The Australian Payments Clearing Association (APCA) releases card fraud statistics every six months for the preceding 12m period. For a decade now, Lockstep has been monitoring these figures, plotting the trend data and analysing what the industry is doing - and not doing - about Card Not Present fraud. Here is our summary for the financial year 2015 stats.
Card Not Present (CNP) fraud has grown over 25 percent year-on-year from FY2014, and now represents 84 percent of all fraud on Australian cards.
APCA evidently has an uneasy relationship with any of the industry's technological responses to CNP fraud, like the controversial 3D Secure, and tokenization. Neither get a mention in the latest payment fraud media release. Instead APCA puts the stress on shopper behaviour, describing the continuing worsening in fraud as "a timely reminder to Australians to remain vigilant when shopping online". Sadly, this ignores that fact that card data used for organised criminal CNP fraud comes from mass breaches of databases, not from websites. There is nothing that shoppers can do when using their cards online to stop them being stolen, because they're much more likely to get stolen from backend systems over which the shoppers have no control.
You can be as careful as you like online - you can even avoid Internet shopping entirely - and still have your card data stolen from a regular store and used in CNP attacks online.
- "Financial institutions and law enforcement have been working together to target skimming at ATMs and in taxis and this, together with the industry’s progressive roll-out of chip-reading at ATMs, is starting to reflect in the fraud data".
That's true. Fraud by skimming and carding was halved by the smartcard rollout, and has remained low and steady in absolute terms for three years. But APCA errs when it goes on:
- "Cardholders can help these efforts by always protecting their PINs and treating their cards like cash".
Safeguarding your physical card and PIN does nothing to prevent the mass breaches of card data held in backend databases.
A proper fix to replay attack is easily within reach, which would re-use the same cryptography that solves skimming and carding, and would restore a seamless payment experience for card holders. Apple for one has grasped the nettle, and is using its Secure Element-based Apple Pay method (established now for card present NFC payments) for Card Not Present transactions, in the app.
See also my 2012 paper Calling for a Uniform Approach to Card Fraud Offline and On" (PDF).
The credit card payments system is a paragon of standardisation. No other industry has such a strong history of driving and adopting uniform technologies, infrastructure and business processes. No matter where you keep a bank account, you can use a globally branded credit card to go shopping in almost every corner of the world. The universal Four Party settlement model, and a long-standing card standard that works the same with ATMs and merchant terminals everywhere underpin seamless convenience. So with this determination to facilitate trustworthy and supremely convenient spending in every corner of the earth, it’s astonishing that the industry is still yet to standardise Internet payments. We settled on the EMV standard for in-store transactions, but online we use a wide range of confusing and largely ineffective security measures. As a result, Card Not Present (CNP) fraud is growing unchecked.
This article argues that all card payments should be properly secured using standardised hardware. In particular, CNP transactions should use the very same EMV chip and cryptography as do card present payments.
With all the innovation in payments leveraging cryptographic Secure Elements in mobile phones, perhaps at last we will see CNP payments modernise for web and mobile shopping.
I have just updated my periodic series of research reports on the FIDO Alliance. The fourth report, "FIDO Alliance Update: On Track to a Standard" is available at Constellation Research (for free for a time).
The Identity Management industry leader publishes its protocol specifications at v1.0, launches a certification program, and attracts support in Microsoft Windows 10.
The FIDO Alliance is the fastest-growing Identity Management (IdM) consortium we have seen. Comprising technology vendors, solutions providers, consumer device companies, and e-commerce services, the FIDO Alliance is working on protocols and standards to strongly authenticate users and personal devices online. With a fresh focus and discipline in this traditionally complicated field, FIDO envisages simply “doing for authentication what Ethernet did for networking”.
Launched in early 2013, the FIDO Alliance has now grown to over 180 members. Included are technology heavyweights like Google, Lenovo and Microsoft; almost every SIM and smartcard supplier; payments giants Discover, MasterCard, PayPal and Visa; several banks; and e-commerce players like Alibaba and Netflix.
FIDO is radically different from any IdM consortium to date. We all know how important it is to fix passwords: They’re hard to use, inherently insecure, and lie at the heart of most breaches. The Federated Identity movement seeks to reduce the number of passwords by sharing credentials, but this invariably confounds the relationships we have with services and complicates liability when more parties rely on fewer identities.
In contrast, FIDO’s mission is refreshingly clear: Take the smartphones and devices most of us are intimately connected to, and use the built-in cryptography to authenticate users to services. A registered FIDO-compliant device, when activated by its user, can send verified details about the device and the user to service providers, via standardized protocols. FIDO leverages the ubiquity of sophisticated handsets and the tidal wave of smart things. The Alliance focuses on device level protocols without venturing to change the way user accounts are managed or shared.
The centerpieces of FIDO’s technical work are two protocols, called UAF and U2F, for exchanging verified authentication signals between devices and services. Several commercial applications have already been released under the UAF and U2F specifications, including fingerprint-based payments apps from Alibaba and PayPal, and Google’s Security Key from Yubico. After a rigorous review process, both protocols are published now at version 1.0, and the FIDO Certified Testing program was launched in April 2015. And Microsoft announced that FIDO support would be built into Windows 10.
With its focus, pragmatism and membership breadth, FIDO is today’s go-to authentication standards effort. In this report, I look at what the FIDO Alliance has to offer vendors and end user communities, and its critical success factors.
This is Part 2 of my coverage of the White House #CyberSecuritySummit; see Part 1 here.
On Feb 13th, at President Obama's request, a good number of the upper echelon of Internet experts gathered at Stanford University in Silicon Valley to work out what to do next about cybersecurity and consumer protection online. The Cyber Security Summit was put together around Obama's signing a new Executive Order to create new cyber threat information sharing hubs and standards to foster sharing while protecting privacy, and it was meant to maintain the momentum of his cybersecurity and privacy legislative program.
The main session of the summit traversed very few technical security issues. The dominant theme was intelligence sharing: how can business and government share what they know in real time about vulnerabilities and emerging cyber attacks? Just a couple of speakers made good points about preventative measures. Intel President Renee James highlighted the importance of a "baseline of computing security"; MasterCard CEO Ajay Banga was eloquent on how innovation can thrive in a safety-oriented regulated environment like road infrastructure and road rules. So apart from these few deviations, the summit had a distinct military intelligence vibe, in keeping with the cyber warfare trope beloved by politicians.
On the one hand, it would be naive to expect such an event to make actual progress. And I don't mind a political showcase if it secures the commitment of influencers and builds awareness. But on the other hand, the root causes of our cybersecurity dilemma have been well known for years, and this esteemed gathering seemed oblivious to them.
Where's the serious talk of preventing cyber security problems? Where is the attention to making e-business platforms and digital economy infostructure more robust?
Personal Information today is like nitroglycerin - it has to be handled with the utmost care, lest it blow up in your face. So we have the elaborate and brittle measures of PCI-DSS or the HIPAA security rules, rendered useless by the slightest operational slip-up.
How about rendering personal information safer online, so it cannot be stolen, co-opted, modified and replayed? If stolen information couldn't be used by identity thieves with impunity, we would neutralise the bulk of today's cybercrime. This is how EMV Chip & PIN payment security works. Personal data and purchase details are combined in a secure chip and digitally signed under the customer's control, to prove to the merchant that the transaction was genuine. The signed transaction data cannot be easily hacked (thanks Jim Fenton for the comment; see below); stolen identity data is useless to a thief if they don't control the chip; a stolen chip is only good for single transactions (and only if the PIN is stolen as well) rather than the mass fraud perpetrated after raiding large databases.
It's obvious (isn't it?) that we need to do something radically different before the Internet of Things turns into a digital cesspool. The good news for privacy and security in ubiquitous computing is that most smart devices can come with Secure Elements and built-in digital signature capability, so that all the data they broadcast can be given pedigree. We should be able to know tell for sure that every piece of information flowing in the IoT has come from a genuine device, with definite attributes, operating with the consent of its owner.
The technical building blocks for a properly secure IoT are at hand. Machine-to-Machine (M2M) identity modules (MIMs) and Trusted Execution Environments (TEEs) provide safe key storage and cryptographic functionality. The FIDO Alliance protocols leverage this embedded hardware and enable personal attributes to be exchanged reliably. Only a couple of years ago, Vint Cerf in an RSA Conference keynote speculated that ubiquitous public key cryptography would play a critical role in the Internet of Things, but he didn't know how exactly.
In fact, we have have known what to do with this technology for years.
At the close of the Cyber Security Summit, President Obama signed his Executive Order -- in ink. The irony of using a pen to sign a cybersecurity order seemed lost on all concerned. And it is truly tragic.
We probably wouldn't need a cybersecurity summit in 2015 if serious identity security had been built into the cyber infrastructure over a decade ago.
You can be forgiven if the FIDO Alliance is not on your radar screen. It was launched barely 18 months ago, to help solve the "password crisis" online, but it's already proven to be one of most influential security bodies yet.
The typical Internet user has dozens of accounts and passwords. Not only are they a pain in the arse, poor password practices are increasingly implicated in fraud and terrible misadventures like the recent "iCloud Hack" which exposed celebrities' personal details.
With so many of our assets, our business and our daily lives happening in cyberspace, we desperately need better ways to prove who we are online – and even more importantly, prove what we entitled to do there.
The FIDO Alliance is a new consortium of identity management vendors, product companies and service providers working on strong authentication standards. FIDO’s vision is to tap the powers of smart devices – smart phones today and wearables tomorrow – to log users on to online services more securely and more conveniently.
FIDO was founded by Lenovo, PayPal, and security technology companies AGNITiO, Nok Nok Labs and Validity Sensors, and launched in February 2013. Since then the Alliance has grown to over 130 members. Two new authentication standards have been published for peer review, half a dozen companies showcased FIDO-Ready solutions at the 2014 Consumer Electronic Show (CES) in Las Vegas, and PayPal has released its ground-breaking pay-by-fingerprint app for the Samsung Galaxy S5.
The FIDO Alliance includes technology heavyweights like Google, Lenovo, Microsoft and Samsung; payments giants Discover, MasterCard, PayPal and Visa; financial services companies such as Aetna, Bank of America and Goldman Sachs; and e-commerce players like Netflix and Salesforce.com. There are also a couple of dozen biometrics vendors, many leading Identity and Access Management (IDAM) solutions and services, and almost every cell phone SIM and smartcard supplier in the world.
I have been watching FIDO since its inception and reporting on it for Constellation Research. The third update in my series of research reports on FIDO is now available and can be downloaded here. The report looks in depth at what the Alliance has to offer vendors and end user communities, its critical success factors, and how and why this body is poised to shake up authentication like never before.
The problem of identity takeover
The root cause of much identity theft and fraud today is the sad fact that customer reference numbers, personal identifiers and attributes generally are so easy to copy and replay without permission and without detection. Simple numerical attributes like bank account numbers and health IDs can be stolen from many different sources, and replayed with impunity in bogus transactions.
Our personal data nowadays is leaking more or less constantly, through breached databases, websites, online forms, call centres and so on, to such an extent that customer reference numbers on their own are no longer reliable. Privacy consequentially suffers because customers are required to assert their identity through circumstantial evidence, like name and address, birth date, mother’s maiden name and other pseudo secrets. All this data in turn is liable to be stolen and used against us, leading to spiraling identity fraud.
To restore the reliability of personal attribute data, we need to know their pedigree. We need to know that a presented data item is genuine, that it originated from a trusted authority, it’s been stored safely by its owner, and it’s been presented with the owner’s consent. If confidence in single attributes can be restored then we can step back from all the auxiliary proof-of-identity needed for routine transactions, and thus curb identity theft.
A practical response to ID theft
Several recent breaches of government registers leave citizens vulnerable to ID theft. In Korea, the national identity card system was attacked and it seems that all Korean's citizen IDs will have to be re-issued. In the US, Social Security Numbers are often stolen and used tin fraudulent identifications; recently, SSNs of 800,000 Post Office employees appear to have been stolen along with other personal records.
Update 14 June 2015: Now last week we got news of a hugely worse breach of US SSNs (not to mention deep personal records) of four million federal US government employees, when the Office of Personnel Management was hacked.
We could protect people against having their stolen identifiers used behind their backs. It shouldn't actually be necessary to re-issue every Korean's ID. Nor should it matter that US SSNs aren't usually replaceable. And great improvements may be made to the reliability of identification data presented online without dramatically changing Relying Parties' back-end processes. If for instance a service provider has always used SSN as part of its identification regime, they could continue to do so, if only the actual Social Security Numbers being received were known to be reliable.
The trick is to be able to tell "original" ID numbers from "copies". But what does "original" mean in the digital world? A more precise term for what we really want is pedigree. What we need is to be able to present attribute data in such a way that the receiver may be sure of their pedigree; that is, know that the attributes were originally issued by an authoritative body to the person presenting or claiming them, and that each presentation of an attribute has occurred under the owner's control.
These objectives can be met with the help of smart cryptographic technologies which today are built into most smart phones and smartcards, and which are finally being properly exploited by initiatives like the FIDO Alliance.
There are ways of issuing attributes to a smart chip device that prevent them from being stolen, copied and claimed by anyone else. One way to do so is to encapsulate and notarise attributes in a unique digital certificate issued to a chip. Today, a great many personal devices routinely embody cryptographically suitable chips for this purpose, including smart phones, SIM cards, "Secure Elements", smartcards and many wearable computers.
Consider an individual named Smith to whom Organisation A has issued a unique attribute N (which could be as simple as a customer reference number). If N is saved in ordinary computer memory or something like a magnetic stripe card, then it has no pedigree. Once the number N is presented by the cardholder in a transaction, it has the same properties as any other number. To better safeguard N in a chip device, it can be sealed into a digital certificate, as follows:
1. generate a fresh private-public key pair inside Smith’s chip
2. export the public key
3. create a digital certificate around the public key, with an attribute corresponding to N
4. have the certificate signed by (or on behalf of) organisation A.
The result of coordinating these processes and technologies is a logical triangle that inextricably binds cardholder Smith to her attribute N and to a specific personally controlled device. The certificate signed by organisation A attests to both Smith’s attribute value N and Smith's control of a particular device. Keys generated inside the chip are retained internally, never divulged to outsiders. It is not possible to copy the private key to another device, so the logical triangle cannot be reproduced or counterfeited.
Note that this technique is at the heart of the EMV "Chip-and-PIN" system where the smart payment card digitally signs cardholder and transaction data, rendering it immune to replay, before sending it to the merchant terminal. See also my 2012 paper Calling for a uniform approach to card fraud, offline and on. Now we should generalise notarised personal data and digitally signed transactions beyond Card-Present payments into as much online business as possible.
Restoring privacy and consumer control
When Smith wants to present her attribute N in an electronic transaction, instead of simply copying N out of memory (at which point it would lose its pedigree), Smith’s app digitally signs the transaction using the certificate containing N. With standard security software, anyone else can then verify that the transaction originated from a genuine device under Smith's control, with an attribute certified by A. And above all, this assurance is reliably made without needing to name Smith or reveal anything about her other than the attribute of interest.
Note that N doesn't have to be a customer number or numeric identifier; it could be any personal data, such as a biometric template, or a package of medical information like an allergy alert, or an isolated (and anonymous) property of the user, such as her age.
The capability to manage multiple key pairs and certificates, and to sign transactions with a nominated private key, is increasingly built into smart devices today. By narrowing down what you need to know about someone to a precise attribute or personal data item, we will reduce identity theft and fraud while radically improving privacy. This sort of privacy enhancing technology is the key to a safe Internet of Things, and it is now widely available.
Addressing ID theft
Perhaps the best thing governments could do immediately is to adopt smartcards and equivalent smart phone apps for holding and presenting such attributes as official ID numbers. The US government has actually come close to such a plan many times; Chip-based Social Security Cards and Medicare Cards have been proposed before, without realising their full potential. These devices would best be used as above to hold a citizen's identifiers and present them cryptographically, without vulnerability to ID theft and takeover. We wouldn't have to re-issue compromised SSNs; we would instead switch from manual presentation of these numbers to automatic online presentation, with a chip card or smart phone app conveying the data through digitally signatures.
Days 3 and 4 at CIS Monterey.
Andre Durand's Keynote
The main sessions at the Cloud Identity Summit (namely days three and four overall) kicked off with keynotes from Ping Identity chief Andre Durand, New Zealand technology commentator Ben Kepes, and Ping Technical Director Mark Diodati. I'd like to concentrate on Andre's speech for it was truly fresh.
Andre has an infectious enthusiasm for identity, and is a magnificent host to boot. As I recall, his CIS keynote last year in Napa was pretty simply a dedication to the industry he loves. Not that there's anything wrong with that. But this year he went a whole lot further, with a rich deep dive into some things we take for granted: identity tokens and the multitude of security domains that bound our daily lives.
It's famously been said that "identity is the new perimeter" and Andre says that view informs all they do at Ping. It's easy I think to read that slogan to mean security priorities (and careers) are moving from firewalls to IDAM, but the meaning runs deeper. Identity is meaningless without context, and each context has an edge that defines it. Identity is largely about boundaries, and closure.
- MyPOV and as an aside: The move to "open" identities which has powered IDAM for a over a decade is subject to natural limits that arise precisely because identities are perimeters. All identities are closed in some way. My identity as an employee means nothing beyond the business activities of my employer; my identity as an American Express Cardholder has no currency at stores that don't accept Amex; my identity as a Qantas OneWorld frequent flyer gets me nowhere at United Airlines (nor very far at American, much to my surprise). We discovered years ago that PKI works well in closed communities like government, pharmaceutical supply chains and the GSM network, but that general purpose identity certificates are hopeless. So we would do well to appreciate that "open" cross-domain identity management is actually a special case and that closed IDAM systems are the general case.
Andre reviewed the amazing zoo of hardware tokens we use from day to day. He gave scores of examples, including driver licenses of course but license plates too; house key, car key, garage opener, office key; the insignias of soldiers and law enforcement officers; airline tickets, luggage tags and boarding passes; the stamps on the arms of nightclub patrons and the increasingly sophisticated bracelets of theme park customers; and tattoos. Especially vivid was Andre's account of how his little girl on arriving at CIS during the set-up was not much concerned with all the potential playthings but was utterly rapt to get her ID badge, for it made her "official".
Tokens indeed have always had talismanic powers.
Then we were given a fly-on-the-wall slide show of how Andre typically starts his day. By 7:30am he has accessed half a dozen token-controlled physical security zones, from his home and garage, through the road system, the car park, the office building, the elevator, the company offices and his own corner office. And he hasn't even logged into cyberspace yet! He left unsaid whether or not all these domains might be "federated".
- MyPOV: Isn't it curious that we never seem to beg for 'Single Sign On' of our physical keys and spaces? I suspect we know instinctively that one-key-fits-all would be ridiculously expensive to retrofit and would require fantastical cooperation between physical property controllers. We only try to federate virtual domains because the most common "keys" - passwords - suck, and because we tend to underestimate the the cost of cooperation amongst digital RPs.
Tokens are, as Andre reminded us, on hand when you need them, easy to use, easy to revoke, and hard to steal (at least without being noticed). And they're non-promiscuous in respect of the personal information they disclose about their bearers. It's a wondrous set of properties, which we should perhaps be more conscious of in our work. And tokens can be used off-line.
- MyPOV: The point about tokens working offline is paramount. It's a largely forgotten value. Andre's compelling take on tokens makes for a welcome contrast to the rarely questioned predominance of the cloud. Managing and resolving identity in the cloud complicates architectures, concentrates more of our personal data, and puts privacy at risk (for it's harder to unweave all the traditionally independent tracks of our lives).
In closing, Andre asked a rhetorical question which was probably forming in most attendees' minds: What is the ultimate token? His answer had a nice twist. I thought he'd say it's the mobile device. With so much value now remote, multi-factor cloud access control is crucial; the smart phone is the cloud control du jour and could easily become the paragon of tokens. But no, Andre considers that a group of IDAM standards could be the future "universal token" insofar as they beget interoperability and portability.
He said of the whole IDAM industry "together we are networking identity". That's a lovely sentiment and I would never wish to spoil Andre Durand's distinctive inclusion, but on that point technically he's wrong, for really we are networking attributes! More on that below and in my previous #CISmcc diary notes.
The identity family tree
My own CISmcc talk came at the end of Day 4. I think it was well received; the tweet stream was certainly keen and picked up the points I most wanted to make. Attendance was great, for which I should probably thank Andre Durand, because he staged the Closing Beach Party straight afterwards.
I'll post an annotated copy of my slides shortly. In brief I presented my research on the evolution of digital identity. There are plenty of examples of how identity technologies and identification processes have improved over time, with steadily stronger processes, regulations and authenticators. It's fascinating too how industries adopt authentication features from one another. Internet banking for example took the one-time password fob from late 90's technology companies, and the Australian PKI de facto proof-of-identity rules were inspired by the standard "100 point check" mandated for account origination.
Clearly identity techniques shift continuously. What I want to do is systematise these shifts under a single unifying "phylogeny"; that is, a rigorously worked-out family tree. I once used the metaphor of a family tree in a training course to help people organise their thinking about authentication, but the inter-relationships between techniques was guesswork on my part. Now I'm curious if there is a real family tree that can explain the profusion of identities we have been working so long on simplifying, often to little avail.
True Darwinian evolution requires there to be replicators that correspond to the heritable traits. Evolution results when the proportions of those replicators in the "gene pool" drift over generations as survival pressures in the environment filter beneficial traits. The definition of Digital Identity as a set of claims or attributes provides a starting point for a Darwinian treatment. I observe that identity attributes are like "Memes" - the inherited units of culture first proposed by biologist Richard Dawkins. In my research I am trying to define sets of available "characters" corresponding to technological, business and regulatory features of our diverse identities, and I'm experimenting with phylogenetic modelling programs to see what patterns emerge in sets of character traits shared by those identities.
So what? A rigorous scientific model for identity evolution would have many benefits. First and foremost it would have explanatory power. I do not believe that as an industry we have a satisfactory explanation for the failure of such apparently good ideas as Information Cards. Nor for promising federation projects like the Australian banking sector's "Trust Centre" and "MAMBO" lifetime portable account number. I reckon we have been "over federating" identity; my hunch is that identities have evolved to fit particular niches in the business ecosystem to such an extent that taking a student ID for instance and using it to log on to a bank is like dropping a saltwater fish into a freshwater tank. A stronger understanding of how attributes are organically interrelated would help us better plan federated identity, and to even do "memetic engineering" of the attributes we really want to re-use between applications and contexts.
If a phylogenetic tree can be revealed, it would confirm the 'secret lives' of attributes and thereby lend more legitimacy to the Attributes Push (which coincidentally some of us first spotted at a previous CIS, in 2013). It would also provide evidence that identification risks in local environments are why identities have come to be the way they are. In turn, we could pay more respect to authentication's idiosyncrasies, instead of trying to pigeonhole them into four rigid Levels of Assurance. At Sunday's NSTIC session, CTO Paul Grassi floated the idea of getting rid of LOAs. That would be a bold move of course; it could be helped along by a new fresh focus to attributes. And of course we kept hearing throughout CIS Monterey about the FIDO Alliance with its devotion to authentication through verified device attributes, and its strategy to stay away from the abstract business of identities.
Reflections on CIS 2014
I spoke with many people at CIS about what makes this event so different. There's the wonderful family program of course, and the atmosphere that creates. And there's the paradoxical collegiality. Ping has always done a marvelous job of collaborating in various standards groups, and likewise with its conference, Ping's people work hard to create a professional, non-competitive environment. There are a few notable absentees of course but all the exhibitors and speakers I spoke to - including Ping's direct competitors - endorsed CIS as a safe and important place to participate in the identity community, and to do business.
But as a researcher and analyst, the Cloud Identity Summit is where I think you can see the future. People report hearing about things for the first time at a CIS, only to find those things coming true a year or two later. It's because there are so many influencers here.
Last year one example was the Attributes Push. This year, the onus on Attributes has become entirely mainstream. For example, the NSTIC pilot partner ID.me (a start-up business focused on improving veterans' access to online discounts through improved verification of entitlements) talks proudly of their ability to convey attributes and reduce the exposure of identity. And Paul Grassi proposes much more focus on Attributes from 2015.
Another example is the "Authorization Agent" (AZA) proposed for SSO in mobile platforms, which was brand new when Paul Madsen presented it at CIS Napa in 2013. Twelve months on, AZA has broadened into the Native Apps (NAPPS) OpenID Working Group.
Then there are the things that are nearly completely normalised. Take mobile devices. They figured in just about every CISmcc presentation, but were rarely called out. Mobile is simply the way things are now.
The mobile form factor is now taken for granted. And now the cryptographic capabilities now standard in most handsets (and increasingly embedded in smart things and wearables), are getting a whole lot of express attention. Hardware crypto was a major theme at CIS. I've already made much of Andre Durand's keynote on tokens, but it was the same throughout the event.
- There was a session on hybrid Physical and Logical Access Control Systems (PACS-LACS) featuring the US Government's PIV-I smartcard standard and the major ongoing R&D on that platform sponsored by DHS.
- Companies like SecureKey are devoted to hardware-based keys, increasingly embedded in "street IDs" like driver licenses, and are working with numerous players deep in the SIM and smartcard supply chains.
- The FIDO Alliance is fundamentally about hardware based identity security measures, leveraging embedded key pairs to attest to the pedigree of authenticator models and the attributes that they transmit on behalf of their verified users. FIDO promises to open up the latent authentication power of many 100s of millions of devices already featuring Secure Elements of one kind or another. FIDO realises PKI the way nature intended all along.
- The good old concept of "What You See Is What You Sign" (WYSIWYS) is making a comeback, with mobile platform players appreciating that users of smartphones need reliable cues in the UX as to the integrity of transaction data served up in their rich operating systems. Clearly some exciting R&D lies ahead.
- In a world of formal standards, we should also acknowledge the informal standards around us - the benchmarks and conventions that represent the 'real way' to do things. Hardware based security is taken increasingly for granted. The FIDO protocols are based on key pairs that people just seem to assume (correctly) will be generated in the compliant devices during registration. And Apple with its iTouch has helped to 'train' end users that biometrics templates must never leave the safety of a controlled hardware end point. FIDO of course makes that a hard standard.
In my view, the Cloud Identity Summit is the only not-to-be missed event on the IDAM calendar. So long may it continue. And if CIS is where you go to see the future, what's next?
- Judging by CISmcc, I reckon we're going to see entire sessions next year devoted to Continuous Authentication, in which signals are collected from wearables and the Internet of Things at large, to gain insights into the state of the user at every important juncture.
- With the disciplined separation of abstract identities from concrete attributes, we're going to need an Digital Identity Stack for reference. FIDO's pyramid is on the right track, but it needs some work. I'm not sure the pyramid is the right visualisation; for one thing it evokes Maslow's Hierarchy of Needs in which the pinnacle corresponds to luxuries not essentials!
- Momentum will grow around Relationships. Kantara's new Identity Relationship Management (IRM) WG was talked about in the CISmcc corridors. I am not sure we're all using the word in the same way, but it's a great trend, for Digital Identity is only really a means to an end, and it's the relationships they support that make identities important.
So there's much to look forward to!
See you again next year (I hope) in Monterey!
First Day Reflections from CIS Monterey.
Follow along on Twitter at #CISmcc (for the Monterey Conference Centre).
The Cloud Identity Summit really is the top event on the identity calendar. The calibre of the speakers, the relevance and currency of the material, the depth and breadth of the cohort, and the international spread are all unsurpassed. It's been great to meet old cyber-friends in "XYZ Space" at last -- like Emma Lindley from the UK and Lance Peterman. And to catch up with such talented folks like Steffen Sorensen from New Zealand once again.
A day or two before, Ian Glazer of Salesforce asked in a tweet what we were expecting to get out of CIS. And I replied that I hoped to change my mind about something. It's unnerving to have your understanding and assumptions challenged by the best in the field ... OK, sometimes it's outright embarrassing ... but that's what these events are all about. A very wise lawyer said to me once, around 1999 at the dawn of e-commerce, that he had changed his mind about authentication a few times up to that point, and that he fully expected to change his mind again and again.
I spent most of Saturday in Open Identity Foundation workshops. OIDF chair Don Thibeau enthusiastically stressed two new(ish) initiatives: Mobile Connect in conjunction with the mobile carrier trade association GSM Association @GSMA, and HIE Connect for the health sector. For the uninitiated, HIE means Health Information Exchange, namely a hub for sharing structured e-health records among hospitals, doctors, pharmacists, labs, e-health records services, allied health providers, insurers, drug & device companies, researchers and carers; for the initiated, we know there is some language somewhere in which the letters H.I.E. stand for "Not My Lifetime".
But seriously, one of the best (and pleasantly surprising) things about HIE Connect as the OIDF folks tell it, is the way its leaders unflinchingly take for granted the importance of privacy in the exchange of patient health records. Because honestly, privacy is not a given in e-health. There are champions on the new frontiers like genomics that actually say privacy may not be in the interests of the patients (or more's the point, the genomics businesses). And too many engineers in my opinion still struggle with privacy as something they can effect. So it's great -- and believe me, really not obvious -- to hear the HIE Connects folks -- including Debbie Bucci from the US Dept of Health and Human Services, and Justin Richer of Mitre and MIT -- dealing with it head-on. There is a compelling fit for the OAUTH and OIDC protocols here, with their ability to manage discrete pieces of information about users (patients) and to permission them all separately. Having said that, Don and I agree that e-health records permissioning and consent is one of the great UI/UX challenges of our time.
Justin also highlighted that the RESTful patterns emerging for fine-grained permissions management in healthcare are not confined to healthcare. Debbie added that the ability to query rare events without undoing privacy is also going to be a core defining challenge in the Internet of Things.
MyPOV: We may well see tremendous use cases for the fruits of HIE Exchange before they're adopted in healthcare!
In the afternoon, we heard from Canadian and British projects that have been working with the Open Identity Exchange (OIX) program now for a few years each.
Emma Lindley presented the work they've done in the UK Identity Assurance Program (IDAP) with social security entitlements recipients. These are not always the first types of users we think of for sophisticated IDAM functions, but in Britain, local councils see enormous efficiency dividends from speeding up the issuance of eg disabled parking permits, not to mention reducing imposters, which cost money and lead to so much resentment of the well deserved. Emma said one Attributes Exchange beta project reduced the time taken to get a 'Blue Badge' permit from 10 days to 10 minutes. She went on to describe the new "Digital Sources of Trust" initiative which promises to reconnect under-banked and under-documented sections of society with mainstream financial services. Emma told me the much-abused word "transformational" really does apply here.
MyPOV: The Digital Divide is an important issue for me, and I love to see leading edge IDAM technologies and business processes being used to do something about it -- and relatively quickly.
Then Andre Boysen of SecureKey led a discussion of the Canadian identity ecosystem, which he said has stabilised nicely around four players: Federal Government, Provincial Govt, Banks and Carriers. Lots of operations and infrastructure precedents from the payments industry have carried over.
Andre calls the smart driver license of British Columbia the convergence of "street identity and digital identity".
MyPOV: That's great news - and yet comparable jurisdictions like Australia and the USA still struggle to join governments and banks and carriers in an effective identity synthesis without creating great privacy and commercial anxieties. All three cultures are similarly allergic to identity cards, but only in Canada have they managed to supplement drivers licenses with digital identities with relatively high community acceptance. In nearly a decade, Australia has been at a standstill in its national understanding of smartcards and privacy.
For mine, the CIS Quote of the Day came from Scott Rice of the Open ID Foundation. We all know the stark problem in our industry of the under-representation of Relying Parties in the grand federated identity projects. IdPs and carriers so dominate IDAM. Scott asked us to imagine a situation where "The auto industry was driven by steel makers". Governments wouldn't put up with that for long.
Can someone give us the figures? I wonder if Identity and Access Management is already more economically ore important than cars?!
Cheers from Monterey, Day 1.
This blog is an edited extract from an article of the same name, first published in the Journal of Internet Banking and Commerce, December 2012, vol. 17, no.3.
The cryptographic techniques discussed here can be implemented in chip-and-PIN smartcards or mobile phones with secure elements. Both phones and smartcards can now be easily interfaced over NFC to laptops of tablet computers, for a pay-wave type of user experience. Or the secure element in a phone could be used in app to safeguard card-not-present payments from the device.
The original article in 2012 was written for smartcards, but the equivalence of smartcards and smart phones is noted in square rackets throughout this updated blog..
The credit card payments system is a paragon of standardisation. No other industry has such a strong history of driving and adopting uniform technologies, infrastructure and business processes. No matter where you keep a bank account, you can use a globally branded credit card to go shopping in almost every corner of the world. Seamless convenience is underpinned by the universal Four Party settlement model, and a long-standing card standard that works the same with ATMs and merchant terminals everywhere.
So with this determination to facilitate trustworthy and supremely convenient spending everywhere, it’s astonishing that the payment card industry has yet to standardise Internet payments. Most of the world has settled on the EMV standard for in-store transactions, but online we use a wide range of confusing, clumsy and largely ineffective security measures. As a result, Card Not Present (CNP) fraud is growing unchecked. This article argues that all card payments should be properly secured using standardised hardware. In particular, CNP transactions should use the very same types of chip and cryptography as do card present payments, with tamper-resistant transactions being digitally signed and sent direct from a client to a server, just as they are sent from a smart card to a merchant terminal.
Skimming and Carding
With “carding”, criminals replicate stolen customer data on blank cards and use those card copies in regular merchant terminals. “Skimming” is one way of stealing card data, by running a card through a copying device when the customer isn’t looking (but it’s actually more common for card data to be stolen in bulk from compromised merchant and processor databases).
A magnetic stripe card stores the customer’s details as a string of ones and zeroes, and presents them to a POS terminal or ATM in the clear. It’s child’s play for criminals to scan the bits and copy them to a blank card.
The industry responded to skimming and carding with EMV (aka Chip-and-PIN). EMV replaces the magnetic storage with an integrated circuit, but more importantly, it actively secures the data transmitted from card to terminal. EMV works by digitally signing those ones and zeros in the chip, and then verifying the signature at the terminal. The signing uses a Private Key unique to the cardholder and held safely inside the chip where it cannot be tampered with by fraudsters. It is not feasible to replicate the digital signature on a transaction without having access to the inner workings of the chip, and thus EMV cards resist carding.
Online Card Fraud
Conventional Card Not Present (CNP) transactions are vulnerable because, just like the old mag stripe cards, they use clear text cardholder data. On its own, a merchant server cannot tell the difference between the original card data and a copy, just as a mag strip terminal cannot tell an original card from a criminal's copy.
So CNP fraud is just online carding.
Despite the simplicity of the root problem, the past decade has seen a bewildering patchwork of flimsy and expensive online payments fixes. Various One Time Passwords have come and gone, from scratchy cards to electronic key fobs. Temporary SMS codes have been popular but were recently declared unsafe by the Communications Alliance in Australia, a policy body representing the major mobile carriers.
Meanwhile, extraordinary resources have been squandered on the novel “3D Secure” scheme (MasterCard “SecureCode” and “Verified by Visa”). 3D Secure take-up is piecemeal; it’s widely derided by merchants and customers alike. It is often blocked by browsers; and it throws up odd looking messages that can appear like a phishing attack or other malfunction. Moreover, it upsets the underlying Four Party settlements architecture, slowing transactions to a crawl and introducing untold legal complexities. Payments regulators too appear to have lost interest in 3D Secure.
So why doesn’t the payment card industry go back to its roots, preserve its global Four Party settlement architecture and standards, and tackle the real issue?
Kill two birds with one chip
We could stop most online fraud by using the same chip technologies we deployed to kill off skimming and carding.
It is technically simple to reproduce the familiar card-present user experience in a standard computer. It would just take the will of the financial services industry to make payments by [smart phone or smartcard] standard. Computers with built-in smartcard readers have come and gone; they're commonplace in some Eastern European and Asian markets where smartcards are normal for e-health and online voting.
But with dual interface and contactless smartcards, the interface options open right up. Most mobile devices now feature NFC ("Near Field Communications"), a special purpose device-to-device networking capability, which until now has mostly been used to emulate a payment card. But NFC enabled tablets and smartphones can switch into reader emulation mode, so as to act as a smartcard terminal. Other researchers have recently demonstrated how to read a smartcard via NFC to authenticate the cardholder to a mobile device.
As an alternative, the SIM or other "Secure Element" of most mobile devices could be used to digitally sign card transactions directly, in place of the card. That’s essentially how NFC payment apps works for Card Present transactions – but nobody has yet made the leap to use smart phone hardware security for Card Not Present.
Using a [smart payment card or smart phone] with a computer could and should be as easy as using Paywave or Paypass.
Conclusion: Hardware security
All serious payments systems use hardware security. The classic examples include SIM cards, EMV, the Hardware Security Modules mandated by regulators in all ATMs, and the Secure Elements of NFC devices. With well-designed hardware security, we gain a lasting upper hand in the criminal arms race.
The Internet and mobile channels will one day overtake the traditional physical payments medium. Indeed, commentators already like to say that the “digital economy” is simply the economy. Therefore, let us stop struggling with stop-gap Internet security measures, and let us stop pretending that PCI-DSS audits will stop organised crime stealing card numbers by the million. Instead, we should kill two birds with one stone, and use chip technology in smart phones and smartcards to secure both card present and CNP transactions, and thus deliver the same high standards of usability and security in all channels.
With a bunch of exciting new members joining up on the eve of the RSA Conference, the FIDO Alliance is going from strength to strength. And they've just published the first public review drafts of their core "universal authentication" protocols.
An update to my Constellation Research report on FIDO is now available. Here's a preview.
The Go-To standards alliance in protocols for modern identity management
The FIDO Alliance – for Fast IDentity Online – is a fresh, fast growing consortium of security vendors and end users working out a new suite of protocols and standards to connect authentication endpoints to services. With an unusual degree of clarity in this field, FIDO envisages simply "doing for authentication what Ethernet did for networking".
Launched in early 2013, the FIDO Alliance has already grown to nearly 100 members, amongst which are heavyweights like Google, Lenovo, MasterCard, Microsoft and PayPal as well as a couple of dozen biometrics vendors, many of the leading Identity and Access Management solutions and service providers and several global players in the smartcard supply chain.
FIDO is different. The typical hackneyed elevator pitch in Identity and Access Management promises to "fix the password crisis" – usually by changing the way business is done. Most IDAM initiatives unwittingly convert clear-cut technology problems into open-ended business transformation problems. In contrast, FIDO's mission is refreshingly clear cut: it seeks to make strong authentication interoperable between devices and servers. When users have activated FIDO-compliant endpoints, reliable fine-grained information about their client environment becomes readily discoverable by any servers, which can then make access control decisions, each according to its own security policy.
With its focus, pragmatism and critical mass, FIDO is justifiably today's go-to authentication standards effort.
In February 2014, the FIDO Alliance announced the release of its first two protocol drafts, and a clutch of new members including powerful players in financial services, the cloud and e-commerce. Constellation notes in particular the addition to the board of security leader RSA and another major payments card, Discover. And FIDO continues to strengthen its vital “Relying Party” (service provider) representation with the appearance of Aetna, Goldman Sachs, Netflix and Salesforce.com.
It's time we fixed the Authentication plumbing
In my view, the best thing about FIDO is that it is not about federated identity but instead it operates one layer down in what we call the digital identity stack. This might seem to run against the IDAM tide, but it's refreshing, and it may help the FIDO Alliance sidestep the quagmire of identity policy mapping and legal complexities. FIDO is not really about the vexed general issue of "identity" at all! Instead, it's about low level authentication protocols; that is, the plumbing.
The FIDO Alliance sets out its mission as follows:
- Change the nature of online authentication by:
- Developing technical specifications that define an open, scalable, interoperable set of mechanisms that reduce the reliance on passwords to authenticate users.
- Operating industry programs to help ensure successful worldwide adoption of the Specifications.
- Submitting mature technical Specification(s) to recognized standards development organization(s) for formal standardization.
The engineering problem underlying Federated Identity is actually pretty simple: if we want to have a choice of high-grade physical, multi-factor "keys" used to access remote services, how do we convey reliable cues to those services about the type of key being used and the individual who's said to be using it? If we can solve that problem, then service providers and Relying Parties can sort out for themselves precisely what they need to know about the users, sufficient to identify and authenticate them.
All of these leaves the 'I' in the acronym "FIDO" a little contradictory. It's such a cute name (alluding of course to the Internet dog) that it's unlikely to change. Instead, I overheard that the acronym might go the way of "KFC" where eventually it is no longer spelled out and just becomes a word in and of itself.
FIDO Alliance Board Members
- CrucialTec (manufactures innovative user input devices for mobiles)
- Discover Card
- Nok Nok Labs (a specialist authentication server software company)
- NXP Semiconductors (a global supplier of card chips, SIMs and Secure Elements)
- Oberthur Technologies (a multinational smartcard and mobility solutions provider)
- Synaptics (fingerprint biometrics)
- Yubico (the developer of the YubiKey PKI enabled 2FA token).
FIDO Alliance Board Sponsor Level Members
- EyeLock Inc.
- Fingerprint Cards AB
- Goldman Sachs
- IDEX ASA
- Next Biometrics Group
- Oesterreichische Staatsdruckerei GmbH
- Ping Identity
- Wave Systems
Stay tuned for the updated Constellation Research report.
An unhappy holiday for Target customers
A week before Christmas, Target in the US revealed it had suffered a massive payment card data breach, with some 40 million customers affected. Details of the breach are still emerging. No well-informed criticism has yet to emerge of Target's security; instead most observers say that Target has very serious security, and therefore this latest attack must have been very sophisticated, or else an inside job. It appears Target was deemed PCI-DSS compliant -- which only goes to prove yet again the futility of the PCI audit regime for deterring organized criminals.
Security analyst Brian Krebs has already seen evidence of a "fire sale" on carding sites. Cardholder records are worth several dollars each, up to $44 according to Krebs for "fresh" accounts. So the Return on Investment for really big attacks like this one on Target (and before that, on Adobe, Heartland Payments Systems, TJMaxx and Sony) can approach one billion dollars.
We have to face the fact that no amount of conventional IT security can protect a digital asset worth a billion dollars. Conventional security can repel amateur attacks and prevent accidental losses, but security policies, audits and firewalls are not up to the job when a determined thief knows what they're looking for.
It's high time that we rendered payment card data immune to criminal reuse. This is not a difficult technological problem; it's been solved before in Card Present transactions around the world, and with a little will power, the payments industry could do it again for Internet payments, nullifying the black market in stolen card data.
A history of strong standardisation
The credit card payments system is a paragon of standardisation. No other industry has such a strong history of driving and adopting uniform technologies, infrastructure and business processes. No matter where you keep a bank account, you can use a globally branded credit card to go shopping in almost every corner of the planet. This seamless interoperability is created by the universal Four Party settlement model, and a long-standing plastic card standard that works the same with ATMs and merchant terminals absolutely everywhere.
So with this determination to facilitate trustworthy and supremely convenient spending in worldwide, it's astonishing that the industry is still yet to standardise Internet payments! We have for the most part settled on the EMV chip card standard for in-store transactions, but online we use a wide range of confusing, piecemeal and largely ineffective security measures. As a result, Card Not Present (CNP) fraud has boomed. I argue that all card payments -- offline and online -- should be properly secured using standardised hardware. In particular, CNP transactions should either use the very same EMV chip and cryptography as do Card Present payments, or it should exploit the capability of mobile handsets and especially Secure Elements.
CNP Fraud trends
The Australian Payments Clearing Association (APCA) releases twice-yearly card fraud statistics, broken down by fraud type: skimming & carding, Card Not Present, stolen cards and so on. Lockstep Consulting monitors the APCA releases and compiles a longitudinal series. The latest Australian card fraud figures are shown below.
APCA like other regulators tend to varnish the rise in CNP fraud, saying it's smaller than the overall rise in e-commerce. There are several ways to interpret this contextualization. The population-wide systemic advantages of e-commerce can indeed be said to outweigh the fraud costs, yet this leaves the underlying vulnerability to payments fraud unaddressed, and ignores the qualitative problems suffered by the individual victims of fraud (as they say, history is written by the winners). It's pretty complacent to play down fraud as being small compared with the systemic benefit of shopping online; it would be like meekly attributing a high road toll to the popularity of motor cars. At some point, we have to do something about safety![And note very carefully that online fraud and online shopping are not in fact two sides of the same coin. Criminals obtain most of their stolen card data from offline retail and processing environments. It's a bit rude to argue CNP fraud is small as a proportion of e-commerce when some people who suffer from stolen card data might have never shopped online in their lives!]
Frankly it's a mystery why the payments industry seems so bamboozled by CNP fraud, because technically it's a very simple problem. And it's one we've already solved elsewhere. For Card Not Present fraud is simply online carding.
Skimming and Carding
In carding, criminals replicate stolen customer data on blank cards; with CNP fraud they replay stolen data on merchant servers.
A magstripe card stores the customer's details as a string of ones and zeroes, and presents them to a POS terminal or ATM in the clear. It's child's play for criminals to scan the bits and copy them to a blank card.
The payments industry responded to skimming and carding with EMV (aka Chip-and-PIN). EMV replaces the magnetic storage with an integrated circuit, but more importantly, it secures the data transmitted from card to terminal. EMV works by first digitally signing those ones and zeros in the chip, and then verifying the signature at the terminal. The signing uses a Private Key unique to the cardholder and held safely inside the chip where it cannot be tampered with by fraudsters. It is not feasible to replicate the digital signature without having access to the inner workings of the chip, and thus EMV cards resist carding.
Online card fraud
Conventional Card Not Present (CNP) transactions are vulnerable because, like the old magstripe cards themselves, they rest on cleartext cardholder data. On its own, a merchant server cannot tell the difference between the original card data and a copy, just as a terminal cannot tell an original magstripe card from a criminal's copy.
Despite the simplicity of the root problem, the past decade has seen a bewildering patchwork of flimsy and expensive online payments fixes. Various One Time Passwords have come and gone, from scratchy cards to electronic key fobs. Temporary SMS codes have been popular for two-step verification of transactions but were recently declared unfit for purpose by the Communications Alliance in Australia, a policy body representing the major mobile carriers.
Meanwhile, extraordinary resources have been squandered on the novel "3D Secure" scheme (MasterCard SecureCode and Verified by Visa). 3D Secure take-up is piecemeal; it's widely derided by merchants and customers alike. It upsets the underlying Four Party settlements architecture, slowing transactions to a crawl and introducing untold legal complexities.
A solution is at hand -- we've done it before
Why doesn't the card payments industry go back to its roots, preserve its global architecture and standards, and tackle the real issue? We could stop most online fraud by using the same chip technologies we deployed to kill off skimming.
It is technically simple to reproduce the familiar card-present user experience in a standard computer or in digital form on a smart phone. It would just take the will of the financial services industry to standardise digital signatures on payment messages sent from a card holder's device or browser to a merchant server.
And there is ample room for innovative payments modalities in online and mobile commerce settings:
All serious payments systems use hardware security. The classic examples include SIM cards, EMV, the Hardware Security Modules mandated by regulators in all ATMs, and the Secure Elements of NFC mobile devices. With well-designed hardware security, we gain a lasting upper hand in the cybercrime arms race.
The Internet and mobile channels will one day overtake the traditional physical payments medium. Indeed, commentators already like to say that the "digital economy" is simply the economy. Therefore, let us stop struggling with stopgap Internet security measures, and let us stop pretending that PCI-DSS audits will stop organised crime stealing card numbers by the million. Instead, we should kill two birds with one stone, and use chip technology to secure both Card Present and CNP transactions, to deliver the same high standards of usability and security in all channels.
Until we render stolen card data useless to criminals, the Return on Investment will remain high for even very sophisticated attacks (or simply bribing insiders), and spectacular data breaches like Target's will continue.