate subscription, or not at all? There are plenty of examples of smart home products with vulnerabilities and questionable security. Informed shoppers know before purchase.

If the product offers a separate subscription for software security updates, the money spent will be well worth it to protect your sensitive personal and financial information, to protect your family's privacy, and to avoid hijacked devices. If the product lacks software security updates, you want to know what you're buying and maybe barter for a lower price. Me? I'd keep shopping for alternatives with better security.

Protect your WiFi-connected home electronics, devices, and appliances. Don't contribute to Internet security problems.

Since most consumers lack the technical expertise to understand and detect breaches on their IoT devices, I am grateful for the FTC enforcement action; and for its guidelines in 2015 for companies offering IoT devices. Plus, the FTC is concerned with industry-wide threats that could hamper commerce. Perhaps, an economist can calculate the negative impacts upon commerce, the U.S. economy, and GDP from botnet attacks.

What are your opinions of the FTC lawsuit against D-Link Corporation? Of the security of IoT devices?