An Attack Backdoor

I was interviewed by the local affiliate of a national TV network earlier today about a hack where a young lady got her bank account emptied out in a matter of seconds after she provided a caller a single 6 digit number. Hopefully this lady will eventually get her money back, but not without a lot of pain. Here is how the story unfolded.

The victim received a phone call from someone claiming to be from Venmo asking if she made a particular $450 transaction. This person was not from Venmo and there was no such transaction.

She said that she did not make such a transaction and the fake Venmo rep said that he was going to send a code to her phone to validate that he was talking to her and he needed her to tell him what the code was. She did and he said it was all good. Except that it wasn’t. She hung up.

Here is what happened next.

The hacker was actually trying to log on to her Venmo account. When she later looked in her spam folder, she saw a number of emails from Venmo saying that someone was trying to log in to her Venmo account and failed.

TIP #1 – Make sure that security alerts from financial service vendors make it into your inbox and not into spam.

What the hacker did while she was on the phone is tell Venmo that he forgot the password to her account. They sent her a one time password to her phone and she gave that code to the hacker. The hacker then entered that code into the forgot my password screen and Venmo let him reset her password. He now “owned” her Venmo account. This is called social engineering in that the attacker doesn’t actually break into the account but rather asks the victim to let him into it. The style of attack is called a man in the middle attack because the hacker is in the middle between the victim and the web site the he wants access to.

TIP #2 – If you get a call like this from a financial institution (or Twitter or other social media company), listen to what they tell you and if they ask for any information, hang up and call back to a known good number (say from the bank’s web site). DO NOT negotiate that with the caller – they understand they have lost the war if you do that and they will give you many reasons why you should not do that.

TIP #3 – If a supposed rep CALLS YOU and asks you to give him or her a code, HANG UP IMMEDIATELY. Refer to Tip #2. Occasionally, companies that YOU CALL may ask you to do that to verify your identity. It is a VERY bad practice but companies sometimes do that. If you are confident that you called the right number, then even though I think this is a horrible security practice, it may be required. You should tell the person that you think this is a horrible security practice and see if there is a different option.

The laws that protect CONSUMER (very different than businesses) financial accounts are pretty strong. Your liability for fraudulent use of your checking or savings account or credit card is pretty limited. Less so for debit cards (which is why I recommend that people never select the DEBIT option at stores and gas stations. Businesses want you to do that because it saves them a little bit on the transaction fee. If you think that you do not want to run up a big credit card bill to have to pay at the end of the month, if you are using a debit card, there is NO DIFFERENCE in terms of what happens whether you select credit or debit. In both cases, the money will be removed from the account that the card is linked to in a few minutes to maybe 24 hours.

TIP#4 – Always select credit and not debit when you are using you debit card in a store or gas pump. If you use your debit card as a debit card and enter your PIN, if the card reader has been hacked, the hacker can clone your card and use it at an ATM. From there, they can empty your bank account. They cannot do that if you use it as a credit card because they won’t have your PIN.

TIP#5 – Banks always set a DAILY CASH LIMIT and DAILY TRANSACTION LIMIT on your debit card (and probably also on your credit card, although that is likely looser). The cash limit restricts the amount of cash you or a hacker pretending to be you can withdraw from your bank account in any given day. The transaction limit is the total amount you can spend in any given day. You should talk to your bank about what these numbers are and set them as low as you can while not inconveniencing yourself too much. This is a risk- benefit trade-off. The higher the limit, the less likely you will be blocked from doing something and the more money a bad guy can get away with before being detected.

In this case, whether the victim will get her money back is less clear than if she was dealing with the bank directly. Venmo is considered a “non-bank money transmitter” so it is not required to comply with all of the banking laws and you are not protected in the same way as if you were dealing with a bank. It is required to comply with “Reg E” under certain circumstances, which does protect you to a degree. This is a risk you accept if you choose to use Venmo or any similar service. My guess is that her bank will work with Venmo and get her money back, but it is a much more slippery slope than the same situation with a bank. See this article for details on this situation.

TIP #6 – DO NOT use “accounts” at sites like Venmo and Paypal where they act like a bank and store money for you. Those accounts are not protected under federal banking laws. If you tie those accounts to an actual bank account, you have more protection under federal law.

TIP #7 – If you are more paranoid than some or just risk averse, but you want to use services like this, tie them to a separate bank account that is not linked to any of your other bank accounts. That way, if the account is compromised, your liability is absolutely limited to what is in the account. I have one of these and I never keep more than $200 in that account. Even though the account is not linked to any of my other accounts, I can transfer money in out of the account online.

TIP #8 – Always use two factor authentication for financial accounts and if possible use an app for that second factor. These apps are way more secure than text messages. Free apps to do this include Google Authenticator, Microsoft Authenticator and Authy, among others. The web site has to be set up to use one or more of these apps.

Hopefully this person will get her money back, but you can use her pain to improve your security.

Last tip – TIP #9 – All banks offer the ability to receive an email or preferably a text message any time a charge or credit to your account happens. This includes checks, debit card transactions, credit card transactions and even ATM transactions. You will receive text messages within seconds of the charge happening. Recently one of my cards was compromised and as SOON AS I got the first text message, I was on the phone with my bank’s fraud department (call the number on the back of your credit or debit card and ask for the fraud department). Banks are very motivated to stop this fraud because they eat the losses. In my case, as I was talking to the fraud department, the card was being used in three different stores. They immediately shut down the account, credited those charges and sent me a new card. If you think it is annoying getting text messages about the use of your account, think about how annoying it is if a hacker empties that account.

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