Unfortunately the EU regulation mandating 2FA[1] is only just starting to be adopted by the banks, in the UK at least. And they're doing it using SMS codes[2].
2FA has always been a requirement in my country, as far as I remember all the way from the start. The new EU legislation made things worse: one-time pad paper key list isn't accepted any more. My second factor now needs to be my phone (app or SMS).
The written list of one-time passwords (not a "pad" the One Time Pad is a specific crypto design that largely exists to compare things to rather than as a practical gizmo) fails the requirement in 2018/389 because it doesn't end up verifying the specific transaction.
Suppose you have password '47BF-38AP-3M99' on the list. You get a plausible email from your friend Barry saying he needs €40 urgently. You send €40 using that password and instructions Barry gave about some web site for transferring money.
Oops. That wasn't Barry, crooks used Barry's email account to send the message and the €40 transfer turns out to have been a transaction to empty your account of €5830.26 but '47BF-38AP-3M99' was correct so the bank OK'd it.
The regulation aims to arrange that the second factor involves the transaction value 5830.26 which is weird for you because you are trying to send Barry €40. You would probably realise something is wrong when typing 5830.26 into an authenticator, or else, the crooks only get €40 which is a bad pay-off for such a sophisticated attack.
My good bank gave me a weird chiclet keypad device years ago that I have to type stuff into while doing online transactions. So I'd have to type the amount into that device. It whitelists certain actions, so if I keep sending Barry money, I think I don't have to type the amount in every time or something.
The EU rules definitely don't forbid your bank doing something better here, but I can see that the way that bank chose to implement them hasn't helped you which sucks.
Thanks for the in-depth explanation. My reaction has maybe been a bit knee-jerk, it's not like this is a major annoyance. The attack scenario is quite convoluted with needing both access to the account and a phishing attack for the one-time key, but I suppose it is plausible. At the same time this does open users to new attack vectors though, especially with SMS.
Any idea what the keypad device is called? Are you expected to carry it with you at all times? Is that feasible? Is there some sort of threshold for its use? For example, transactions under $X, even if fraudulent, might not be worth the inconvenience to the customer of having to go through the extra steps.
If you don’t mind my asking, is your banking institution geared towards HNW clients? The amount verification sounds very similar to what most banks in the US do for inter-bank transactions but I’ve never heard of something like that implemented on a bank account from the consumer’s side.
The device claims to be a "Vasco DigiPass". It has lots of other identifying marks but those might be secret (even if they weren't supposed to be, disclosing them might inadvertently reveal a secret)
I am not required to carry it, but my understanding is that most features of my online banking don't work if I tell the system I don't have it with me. I store it with other valuable identity items like my birth certificate in my home, I do not take it with me when I travel.
This bank offers excellent 24/7 phone service, if I was away from home I would call them if I needed anything. All conceivable transactions can be concluded by phone, indeed I've mentioned to HN before that it turns out very high value financial transactions (literally buying a home in my case) can't be done online at all. The web site just tells me to call them instead to complete the transaction.
The institution is not especially geared to High Net Worth individuals, but it doesn't offer any products geared to people focused on being thrifty/ economical. It doesn't offer zero fee current account banking, it doesn't pay great interest on savings, it doesn't have "cash back" features on credit cards, it's just a very well run bank. If I needed £10 more than I need a bank I can rely on, I would leave.
The most secure alternative, which should be the choice for anyone who actually cares, and an option anywhere that thinks _any_ of their users might care is WebAuthn (U2F is roughly the same thing but obsolete, no reason to deploy more of it)
WebAuthn uses FIDO Security keys, relatively cheap USB or Bluetooth devices or sometimes just a built-in feature of a smartphone, to authenticate. They are Something-You-Have, but the WebAuthn protocol also offers:
* Optionally a mode where you give the FIDO key a PIN (Something-You-Know) or biometric input (Something-You-Are) to do all the authentication locally
* Phishing proof - there's no decision about whether this is really your bank. WebAuthn is completely happy to log you into https://fake.bank.phishingsite.example/ but the credentials are useless to the crooks who own that site because they won't work on https://your.actual.bank.example/ even if the crooks got the logo just exactly right and wrote a very convincing pleading email from your bank saying they definitely need you to go to the fake bank site.
With all of these, you're often kicking the vulnerability down to the enrollment step. You've still got to find a way of assigning the authentication device/key generator to the users account in a secure way and dealing with losing the device.
Don't save your TOTP codes in your password manager if you are going for the "best" security.
That turns multi-factor auth back into "single factor auth" and leaves you one exploit away from having your password and TOTP code from getting stolen.
I store my TOTP in 1Password... I think it's still more secure than SMS (because to restore 1Password vault you also need a Secret, not only your password) and so much more convenient than a separate app, because 1Password auto-copies the TOTP code to your clipboard after filling form fields, making signing in a very smooth experience.
It is a security tradeoff that I take for most of my accounts. For a few that a much more sensitive I use a Yubikey.
And that's fine IMO as long as you know you are making a tradeoff.
But unless you have your 1Password setup to need the secret every time you go to have it fill in the password, the seed string is in memory unencrypted along with your passwords (or more specifically, it's stored in a way that it can be decrypted by the app/extension on it's own). That makes it one spectre/meltdown style exploit away from getting everything needed to login to the account.
Still, if that system works for you, then good! having any 2fa (even SMS) is better than nothing, storing TOTP codes in a password manager is better than SMS, storing them in a seperate device is better still, and U2F keys are even better still.
Like anything it's a gradient of tradeoffs, but I've seen too many people go from Google Authenticator to 1Password in an attempt to further secure their account, and I just like to point out that there's a good chance it's doing the opposite.
The main benefit behind TOTP is that you can tie its value creation to a second factor, such as something you own like a device (instead of something you know like a password).
It’s arguable that you’re removing that second factor when you store the parameters needed to create the TOTP in the same place as you store your passwords.
The setup string which generates the time codes is basically a second password. If something can read that setup string, they can generate their own TOTP codes for your account whenever they want.
I've done a piss poor job of describing it, but the way TOTP works is there is a "setup code" or a setup "string". Often in a QR code format.
That string is all that is needed to generate all of the TOTP codes forever. So while the TOTP code that you type is different every minute, it's generated by doing some math on the setup string and the current time.
Some password managers (like 1Password) allow you to have them generate your TOTP codes by putting in your setup string into them (often using the exact same process you would do to setup your TOTP codes in an app). But i'm saying that's not a good idea if you are going for "most secure", because at that point if something were to somehow exploit your password manager, they will not only get your username and password, but will have that setup string as well so they can generate their own TOTP codes for you.
WebAuthn/U2F security keys. No MITM, phishing or duplication possible. Register more than one per account in case the physical key breaks, keep one in a secure place.
My bank uses an app, Symantec VIP, to generate a 6 digit code.
This works on vacation when I can't receive SMS. It was much cheaper to buy a 4G SIM in Barcelona (for Google Maps etc) than enable international roaming from Australia ($AU5/day).
