FTC Enforcement Action Against Company and CEO Provides Roadmap for Reasonable Data Security Measures

November 8, 2022November 9, 2022 Kathie McDonald-McClure Cyber Security and Cyber Crime, Data Privacy & Security, FTC Enforcement account credentials, consumer privacy and security, FTC Act Section 5, FTC enforcement action, multi-factor authentication, passwords

Company’s Security Failures Exposed Data of 2.5 Million Consumers

By Kathie McDonald-McClure

On October 24, 2022, the Federal Trade Commission (FTC) announced enforcement action against Drizly, an online alcohol marketplace and subsidiary of Uber, and the Drizly CEO, over allegations that Drizly and the CEO failed to implement safeguards to prevent unauthorized access to consumer data stored on the Amazon Relational Database Service (Amazon RDS) that Drizly used to host its online marketplace platform. The FTC said that Drizly and its CEO were alerted to a security issue two years before the breach yet failed to take appropriate responsive action to secure personal information of consumers stored on Drizly’s Amazon RDS.

Employee posted company account login information on GitHub contributing to 2018 and 2020 security breaches. In 2018, a Drizly employee posted company cloud computing account login information on GitHub. GitHub is a free, online software development and hosting platform used for storing, tracking and collaborating on software projects. Drizly uses GitHub not only to manage and support its e-commerce website, but also to store spreadsheets, data sets, and repositories of past company data and projects.

The GitHub repositories included the AWS credentials used to access Drizly’s production environment. This security lapse allowed hackers to use Drizly’s servers to mine cryptocurrency in 2018. Upon discovering this, Drizly changed the login information for its cloud computing account and publicly claimed that it used adequate data security protections. Its website privacy policy stated: “We use standard security practices such as encryption and firewalls to protect the information we collect from you.”

Company employee is allowed access to GitHub repositories for a hackathon, using compromised credentials. According to the FTC complaint, in 2020 the company granted a company executive access to the GitHub repositories in order to participate in a one-day hackathon. The company failed to terminate the executive’s access after the event was over. At the time of granting such access, Drizly had not required unique and complex passwords nor multifactor authentication for access to the GitHub repositories. As a result, the executive had used a seven-character, alphanumeric password that he had used for other personal accounts and that was the subject of an unrelated data breach. The hacker used the executive’s compromised password to gain access to his GitHub account and to then access the company’s AWS and database credentials stored in the repositories. Ultimately, the hacker located the customer information stored on the company databases and put the information up for sale on two publicly available websites on the dark web.

Large volume of nonpublic, personal information was accessed by hacker. The FTC said Drizly’s security failures led to a breach of the personal information of about 2.5 million consumers. The personal information includes data collected from consumers who visited or placed e-commerce orders on the platform, such as name, age, email address, postal address, phone numbers, unique device identifiers, order histories, partial payment information, geolocation information, as well as personal information automatically collected from consumer computers and mobile devices by the website’s data collection tools.

In addition, the personal information included consumer data that Drizly purchased from third parties such as income level, marital status, gender, ethnicity, existence of children, and home value. The Drizly databases also contained consumer account passwords that were hashed using MD5 which the FTC said is “cryptographically broken and widely considered insecure.”

The FTC complaint provides a roadmap for minimum reasonable data security measures. The FTC complaint alleges that Drizly failed to implement “reasonable information security practices” to protect consumers’ personal information. These reasonable security practices include:

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CISA Discourages Use of App-Based, SMS and Voice MFAs and Encourages Phishing-Resistant MFAs

November 3, 2022November 4, 2022 Kathie McDonald-McClure Cyber Security and Cyber Crime, Data Privacy & Security CISA, IT data security policies, MFA, MFA fatigue and push bombing, multi-factor authentication, phishing, SIM swapping, SS7 protocol vulnerabily

Cyber Threat Actors Are Breaking the Security of Commonly Used MFAs

By: Kathie McDonald-McClure

A best practice in securing sensitive data is to deploy Multi-Factor Authentication (MFA) to prevent access by unauthorized users to internet-connected sources for such data. MFA requires authorized users to present a combination of two or more different authenticators (something you know, you have, or you are) to verify identity prior to access. MFA makes it more difficult for unauthorized users to gain access to servers and applications. For example, if one factor, such as a PIN, becomes compromised, the unauthorized user cannot gain access if they do not have the second factor, such as a mobile token or fingerprint.

Cyber security experts recommend MFA for all internet-facing applications with access to sensitive information. Such applications include remote desktop, Virtual Private Networks (VPNs), email accounts, financial and accounting software, file sharing and document management platforms, CRM, just to name a few.

Demonstrated compromises in commonly used MFAs prompts CISA to issue guidance. On October 31, 2022, the U.S. Cybersecurity & Infrastructure Security Agency (CISA) released Guidance on Phishing-Resistant and Numbers Matching Multifactor Authentication. The CISA Guidance includes two Fact Sheets. One Fact Sheet, Implementing Phishing-Resistant MFA, describes the methods cyber threat actors are using to gain access to MFA credentials. These methods include phishing emails and malicious websites, MFA fatigue, exploitation of SS7 protocol vulnerabilities, and SIM swapping. This CISA Fact Sheet identifies App-Based MFA and SMS or Voice MFA as being particularly vulnerable to these methods of stealing MFA credentials.

CISA strongly encourages organizations currently using App-Based, SMS or Voice MFA to migrate to a Phishing-Resistant MFA for as many applications as is feasible. CISA indicates that the currently available Phishing-Resistant MFA options are limited to FIDO/WebAuthn (included in most major browsers) and the PKI-based MFA (smart cards used with SSO technologies). App-Based MFAs verify the identity of users either by generating a one-time password (OTP) or sending a “push” pop-up notification to the mobile application. SMS and Voice MFAs send a code to the user’s phone or email. The user then retrieves this second factor code from their text or email to use for login authentication. CISA says that SMS and Voice MFA should only be used as a last resort.

CISA acknowledges there are several stumbling blocks to the deployment of Phishing-Resistant MFAs. These include the lack of support for it in the organization’s existing systems and products, difficulty in deploying it to all staff members at once, and upper management concerns that users will resist the migration. Nevertheless, CISA recommends that the organization’s IT leadership prioritize the migration to Phishing-Resistant MFA in logical phases focusing on the technologies at highest risk, such as email systems, file servers, and remote access systems, and the users who are high-value targets, such as system administrators, attorneys, HR staff, and others with access to sensitive data.

What if your organization uses mobile push-notification based MFA and migration to Phishing-Resistant MFA is not feasible? CISA recommends using “number matching” in the MFA application to mitigate MFA fatigue. CISA says, “MFA fatigue, also known as ‘push bombing,’ occurs when a cyber threat actor bombards a user with mobile application push notifications until the user either approves the request by accident or out of annoyance with the nonstop notifications.” Refer to the CISA Fact Sheet titled, Implementing Number Matching in MFA Applications, for guidance on how to enable “number matching” on MFA configurations to prevent MFA fatigue.

So why is a lawyer writing this technical piece? We assist clients proactively to prevent security breaches and reactively after a security incident in the preparation or revision of IT data security policies and procedures necessary to meet regulatory, contractual, cyber insurance underwriting, and other third-party expectations. If you are looking for assistance in this area, and to learn more about Wyatt’s data privacy and security practice, visit Data Privacy and Cyber Security.

If you need additional information, please contact:

Kathie McDonald-McClure

Phone: 502.562.7526

Email: kmcclure@wyattfirm.com

“Shields Up” Cyber Threat Alert Issued for All U.S. Organizations

February 21, 2022 Kathie McDonald-McClure Cyber Security and Cyber Crime CISA, cyber attacks, Russia, Shields Up Alert

By Kathie McDonald-McClure

The United States Cybersecurity and Infrastructure Security Agency (CISA) has issued a “Shields Up” Alert for every organization in the United States. The Shields Up Alert states that, as a result of the Russian government’s use of cyber as a key component of asserting pressure on a country’s government, military and population, “[e]very organization in the United States is at risk from cyber threats that can disrupt essential services and potentially result in impacts to public safety.” The Shields Up Alert sets forth specific recommended actions for organizations to take, regardless of size, to:

Reduce the likelihood of a damaging cyber intrusion,
Quickly detect a potential intrusion,
Ensure the organization is prepared to respond to an intrusion, and
Maximize the the organization’s resilence to a destructive cyber incident.

Read the full Shields Up Alert here.

Apache Log4j Vulnerability in Java Applications May Pose Risk to Confidential Company and Personal Information

December 17, 2021January 19, 2022 Kathie McDonald-McClure Cyber Security and Cyber Crime, data breach; notification, Data Privacy & Security Breach Notification, data theft, Java application vulnerability, Log4j, ransomware, unauthorized access

By: Kathie McDonald-McClure

On December 11, 2021, the United States Cybersecurity & Infrastructure Security Agency (CISA), issued a Statement regarding what it called a “critical vulnerability affecting products containing the log4j software library”. This Statement emphasizes that end users are reliant on their vendors to inform them about the vulnerabilities and to develop patches to protect against the vulnerabilities. Separately, CISA established a webpage for Apache Log4j Vulnerability Guidance that CISA is continually updating to impart further guidance and vendor information as they become available. End users should be on the lookout for critical patches from their vendors.

According to the CISA Guidance, the Log4j vulnerability is being widely exploited by a growing set of malicious actors to steal information, launch ransomware attacks, or conduct other malicious activity such as taking over a company server to mine cryptocurrency. At least 10 major technology vendors have issued statements that one or more of their products have been affected by the Log4j vulnerability: Cisco, IBM, VMware, Amazon Web Services (AWS), Fortinet, Broadcom, ConnectWise, HCL Connections, N-Able, and Okta.[1] On December 15, 2021, the Microsoft 365 Defender Threat Intelligence Team reported that a new family of ransomware, called Khonsari, is being deployed via the Log4j vulnerability on non-Microsoft hosted servers.

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KRONOS Payroll Ransomware Attack Implicates Potential Data Breach Notification Obligations

December 17, 2021January 19, 2022 Kathie McDonald-McClure Cyber Security and Cyber Crime, data breach; notification, Data Privacy & Security Breach Notification, KRONOS Privacy Cloud, Log4j, personal information compromise, ransomware, UKG, unauthorized access

By: Kathie McDonald-McClure

UKG, Inc., a company that provides payroll support services known as KRONOS for many U.S. companies, began notifying its customers on December 12, 2021, that the KRONOS Private Cloud (KPC) had been attacked by ransomware. (See UKG Kronos Private Cloud Status Updates.) The KPC products include Workforce Central, TeleStaff, Healthcare Extensions and Banking Scheduling Solutions. UKG reports that the KPC solutions may be unavailable for “several weeks.” Affected companies are diligently working to find alternative solutions to process their payrolls in the interim. UKG has created a KPC Incident Resource Hub to assist customers impacted by the KPC disruption in services.

The American Hospital Association (AHA) reported that the ransomware attack has impacted many hospitals and health systems that rely on KRONOS for timekeeping, scheduling and payroll. John Riggi, AHA’s Senior Advisor for Cybersecurity and Risk, said, “A lack of the availability of those services could be quite disruptive for health care providers, many of whom are experiencing surges of COVID-19 and flu patients. … This attack once again highlights the need for robust third-party risk management programs that identify mission-critical dependencies and downtime preparedness. … [W]e urge all third-party providers that serve the health care community to examine their cyber readiness, response and resiliency capabilities.”

In addition to the immediate payroll issues, if the ransomware attack compromises employee personal information, then it may trigger a data breach notification for these employers under state breach notification laws.

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