Over the past few weeks, our research group has found that 30 percent of attacks against websites that use two-factor authentication are now utilizing real-time Man in the Middle (MitM) techniques to bypass this trusted security mechanism. The findings are based on the monitoring of thousands of phishing attacks. In a real-time phishing attack, the user enters details on a phishing website, which captures the banking credentials and authentication information. The stolen credentials are then immediately used to open a session on the real bank website to commit fraud. Authentication information typically captured and used by criminals in real-time phishing include one-time passwords (OTP), tokens, SMS authentication and cards and readers, rendering them ineffective against this type of attack.

Most phishing attacks to date have been completely static. In traditional phishing attacks, the victim reaches a phishing website and submits login credentials. The credentials are stored for later use by cybercriminals. The introduction of strong two-factor authentication systems, especially one-time passwords, rendered those attacks useless; fraudsters could not use static stolen credentials to commit fraud. With strong two-factor authentication, the user is required to provide an OTP as part of the login process. There are many OTP approaches; some of them are based on token devices that users carry with them, while others are sent to the user’s phone as an SMS text or voice call each time the user logs on. Even if the fraudsters managed to capture OTP data, there is only a short period of time in which the data can be used.

For some time, websites that used strong two-factor authentication reported a significant drop in phishing attacks. The cybercriminals, however, have not given up.

Cross-Channel Phishing

Initially, criminals who targeted OTP-protected websites used cross-channel phishing techniques, which collect enough information from the victim to successfully authenticate over the phone. Since users are required to provide more information when they authenticate over the phone, clever fraudsters are often able to collect enough data through phishing to successfully impersonate the victim. Criminals often claim that they lost their authentication device and ask for a new one, or request a change of address.

Real-Time Phishing

Recently, we have noticed an increase, on three different continents, of a different type of attack called Man in the Middle phishing, or real-time phishing. This tactic allows fraudsters to completely bypass two-factor authentication.

The concept is not a new one and is well known in the security world; however, up until now, we haven’t seen too many attacks like this. The recent escalation of websites now experiencing this type of attack is a cause for immediate concern.

In a Man in the Middle attack the phishing website is connected, in real time, to the bank website. The credentials that the user submits to the phishing site, including OTPs, are stolen and used immediately by the fraudsters to initiate a fraudulent session on the bank website. It doesn’t matter if the website uses a dedicated OTP token, SMS authentication, card and reader or any other type of two-factor authentication.

At first glance, real-time phishing seems just like any other phishing attack. On closer examination of the malicious website, however, one can determine that it is, in fact, connected in real time to the bank. This enables any information submitted to the fake Web page to be posted to the bank website immediately.

Many organizations that used strong two-factor authentication were dismissive of phishing attacks. They assumed that the attacks were incapable of bypassing their security controls. This is no longer the case. Using phishing kits with real-time capabilities, fraudsters have improved their operations to conduct fraud in real time. In our last post, we warned that fraudsters are improving the turnaround time for malware attacks; this development now seems to apply to phishing, as well.

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