PayPal’s two-factor authentication easily beaten, researcher says

Security researcher Joshua Roberts
Security researcher Joshua Roberts turned down a reward from PayPal to report a bug in it's system after the company refused to act on the information

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5 August 2014 | 0

A security feature offered by PayPal to help prevent accounts from being taken over by hackers can be easily circumvented, an Australian security researcher has found.

PayPal users can elect to receive a six-digit passcode via text message in order to access their accounts. The number is entered after a username and password is submitted.

The security feature, known as two-factor authentication, is an option on many online services such as Google and mandatory on many financial services websites for certain kinds of high-risk transactions. Since the code is sent offline or generated by a mobile application, it is much more difficult for hackers to intercept although by no means impossible.

Joshua Rogers, a 17-year-old based in Melbourne, found a way to get access to a PayPal account that has enabled two-factor authentication. He published details of the attack on his blog on Monday after he said PayPal failed to fix the flaw despite being notified on 5 June.

By going public with the information, Rogers will forfeit a reward usually paid by PayPal to security researchers that requires confidentiality until a software vulnerability is fixed. Rogers estimated the reward might be around $3,000, although PayPal didn’t give him a figure.

“I don’t care about the money, no,” he said via e-mail. “Money isn’t everything in this world.”

The attack requires a hacker to know a person’s eBay and PayPal login credentials, but malicious software programs have long been able to easily harvest those details from compromised computers.

The fault lies in a page on eBay that allows users to link their eBay account with PayPal, which eBay owns. Linking the accounts creates a cookie that makes the PayPal application think the person is logged in, even if a six-digit code has not been entered, Rogers wrote on his blog.

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