Is Two-Factor Authentication Being Oversold?

Opinion: Bruce Schneier thinks so. There are problems that it solves, but the real threats to consumers aren't among them.

If youre exchanging sensitive data online and youre not worried about identity theft, you should be. Several new attacks are released every day to steal your data or co-opt your account.

There are no shortage of products to protect you, even if the most important ingredient in personal security has, frighteningly, always been education. But now the security industry has a new set of products its selling to protect consumers: two-factor authentication.

Corporate IT departments have relied on two-factor identification, a market dominated by RSA with its SecurID products, for years. But corporate network log-ins are one thing; consumers accessing an ISP (as in AOLs SecurID-based PassCode service) or a Web-based service (such as the E*Trade Complete Security System with Digital Security ID) is another.

In fact, as Bruce Schneier, chief technology officer at Counterpane Internet Security, argues in a piece just published in Communications of the ACM, obviously its no solution. The obviousness of this is the really stunning thing.

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Schneier asks the question: What are the identity problems facing Internet consumers, and what does two-factor authentication do to mitigate them? Schneier identifies two broad classes of attack: man-in-the-middle attacks and Trojan horse software.

Two-factor authentication would defeat the sort of phishing where the Web site just collects user names and passwords, but imagine a phishing site (this is not novel, its been done a lot) where a fake page is put up but acts as a conduit to the real site. The user is actually working on the bank or commerce site or whatever it is they think they are working on, and everything goes through the fake site on its way between the user and the site.

Its the fake site in the middle that has the actual authenticated session with the commerce site, not the user. Therefore, the site can piggyback on the users provided authentication to conduct other transactions, such as purchases or transfers of funds. Two-factor authentication doesnt stop this.

The Trojan horse attack involves a program the user is tricked into running and that remains on his or her system, monitoring it for the opportunity to attack. You could call this a form of spyware. The Trojan waits for the user to connect to one or more commerce sites and uses the authenticated connection to perform transactions. Once again, since the user actually logs in, two-factor authentication is no problem for the attack.

Its tempting to think that there must be something to it, but as Schneier argues, the industry can have a herd mentality when it comes to security. And this particular fad has all the earmarks of being marketing-driven; its a way to enhance the security prestige of a brand and a way to sell premium services.

Local network log-on, the problem solved by two-factor authentication, was a real problem a long time ago when RSA solved it. But attackers have moved on to develop attacks that are more appropriate to the Internet. Just because a solution looks professional and enterprise-class doesnt make it an appropriate solution for consumers—far from it. In fact, its just another Internet scam.

Security Center Editor Larry Seltzer has worked in and written about the computer industry since 1983.

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