TurboHax | TechSNAP 203 | Jupiter Broadcasting

Lenovo & Google are victims of DNS hijacking, we’ll share the details, Everyone wants you to secure your data, just not from them & how Turbotax profits from Cyber tax fraud!

Plus a great batch of your questions, a fantastic round up & much, much more!

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— Show Notes: —

Attackers Hijack Lenovo Domain, Spoof Website and Intercept Company Emails

The lenovo.com website was replaced with a slideshow of some random person
The attack was apparently carried about by members of LizardCircle (or LizardSquad)
The identity of the person in the slideshow is unclear, but reports suggest they are two members of another hacking group (Hack The Planet) that have been trying to undermine LizardSquad for months
The pictures on the Lenovo site suggest that the webcam of the target may have been compromised
It seems the Lizard Squad was able to compromise webnic.cc, a large domain name registrar via a remote command injection vulnerability
They then reported installed a rootkit and took over the registrars infrastructure
Using this access, they were able to change the authoritative nameservers for the Lenovo.com domain to their own, and post the defacement page
This allow allowed them to intercept all incoming email sent to @lenovo.com addresses
They apparently used CloudFlare to host the site, and CloudFlare engineers eventually returned control of the site to Lenovo, while the DNS changes propagated
The attackers apparently also got access to the ‘auth codes’ required to transfer ownership of the domain to another registrar
Same attack also compromised google.com.vn domain in Vietnam
Additional Coverage: Krebs On Security
Additional Coverage: Ars Technica

Everyone wants you to secure your data, just not from them

Bruce Schneier writes a blog post about security and privacy
Google and Facebook was your data to be secure, on their server, so they can analyze it
Your government wants you to have security communications, as long as they have the magic keys to decrypt it, but other governments do not
“Governments are no different. The FBI wants people to have strong encryption, but it wants backdoor access so it can get at your data. UK Prime Minister David Cameron wants you to have good security, just as long as it’s not so strong as to keep the UK government out. And, of course, the NSA spends a lot of money ensuring that there’s no security it can’t break.”
Schneier also quotes Whitfield Diffie (pioneering cryptographer, co-developed the Diffie-Hellman key exchanged used in SSH and TLS): “You can’t have privacy without security, and I think we have glaring failures in computer security in problems that we’ve been working on for 40 years. You really should not live in fear of opening an attachment to a message. It ought to be confined; your computer ought to be able to handle it. And the fact that we have persisted for decades without solving these problems is partly because they’re very difficult, but partly because there are lots of people who want you to be secure against everyone but them. And that includes all of the major computer manufacturers who, roughly speaking, want to manage your computer for you. The trouble is, I’m not sure of any practical alternative.”
Corporations want access to your data for profit; governments want it security purposes, be they benevolent or malevolent. But Diffie makes an even stronger point: we give lots of companies access to our data because it makes our lives easier.
Bruce wrote in his recent book: Data and Goliath: “Convenience is the other reason we willingly give highly personal data to corporate interests, and put up with becoming objects of their surveillance. As I keep saying, surveillance-based services are useful and valuable. We like it when we can access our address book, calendar, photographs, documents, and everything else on any device we happen to be near. We like services like Siri and Google Now, which work best when they know tons about you. Social networking apps make it easier to hang out with our friends. Cell phone apps like Google Maps, Yelp, Weather, and Uber work better and faster when they know our location. Letting apps like Pocket or Instapaper know what we’re reading feels like a small price to pay for getting everything we want to read in one convenient place. We even like it when ads are targeted to exactly what we’re interested in. The benefits of surveillance in these and other applications are real, and significant.”
“Last week, we learned that the NSA broke into the Dutch company Gemalto and stole the encryption keys for billions yes, billions of cell phones worldwide. That was possible because we consumers don’t want to do the work of securely generating those keys and setting up our own security when we get our phones; we want it done automatically by the phone manufacturers. We want our data to be secure, but we want someone to be able to recover it all when we forget our password.”
“We’ll never solve these security problems as long as we’re our own worst enemy. That’s why I believe that any long-term security solution will not only be technological, but political as well. We need laws that will protect our privacy from those who obey the laws, and to punish those who break the laws. We need laws that require those entrusted with our data to protect our data. Yes, we need better security technologies, but we also need laws mandating the use of those technologies.”
I think at some level, part of the onus needs to be on the user as well, you are responsible for managing your passwords and security.
Transcript: NSA Director Mike Rogers vs. Yahoo! on Encryption Back Doors | Just Security

The rise of tax refund fraud

Fraudsters made billions of dollars last year by filing fake federal tax refund requests in the names of millions of unsuspecting Americans
The IRS added a number of security measures and better automated screening, which drove the fraudsters to focus on state-level tax fraud
“Anti-fraud Improvements by IRS Fuel Up To 3700 Percent Rise in Phony State Filings”
“Earlier this month, TurboTax was forced to briefly suspend state tax refund filings while it investigated the source of the unprecedented fraud spike”
To learn more about what was going on, Krebs interviewed Indu Kodukula, chief information security officer at Intuit
“The IRS has gotten much better than a few years ago from the perspective of fighting fraud,” Kodukula said. “We think what’s happening is that as a result the fraudsters are starting to target the states.”
In the 2014 tax season, the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS identified and confirmed 28,076 fraudulent tax returns involving identity theft. That was down significantly from a year earlier (PDF), when the IRS identified and confirmed 85,385 fraudulent tax returns involving identity theft
“But there are 46 states in the Union where taxpayers can file what’s called an ‘unlinked return,’ meaning they can file a state return without having a file a federal return at the same time. So when the [tax fraudsters] file an unlinked return, it leaves the state at its own disposal to fight this fraud, and we think that’s what has taken the states by surprise this year.”
“States allow unlinked returns because most taxpayers owe taxes at the federal level but are due refunds from their state. Thus, unlinked returns allow taxpayers who owe money to the IRS to pay some or all of that off with state refund money.”
“Unlinked returns typically have made up a very small chunk of Intuit’s overall returns, Kodukula said. However, so far in this year’s tax filing season, Intuit has seen between three and 37-fold increases in unlinked, state-only returns. Convinced that most of those requests are fraudulent, the company now blocks users from filing unlinked returns via TurboTax.”
“It’s very hard to imagine a fundamental demographic shift that could cause that kind of pattern,” Kodukula said. “Our thought is that the vast majority of this is clearly not legitimate activity.”
The traditional way that income tax fraud has been perpetrated was to steal the identity of an individual, then create an online tax account on their behalf and file the fraudulent return
However, there has been a spike in compromised tax accounts, most appear to be because of password reuse
We have seen many sites being compromised in the last few years, like LinkedIn, and Adobe. When huge piles of passwords like that are dropped on the Internet, the attackers try those same username/email and password combinations on other sites, like tax preparation sites
“Over the past one-and-a-half years, we started to see much more of this type type of account takeover attack, where a customer’s TurboTax credentials were compromised at another site,” Kodukula said, describing wave after wave of attempts by fraudsters to log in at TurboTax using huge lists of credentials leaked in the wake of breaches at other companies.
Currently, about 60 percent of the returns flagged as likely fraudulent by Intuit appear to come from SIRF, while the other 40 percent are the result of account takeovers, Kodukula said. But the account takeover attacks are definitely growing in frequency and intensity, he said.
“From the list validation attacks we’ve seen, we know the credentials came from somewhere else,” he added. “When you look at credentials that have never been used in our system [trying to log in] it’s a pretty good indicator that those are credentials not from our space.”
Security experts (including Krebs) have long called on TurboTax to implement two-step authentication for customers to help address the account takeover the problem of password re-use by consumers. Earlier this month, Intuit announced it would be implementing this very feature, although the company’s choice of approaches may fall short of what many security experts think of when they talk about real two-step or two-factor authentication.
Krebs’ article also has some links and guidance for those who fall victim to this type of attack
A week after the above interview, Krebs interviewed Robert Lee, a security business partner at Intuit’s consumer tax group until his departure from the company in July 2014
Kreb’s 2nd Interview
Lee said that he and his team at Intuit developed sophisticated fraud models to help Intuit quickly identify and close accounts that were being used by crooks to commit massive amounts of SIRF fraud.
But Lee said he was mystified when Intuit repeatedly refused to adopt some basic policies that would make it more costly and complicated for fraudsters to abuse the company’s service for tax refund fraud, such as blocking the re-use of the same Social Security number across a certain number of TurboTax accounts, or preventing the same account from filing more than a small number of tax returns
“If I sign up for an account and file tax refund requests on 100 people who are not me, it’s obviously fraud,” Lee said in an interview with KrebsOnSecurity. “We found literally millions of accounts that were 100 percent used only for fraud. But management explicitly forbade us from either flagging the accounts as fraudulent, or turning off those accounts.”
“The Federal Trade Commission (FTC) said it received 332,646 identity theft complaints in the calendar year 2014, and that almost one-third of them — the largest portion — were tax-related identity theft complaints. Tax identity theft has been the largest ID theft category for the last five years.”
Lee said the scammers who hijack existing TurboTax accounts most often will use stolen credit cards to pay the $25-$50 TurboTax fee for processing and sending the refund request to the IRS.
But he said the crooks perpetrating SIRF typically force the IRS — and, by extension, U.S. taxpayers — to cover the fee for their bogus filings. That’s because most SIRF filings take advantage of what’s known in the online tax preparation business as a ‘refund transfer’, which deducts TurboTax’s filing fee from the total amount of the fraudulent refund request. If the IRS then approves the fraudulent return, TurboTax gets paid.
“The reason fraudsters love this system is because they don’t even have to use stolen credit cards to do it,” Lee said. “What’s really going on here is that the fraud business is actually profitable for Intuit.”
Lee confirmed Kodukula’s narrative that Intuit is an industry leader in sending the IRS regular reports about tax returns that appear suspicious. But he said the company eventually scaled back those reports after noticing that the overall fraud the IRS was reporting wasn’t decreasing as a result of Intuit’s reporting: Fraudsters were simply taking their business to Intuit’s competitors.
“We noticed the IRS started taking action, and because of this, we started to see not only our fraud numbers but also our revenue go down before the peak of tax season a couple of years ago,” Lee recalled. “When we stopped or delayed sending those fraud numbers, we saw the fraud and our revenue go back up.”
“Then, there was a time period where we didn’t deliver that information at all,” he said. “And then at one point there was a two-week delay added between the time the information was ready and the time it was submitted to the IRS. There was no technical reason for that delay, but I can only speculate what the real justification for that was.”
KrebsOnSecurity obtained a copy of a recording made of an internal Intuit conference call on Oct. 14, 2014, in which Michael Lyons, TurboTax’s deputy general counsel, describes the risks of the company being overly aggressive — relative to its competitors — in flagging suspicious tax returns for the IRS.
“As you can imagine, the bad guys being smart and savvy, they saw this and noticed it, they just went somewhere else,” Lyons said in the recording. “The amount of fraudulent activity didn’t change. The landscape didn’t change. It was like squeezing a balloon. They recognized that TurboTax returns were getting stopped at the door. So they said, ‘We’ll just go over to H&R Block, to TaxSlayer or TaxAct, or whatever.’ And all of a sudden we saw what we call ‘multi-filer activity’ had completely dropped off a cliff but the amount that the IRS reported coming through digital channels and through their self reported fraud network was not changing at all. The bad guys had just gone from us to others.”
That recording was shared by Shane MacDougall, formerly a principal security engineer at Intuit. MacDougall resigned from the company last week and filed an official whistleblower complaint with the U.S. Securities and Exchange Commission, alleging that the company routinely placed profits ahead of ethics. MacDougall submitted the recording in his filing with the SEC.
“Complainant repeatedly raised issues with managers, directors, and even [a senior vice president] of the company to try to rectify ongoing fraud, but was repeatedly rebuffed and told Intuit couldn’t do anything that would ‘hurt the numbers’,” MacDougall wrote in his SEC filing. “Complainant repeatedly offered solutions to help stop the fraud, but was ignored.”
Robert Lanesey, Inuit’s chief communications officer, said Intuit doesn’t make a penny on tax filings that are ultimately rejected by the IRS.
“Revenue that comes from reports included in our suspicious activity reports to the IRS has dropped precipitously as we have changed and improved our reporting mechanisms,” Lanesey said. “When it comes to market share, it doesn’t count toward our market share unless it’s a successful return. We’ve gotten better and we’ve gotten more accurate, but it’s not about money.”
Williams added that it is not up to Intuit to block returns from being filed, and that it is the IRS’s sole determination whether to process a given refund request.
“We will flag them as suspicious, but we do not get to determine if a return is fraud,” Williams said. “It’s the IRS’s responsibility and ultimately they make that decision. What I will tell you is that of the ones we report as suspicious, the IRS rejects a very high percentage, somewhere in the 80-90 percent range.”
It will be interesting to see how this story develops

TurboHax | TechSNAP 203