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Home » Hacking News » Throwing millions on two-factor authentication

Throwing millions on two-factor authentication

by Nikola Strahija on March 16th, 2005 Two-factor authentication that banks use for customers no longer provides adequate protection against fraud or identity theft.


That security measure is completely obsolete and therefore a waste of money. An encryption guru, Bruce Schneier, notes that passwords alone do not provide adequate security, and supplementing them with hardware tokens, which dynamically generate authentication key codes that change every minute, guards against eavesdropping and offline password guessing. All well and good but this approach fails to protect against modern active attack techniques such as man-in-the-middle attacks or Trojans, according to Schneier.

In the first case [man-in-the middle], the attacker can pass the ever-changing part of the password to the bank along with the never-changing part. And in the second case, the attacker is relying on the user to log in," he writes. "The real threat is fraud due to impersonation, and the tactics of impersonation will change in response to the defences. Two-factor authentication will force criminals to modify their tactics, that's all."

He predicts that the approach is ultimately doomed. Despite his criticisms, he reckons two factor authentication still has a role in enterprise security. "It works for local log-in, and it works within some corporate networks. But it won't work for remote authentication over the Internet," he concludes.


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