Identity thieves who specialize in tax refund fraud had big help this past tax year from Equifax, one of the nation’s largest consumer data brokers and credit bureaus. The trouble stems from TALX, an Equifax subsidiary that provides online payroll, HR and tax services. Equifax says crooks were able to reset the 4-digit PIN given to customer employees as a password and then steal W-2 tax data after successfully answering personal questions about those employees.

In a boilerplate text sent to several affected customers, Equifax said the unauthorized access to customers’ employee tax records happened between April 17, 2016 and March 29, 2017.

Beyond that, the extent of the fraud perpetrated with the help of hacked TALX accounts is unclear, and Equifax refused requests to say how many consumers or payroll service customers may have been impacted by the authentication weaknesses.

Thanks to data breach notification laws in nearly all U.S. states now, we know that so far at least five organizations have received letters from Equifax about a series of incidents over the past year, including defense contractor giant Northrop Grumman; staffing firm Allegis Group; Saint-Gobain Corp.; Erickson Living; and the University of Louisville.

A snippet from TALX’s letter to the New Hampshire attorney general (PDF) offers some insight into the level of security offered by this wholly-owned subsidiary of Equifax. In it, lawyers for TALX downplay the scope of the breach even as they admit the company wasn’t able to tell exactly how much unauthorized access to tax records may have occurred.

“TALX believes that the unauthorized third-party(ies) gained access to the accounts primarily by successfully answering personal questions about the affected employees in order to reset the employees’ pins (the password to the online account portal),” wrote Nicholas A. Oldham, an attorney representing TALX. “Because the accesses generally appear legitimate (e.g., successful use of login credentials), TALX cannot confirm forensically exactly which accounts were, in fact, accessed without authorization, although TALX believes that only a small percentage of these potentially affected accounts were actually affected.”

ANALYSIS

Generally. Forensically. Exactly. Potentially. Actually. Lots of hand-waiving from the TALX/Equifax suits. But Equifax should have known better than to rely on a simple PIN for a password, says Avivah Litan, a fraud analyst with Gartner Inc.

“That’s so 1990s,” Litan said. “It’s pretty unbelievable that a company like Equifax would only protect such sensitive data with just a PIN.”

Litan said TALX should have required customers to use stronger two-factor authentication options, such as one-time tokens sent to an email address or mobile device (as Equifax now says TALX is doing — at least with those we know were notified about possible employee account abuse).

The big consumer credit bureaus like Equifax, Experian, Innovis and Trans Union are all regulated by the Fair Credit Reporting Act (FCRA), which strives to promote accuracy, fairness and privacy for data used by consumer reporting agencies.  But Litan said there are no federal requirements that credit bureaus use stronger authentication for access to consumer data — such as two-factor authentication.

“There’s about 500 percent more protection for credit card data right now than there is for identity data,” Litan said. “And yet I don’t know of one document from the federal government that spells out how these credit bureaus and other companies have to protect PII (personally identifiable information).”

Then there is the small matter of the questions that ID thieves were able to successfully answer about their victims via TALX’s online portal. Security experts have been warning for years about the waning effectiveness of using so-called “knowledge-based authentication questions” (KBA) — such as details about the consumer’s historic location and financial activity — for online authentication.

The problem with relying on KBA questions to authenticate consumers online is that so much of the information needed to successfully guess the answers to those multiple-choice questions is now indexed or exposed by search engines, social networks and third-party services online — both criminal and commercial.

What’s more, many of the companies that provide and resell these types of KBA challenge/response questions have been hacked in the past by criminals that run their own identity theft services.

“Whenever I’m faced with KBA-type questions I find that database tools like Spokeo, Zillow, etc are my friend because they are more likely to know the answers for me than I am,” said Nicholas Weaver, a senior researcher in networking and security for the International Computer Science Institute (ICSI).

In short: The crooks broadly have access to the data needed to reliably answer KBA questions on most consumers.

Litan said the key is reducing reliance on static data – much of which is PII data that has been compromised by the crooks – and increasing reliance on dynamic data, like reputation, behavior and relationships between non-PII data elements.

Identity thieves prize the W-2 and payroll data held by companies like TALX because they can use it to file fraudulent tax refund requests with the IRS and the states on behalf of victim consumers. According to the Internal Revenue Service, some 787,000 Americans reported being victimized by tax refund fraud last year.

Extra security and screening precautions by the states and the IRS brought last year’s victim numbers down 50 percent from 2015. But even the IRS has struggled with its own tax fraud-related security foibles tied to weak consumer authentication. In 2015, it issued more than $490 million in fraudulent refunds requested on behalf of hundreds of thousands of Americans who were victimized by data stolen directly from the “Get Transcript” feature of the IRS’s own Web site.

It’s worth noting that – as with the TALX incidents — the IRS’s Get Transcript fiasco also failed because it relied primarily on KBA questions asked by Equifax.

Tax-related identity theft occurs when someone uses a Social Security number (SSN) — either a client’s, a spouse’s, or dependent’s — to file a tax return claiming a fraudulent refund. Thieves may also use a stolen Employer Identification Number (EIN) from a business client to create false Forms W-2 to support refund fraud schemes. Increasingly, fraudsters are simply phishing W-2 data in large quantities from human resource professionals at a variety of organizations.

Victims usually first learn of the crime after having their returns rejected because scammers beat them to it. Even those who are not required to file a return can be victims of refund fraud, as can those who are not actually due a refund from the IRS.

“If the federal government is smart, they will consider suing Equifax for false returns filed using W2 information stolen from TALX customers, since this is exactly the sort of mass scale attack that even the most basic SMS-based 2-factor would block,” the ICSI’s Weaver said.

It’s high time for consumers to come face-to-face with the reality that the basic data needed to open new lines of credit on them or file taxes in their name is broadly available for sale in the cybercrime underground. What little consumer data that cannot be found in the bowels of the Dark Web can be coaxed out of countless poorly-secured and automated services like TALX that hold extremely sensitive consumer data and yet safeguard it with antiquated and insufficient authentication measures.

In light of the above, the sobering reality is that we have no business using these static identifiers (SSN, DOB, address, previous address, income, mother’s maiden name) for authentication, and yet this practice remains rampant across vast sectors of the American economy today, including consumer banking, higher education and government services.

Predictably, Equifax is offering identity theft detection services (for two years) to employees of TALX customers. Loyal readers here know where I come down on these credit monitoring services, because nobody should confuse these services with a reliable method to block identity theft. The most consumers can hope for out of a credit monitoring service is that it alerts you when ID thieves hijack your data; these services generally don’t prevent ID theft. Also, they can be useful for helping to clean up after a confirmed ID theft incident.

The consumer’s best weapon against new account fraud and other forms of identity theft is the security freeze, also known as a credit freeze. I explain more about the benefits of the freeze as well as other options in multiple posts on this blog. I should note, however, that a security freeze will do nothing to stop fraudsters from filing phony tax refunds in your name with the IRS. For tips on avoiding tax refund fraud, check out this post.

DocuSign, a major provider of electronic signature technology, acknowledged today that a series of recent malware phishing attacks targeting its customers and users was the result of a data breach at one of its computer systems. The company stresses that the data stolen was limited to customer and user email addresses, but the incident is especially dangerous because it allows attackers to target users who may already be expecting to click on links in emails from DocuSign.

On San Francisco-based DocuSign warned on May 9 that it was tracking a malicious email campaign where the subject line reads, “Completed: docusign.com – Wire Transfer Instructions for recipient-name Document Ready for Signature.” The missives contained a link to a downloadable Microsoft Word document that harbored malware.

The company said at the time that the messages were not associated with DocuSign, and that they were sent from a malicious third-party using DocuSign branding in the headers and body of the email. But in an update late Monday, DocuSign confirmed that this malicious third party was able to send the messages to customers and users because it had broken in and stolen DocuSign’s list of customers and users.

“As part of our ongoing investigation, today we confirmed that a malicious third party had gained temporary access to a separate, non-core system that allows us to communicate service-related announcements to users via email,” DocuSign wrote in an alert posted to its site. “A complete forensic analysis has confirmed that only email addresses were accessed; no names, physical addresses, passwords, social security numbers, credit card data or other information was accessed. No content or any customer documents sent through DocuSign’s eSignature system was accessed; and DocuSign’s core eSignature service, envelopes and customer documents and data remain secure.”

The company is asking people to forward any suspicious emails related to DocuSign to spam@docusign.com, and then to delete the missives. 

“They may appear suspicious because you don’t recognize the sender, weren’t expecting a document to sign, contain misspellings (like “docusgn.com” without an ‘i’ or @docus.com), contain an attachment, or direct you to a link that starts with anything other than https://www.docusign.com or https://www.docusign.net,” reads the advisory.

If you have reason to expect a DocuSign document via email, don’t respond to an email that looks like it’s from DocuSign by clicking a link in the message. When in doubt, access your documents directly by visiting docusign.com, and entering the unique security code included at the bottom of every legitimate DocuSign email. DocuSign says it will never ask recipients to open a PDF, Office document or ZIP file in an email.

DocuSign was already a perennial target for phishers and malware writers, but this incident is likely to intensify attacks against its users and customers. DocuSign says it has more than 100 million users, and it seems all but certain that the criminals who stole the company’s customer email list are going to be putting it to nefarious use for some time to come.

As thousands of organizations work to contain and clean up the mess from this week’s devastating Wana ransomware attack, the fraudsters responsible for releasing the digital contagion are no doubt counting their earnings and congratulating themselves on a job well done. But according to a review of the Bitcoin addresses hard-coded into Wana, it appears the perpetrators of what’s being called the worst ransomware outbreak ever have made little more than USD $26,000 so far from the scam.

The Wana ransomware became a global epidemic virtually overnight this week, after criminals started distributing copies of the malware with the help of a security vulnerability in Windows computers that Microsoft patched in March 2017. Infected computers have all their documents and other important user files scrambled with strong encryption, and victims without access to good backups of that data have two choices: Kiss the data goodbye, or pay the ransom — the equivalent of approximately USD $300 worth of the virtual currency Bitcoin.

According to a detailed writeup on the Wana ransomware published Friday by security firm Redsocks, Wana contains three bitcoin payment addresses that are hard-coded into the malware. One of the nice things about Bitcoin is that anyone can view all of the historic transactions tied a given Bitcoin payment address. As a result, it’s possible to tell how much the criminals at the helm of this crimeware spree have made so far and how many victims have paid the ransom.

A review of the three payment addresses hardcoded into the Wana ransomware strain indicates that these accounts to date have received 100 payments totaling slightly more than 15 Bitcoins — or approximately $26,148 at the current Bitcoin-to-dollars exchange rate.

ANALYSIS

It is possible that the crooks responsible for this attack maintained other Bitcoin addresses that were used to receive payments in connection with this attack, but there is currently no evidence of that. It’s worth noting that the ransom note Wana popped up on victim screens (see screenshot above) included a “Contact Us” feature that may have been used by some victims to communicate directly with the fraudsters. Also, I realize that in many ways USD $26,000 is a great deal of money.

However, I find it depressing to think of the massive financial damage likely wrought by this ransom campaign in exchange for such a comparatively small reward. It’s particularly galling because this attack potentially endangered the lives of many. At least 16 hospitals in the United Kingdom were diverting patients and rescheduling procedures on Friday thanks to the Wana outbreak, meaning the attack may well have hurt people physically (no deaths have been reported so far, thank goodness).

Unfortunately, this glaring disparity is par for the course with cybercrime in general. As I observed on several occasions in my book Spam Nation — which tracked the careers of some of the most successful malware writers and pharmacy pill spammers on the planet — it was often disheartening to see how little money most of those guys made given the sheer amount of digital disease they were pumping out into the Internet on a daily basis.

In fact, very few of these individuals made much money at all, and yet they were responsible for perpetuating a global crime machine that inflicted enormous damage on businesses and consumers. A quote in the book from Stefan Savage, a computer science professor at the University of California, San Diego (UCSD) encapsulates the disparity quite nicely and seems to have aged quite well:

“What’s fascinating about all this is that at the end of the day, we’re not talking about all that much money,” Savage said. “These guys running the pharma programs are not Donald Trumps, yet their activity is going to have real and substantial financial impact on the day-to-day lives of tens of millions of people. In other words, for these guys to make modest riches, we need a multibillion-dollar industry to deal with them.”

Microsoft Corp. today took the unusual step of issuing security updates to address flaws in older, unsupported versions of Windows — including Windows XP and Windows 8. The move is a bid to slow the spread of the WanaCrypt ransomware strain that infected tens of thousands of Windows computers virtually overnight this week.

On Friday, May 12, countless organizations around the world began fending off attacks from a ransomware strain variously known as WannaCrypt, WanaDecrypt and Wanna.Cry. Ransomware encrypts a victim’s documents, images, music and other files unless the victim pays for a key to unlock them.

It quickly became apparent that Wanna was spreading with the help of a file-sharing vulnerability in Windows. Microsoft issued a patch to fix this flaw back in March 2017, but organizations running older, unsupported versions of Windows (such as Windows XP) were unable to apply the update because Microsoft no longer supplies security patches for those versions of Windows.

The software giant today made an exception to that policy after it became clear that many organizations hit hardest by Wanna were those still running older, unsupported versions of Windows.

“Seeing businesses and individuals affected by cyberattacks, such as the ones reported today, was painful,” wrote Phillip Misner, principal security group manager at the Microsoft Security Response Center. “Microsoft worked throughout the day to ensure we understood the attack and were taking all possible actions to protect our customers.”

The update to address the file-sharing bug that Wanna is using to spread is now available for Windows XP, Windows 8, and Windows Server 2003 via the links at the bottom of this advisory.

On Friday, at least 16 hospitals in the United Kingdom were forced to divert emergency patients after computer systems there were infected with Wanna. According to multiple stories in the British media, approximately 90 percent of care facilities in the U.K.’s National Health Service are still using Windows XP – a 16-year-old operating system.

According to a tweet from Jakub Kroustek, a malware researcher with security firm Avast, the company’s software has detected more than 100,000 instances of the Wana ransomware.

For advice on how to harden your systems against ransomware, please see the tips in this post.

At least 16 hospitals in the United Kingdom are being forced to divert emergency patients today after computer systems there were infected with ransomware, a type of malicious software that encrypts a victim’s documents, images, music and other files unless the victim pays for a key to unlock them.

It remains unclear exactly how this ransomware strain is being disseminated and why it appears to have spread so quickly, but there are indications the malware may be spreading to vulnerable systems through a security hole in Windows that was recently patched by Microsoft.

In a statement, the U.K.’s National Health Service (NHS) said a number of NHS organizations had suffered ransomware attacks.

“This attack was not specifically targeted at the NHS and is affecting organizations from across a range of sectors,” the NHS said. “At this stage we do not have any evidence that patient data has been accessed.”

According to Reuters, hospitals across England are diverting patients requiring emergency treatment away from the affected hospitals, and the public is being advised to seek medical care only for acute medical conditions.

NHS said the investigation is at an early stage but the ransomware that hit at least 16 NHS facilities is a variant of Wanna Decryptor (a.k.a. “WannaCry“), a ransomware strain that surfaced roughly two weeks ago.

Lawrence Abrams, owner of the tech-help forum BleepingComputer, said Wanna Decryptor wasn’t a big player in the ransomware space until the past 24 hours, when something caused it to be spread far and wide very quickly.

“It’s been out for almost two weeks now, and until very recently it’s just been sitting there,” Abrams said. “Today, it just went nuts.”

For example, the same ransomware strain apparently today also hit Telefonica, one of Spain’s largest telecommunications companies. According to an article on BleepingComputer, Telefonica has responded by “desperately telling employees to shut down computers and VPN connections in order to limit the ransomware’s reach.”

An alert published by Spain’s national computer emergency response team (CCN-CERT) suggested that the reason for the rapid spread of Wanna Decryptor is that it is leveraging a software vulnerability in Windows computers that Microsoft patched in March.

According to CCN-CERT, that flaw is MS17-010, a vulnerability in the Windows Server Message Block (SMB) service, which Windows computers rely upon to share files and printers across a local network. Malware that exploits SMB flaws could be extremely dangerous inside of corporate networks because the file-sharing component may help the ransomware spread rapidly from one infected machine to another.

That SMB flaw has enabled Wanna Decryptor to spread to more than 36,000 Windows computers so far, according to Jakub Kroustek, a malware researcher with Avast, a security firm based in the Czech Republic.

“So far, Russia, Ukraine, and Taiwan leading,” the world in new infections, Kroustek wrote in a tweet. “This is huge.”

Abrams said Wanna Decryptor — like many ransomware strains — encrypts victim computer files with extremely strong encryption, but the malware itself is not hard to remove from infected computers. Unfortunately, removing the infection does nothing to restore one’s files to their original, unencrypted state.

“It’s not difficult to remove, but it also doesn’t seem to be decryptable,” Abrams said. “It also seems to be very persistent. Every time you make a new file [on an infected PC], it encrypts that new file too.”

Experts may yet find a weakness in Wanna that allows them to way to decode the ransomware strain without paying the ransom. For now, however, victims who don’t have backups of their files have one option: Pay the $300 Bitcoin ransom being demanded by the program.

Nevertheless, victims who are struggling with ransomware should pay a visit to BleepingComputer’s ransomware help forum, which often has tutorials on how to remove the malware and in some cases unlock encrypted files without paying the ransom. In addition, the No More Ransom Project also includes an online tool that enables ransomware victims to learn if a free decryptor is available by uploading a single encrypted file.