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Me on the Equifax Breach

Last week, I testified before the House Energy and Commerce committee on the Equifax hack. You can watch the video here. And you can read my written testimony below.

Testimony and Statement for the Record of Bruce Schneier
Fellow and Lecturer, Belfer Center for Science and International Affairs, Harvard Kennedy School Fellow, Berkman Center for Internet and Society at Harvard Law School

Hearing on “Securing Consumers’ Credit Data in the Age of Digital Commerce”

Before the Subcommittee on Digital Commerce and Consumer Protection Committee on Energy and Commerce United States House of Representatives

1 November 2017
2125 Rayburn House Office Building
Washington, DC 20515

Mister Chairman and Members of the Committee, thank you for the opportunity to testify today concerning the security of credit data. My name is Bruce Schneier, and I am a security technologist. For over 30 years I have studied the technologies of security and privacy. I have authored 13 books on these subjects, including Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World (Norton, 2015). My popular newsletter CryptoGram and my blog Schneier on Security are read by over 250,000 people.

Additionally, I am a Fellow and Lecturer at the Harvard Kennedy School of Government­ — where I teach Internet security policy — ­and a Fellow at the Berkman Klein Center for Internet and Society at Harvard Law School. I am a board member of the Electronic Frontier Foundation, AccessNow, and the Tor Project; and an advisory board member of Electronic Privacy Information Center and VerifiedVoting.org. I am also a special advisor to IBM Security and the Chief Technology Officer of IBM Resilient.

I am here representing none of those organizations, and speak only for myself based on my own expertise and experience.

I have eleven main points:

1. The Equifax breach was a serious security breach that puts millions of Americans at risk.

Equifax reported that 145.5 million US customers, about 44% of the population, were impacted by the breach. (That’s the original 143 million plus the additional 2.5 million disclosed a month later.) The attackers got access to full names, Social Security numbers, birth dates, addresses, and driver’s license numbers.

This is exactly the sort of information criminals can use to impersonate victims to banks, credit card companies, insurance companies, cell phone companies and other businesses vulnerable to fraud. As a result, all 143 million US victims are at greater risk of identity theft, and will remain at risk for years to come. And those who suffer identify theft will have problems for months, if not years, as they work to clean up their name and credit rating.

2. Equifax was solely at fault.

This was not a sophisticated attack. The security breach was a result of a vulnerability in the software for their websites: a program called Apache Struts. The particular vulnerability was fixed by Apache in a security patch that was made available on March 6, 2017. This was not a minor vulnerability; the computer press at the time called it “critical.” Within days, it was being used by attackers to break into web servers. Equifax was notified by Apache, US CERT, and the Department of Homeland Security about the vulnerability, and was provided instructions to make the fix.

Two months later, Equifax had still failed to patch its systems. It eventually got around to it on July 29. The attackers used the vulnerability to access the company’s databases and steal consumer information on May 13, over two months after Equifax should have patched the vulnerability.

The company’s incident response after the breach was similarly damaging. It waited nearly six weeks before informing victims that their personal information had been stolen and they were at increased risk of identity theft. Equifax opened a website to help aid customers, but the poor security around that­ — the site was at a domain separate from the Equifax domain­ — invited fraudulent imitators and even more damage to victims. At one point, the official Equifax communications even directed people to that fraudulent site.

This is not the first time Equifax failed to take computer security seriously. It confessed to another data leak in January 2017. In May 2016, one of its websites was hacked, resulting in 430,000 people having their personal information stolen. Also in 2016, a security researcher found and reported a basic security vulnerability in its main website. And in 2014, the company reported yet another security breach of consumer information. There are more.

3. There are thousands of data brokers with similarly intimate information, similarly at risk. Equifax is more than a credit reporting agency. It’s a data broker. It collects information about all of us, analyzes it all, and then sells those insights. It might be one of the biggest, but there are 2,500 to 4,000 other data brokers that are collecting, storing, and selling information about us­ — almost all of them companies you’ve never heard of and have no business relationship with.

The breadth and depth of information that data brokers have is astonishing. Data brokers collect and store billions of data elements covering nearly every US consumer. Just one of the data brokers studied holds information on more than 1.4 billion consumer transactions and 700 billion data elements, and another adds more than 3 billion new data points to its database each month.

These brokers collect demographic information: names, addresses, telephone numbers, e-mail addresses, gender, age, marital status, presence and ages of children in household, education level, profession, income level, political affiliation, cars driven, and information about homes and other property. They collect lists of things we’ve purchased, when we’ve purchased them, and how we paid for them. They keep track of deaths, divorces, and diseases in our families. They collect everything about what we do on the Internet.

4. These data brokers deliberately hide their actions, and make it difficult for consumers to learn about or control their data.

If there were a dozen people who stood behind us and took notes of everything we purchased, read, searched for, or said, we would be alarmed at the privacy invasion. But because these companies operate in secret, inside our browsers and financial transactions, we don’t see them and we don’t know they’re there.

Regarding Equifax, few consumers have any idea what the company knows about them, who they sell personal data to or why. If anyone knows about them at all, it’s about their business as a credit bureau, not their business as a data broker. Their website lists 57 different offerings for business: products for industries like automotive, education, health care, insurance, and restaurants.

In general, options to “opt-out” don’t work with data brokers. It’s a confusing process, and doesn’t result in your data being deleted. Data brokers will still collect data about consumers who opt out. It will still be in those companies’ databases, and will still be vulnerable. It just won’t be included individually when they sell data to their customers.

5. The existing regulatory structure is inadequate.

Right now, there is no way for consumers to protect themselves. Their data has been harvested and analyzed by these companies without their knowledge or consent. They cannot improve the security of their personal data, and have no control over how vulnerable it is. They only learn about data breaches when the companies announce them­ — which can be months after the breaches occur­ — and at that point the onus is on them to obtain credit monitoring services or credit freezes. And even those only protect consumers from some of the harms, and only those suffered after Equifax admitted to the breach.

Right now, the press is reporting “dozens” of lawsuits against Equifax from shareholders, consumers, and banks. Massachusetts has sued Equifax for violating state consumer protection and privacy laws. Other states may follow suit.

If any of these plaintiffs win in the court, it will be a rare victory for victims of privacy breaches against the companies that have our personal information. Current law is too narrowly focused on people who have suffered financial losses directly traceable to a specific breach. Proving this is difficult. If you are the victim of identity theft in the next month, is it because of Equifax or does the blame belong to another of the thousands of companies who have your personal data? As long as one can’t prove it one way or the other, data brokers remain blameless and liability free.

Additionally, much of this market in our personal data falls outside the protections of the Fair Credit Reporting Act. And in order for the Federal Trade Commission to levy a fine against Equifax, it needs to have a consent order and then a subsequent violation. Any fines will be limited to credit information, which is a small portion of the enormous amount of information these companies know about us. In reality, this is not an effective enforcement regime.

Although the FTC is investigating Equifax, it is unclear if it has a viable case.

6. The market cannot fix this because we are not the customers of data brokers.

The customers of these companies are people and organizations who want to buy information: banks looking to lend you money, landlords deciding whether to rent you an apartment, employers deciding whether to hire you, companies trying to figure out whether you’d be a profitable customer­ — everyone who wants to sell you something, even governments.

Markets work because buyers choose from a choice of sellers, and sellers compete for buyers. None of us are Equifax’s customers. None of us are the customers of any of these data brokers. We can’t refuse to do business with the companies. We can’t remove our data from their databases. With few limited exceptions, we can’t even see what data these companies have about us or correct any mistakes.

We are the product that these companies sell to their customers: those who want to use our personal information to understand us, categorize us, make decisions about us, and persuade us.

Worse, the financial markets reward bad security. Given the choice between increasing their cybersecurity budget by 5%, or saving that money and taking the chance, a rational CEO chooses to save the money. Wall Street rewards those whose balance sheets look good, not those who are secure. And if senior management gets unlucky and the a public breach happens, they end up okay. Equifax’s CEO didn’t get his $5.2 million severance pay, but he did keep his $18.4 million pension. Any company that spends more on security than absolutely necessary is immediately penalized by shareholders when its profits decrease.

Even the negative PR that Equifax is currently suffering will fade. Unless we expect data brokers to put public interest ahead of profits, the security of this industry will never improve without government regulation.

7. We need effective regulation of data brokers.

In 2014, the Federal Trade Commission recommended that Congress require data brokers be more transparent and give consumers more control over their personal information. That report contains good suggestions on how to regulate this industry.

First, Congress should help plaintiffs in data breach cases by authorizing and funding empirical research on the harm individuals receive from these breaches.

Specifically, Congress should move forward legislative proposals that establish a nationwide “credit freeze” — ­which is better described as changing the default for disclosure from opt-out to opt-in — ­and free lifetime credit monitoring services. By this I do not mean giving customers free credit-freeze options, a a href=”http://money.cnn.com/2017/09/15/pf/warren-schatz-equifax/index.html”>proposalby Senators Warren and Schatz, but that the default should be a credit freeze.

The credit card industry routinely notifies consumers when there are suspicious charges. It is obvious that credit reporting agencies should have a similar obligation to notify consumers when there is suspicious activity concerning their credit report.

On the technology side, more could be done to limit the amount of personal data companies are allowed to collect. Increasingly, privacy safeguards impose “data minimization” requirements to ensure that only the data that is actually needed is collected. On the other hand, Congress should not create a new national identifier to replace the Social Security Numbers. That would make the system of identification even more brittle. Better is to reduce dependence on systems of identification and to create contextual identification where necessary.

Finally, Congress needs to give the Federal Trade Commission the authority to set minimum security standards for data brokers and to give consumers more control over their personal information. This is essential as long as consumers are these companies’ products and not their customers.

8. Resist complaints from the industry that this is “too hard.”

The credit bureaus and data brokers, and their lobbyists and trade-association representatives, will claim that many of these measures are too hard. They’re not telling you the truth.

Take one example: credit freezes. This is an effective security measure that protects consumers, but the process of getting one and of temporarily unfreezing credit is made deliberately onerous by the credit bureaus. Why isn’t there a smartphone app that alerts me when someone wants to access my credit rating, and lets me freeze and unfreeze my credit at the touch of the screen? Too hard? Today, you can have an app on your phone that does something similar if you try to log into a computer network, or if someone tries to use your credit card at a physical location different from where you are.

Moreover, any credit bureau or data broker operating in Europe is already obligated to follow the more rigorous EU privacy laws. The EU General Data Protection Regulation will come into force, requiring even more security and privacy controls for companies collecting storing the personal data of EU citizens. Those companies have already demonstrated that they can comply with those more stringent regulations.

Credit bureaus, and data brokers in general, are deliberately not implementing these 21st-century security solutions, because they want their services to be as easy and useful as possible for their actual customers: those who are buying your information. Similarly, companies that use this personal information to open accounts are not implementing more stringent security because they want their services to be as easy-to-use and convenient as possible.

9. This has foreign trade implications.

The Canadian Broadcast Corporation reported that 100,000 Canadians had their data stolen in the Equifax breach. The British Broadcasting Corporation originally reported that 400,000 UK consumers were affected; Equifax has since revised that to 15.2 million.

Many American Internet companies have significant numbers of European users and customers, and rely on negotiated safe harbor agreements to legally collect and store personal data of EU citizens.

The European Union is in the middle of a massive regulatory shift in its privacy laws, and those agreements are coming under renewed scrutiny. Breaches such as Equifax give these European regulators a powerful argument that US privacy regulations are inadequate to protect their citizens’ data, and that they should require that data to remain in Europe. This could significantly harm American Internet companies.

10. This has national security implications.

Although it is still unknown who compromised the Equifax database, it could easily have been a foreign adversary that routinely attacks the servers of US companies and US federal agencies with the goal of exploiting security vulnerabilities and obtaining personal data.

When the Fair Credit Reporting Act was passed in 1970, the concern was that the credit bureaus might misuse our data. That is still a concern, but the world has changed since then. Credit bureaus and data brokers have far more intimate data about all of us. And it is valuable not only to companies wanting to advertise to us, but foreign governments as well. In 2015, the Chinese breached the database of the Office of Personal Management and stole the detailed security clearance information of 21 million Americans. North Korea routinely engages in cybercrime as way to fund its other activities. In a world where foreign governments use cyber capabilities to attack US assets, requiring data brokers to limit collection of personal data, securely store the data they collect, and delete data about consumers when it is no longer needed is a matter of national security.

11. We need to do something about it.

Yes, this breach is a huge black eye and a temporary stock dip for Equifax — ­this month. Soon, another company will have suffered a massive data breach and few will remember Equifax’s problem. Does anyone remember last year when Yahoo admitted that it exposed personal information of a billion users in 2013 and another half billion in 2014?

Unless Congress acts to protect consumer information in the digital age, these breaches will continue.

Thank you for the opportunity to testify today. I will be pleased to answer your questions.

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My Blogging

Blog regulars will notice that I haven’t been posting as much lately as I have in the past. There are two reasons. One, it feels harder to find things to write about. So often it’s the same stories over and over. I don’t like repeating myself. Two, I am busy writing a book. The title is still: Click Here to Kill Everybody: Peril and Promise in a Hyper-Connected World. The book is a year late, and as a very different table of contents than it had in 2016. I have been writing steadily since mid-August. The book is due to the publisher at the end of March 2018, and will be published in the beginning of September.

This is the current table of contents (subject to change, of course):

  • Introduction: Everything is Becoming a Computer
  • Part 1: The Trends
    • 1. Capitalism Continues to Drive the Internet
    • 2. Customer/User Control is Next
    • 3. Government Surveillance and Control is Also Increasing
    • 4. Cybercrime is More Profitable Than Ever
    • 5. Cyberwar is the New Normal
    • 6. Algorithms, Automation, and Autonomy Bring New Dangers
    • 7. What We Know About Computer Security
    • 8. Agile is Failing as a Security Paradigm
    • 9. Authentication and Identification are Getting Harder
    • 10. Risks are Becoming Catastrophic
  • Part 2: The Solutions
    • 11. We Need to Regulate the Internet of Things
    • 12. We Need to Defend Critical Infrastructure
    • 13. We Need to Prioritize Defense Over Offense
    • 14. We Need to Make Smarter Decisions About Connecting
    • 15. What’s Likely to Happen, and What We Can Do in Response
    • 16. Where Policy Can Go Wrong
  • Conclusion: Technology and Policy, Together

So that’s what’s been happening.

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More on My LinkedIn Account

I have successfully gotten the fake LinkedIn account in my name deleted. To prevent someone from doing this again, I signed up for LinkedIn. This is my first — and only — post on that account:

My Only LinkedIn Post (Yes, Really)

Welcome to my LinkedIn page. It looks empty because I’m never here. I don’t log in, I never post anything, and I won’t read any notes or comments you leave on this site. Nor will I accept any invitations or click on any “connect” links. I’m sure LinkedIn is a nice place; I just don’t have the time.

If you’re looking for me, visit my webpage at www.schneier.com. There you’ll find my blog, and just about everything I’ve written. My e-mail address is schneier@schneier.com, if you want to talk to me personally.

I mirror my blog on my Facebook page (https://www.facebook.com/bruce.schneier/) and my Twitter feed (@schneierblog), but I don’t visit those, either.

Now I hear that LinkedIn is e-mailing people on my behalf, suggesting that they friend, follow, connect, or whatever they do there with me. I assure you that I have nothing to do with any of those e-mails, nor do I care what anyone does in response.

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I Seem to Have a LinkedIn Account

I seem to have a LinkedIn account.

This comes as a surprise, since I don’t have a LinkedIn account, and have never logged in to LinkedIn.

Does anyone have any contacts into the company? I would like to report this fraudulent account, and possibly get control of it. I’m not on LinkedIn, but the best defense against this is probably to create a real account.

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Measuring Vulnerability Rediscovery

New paper: “Taking Stock: Estimating Vulnerability Rediscovery,” by Trey Herr, Bruce Schneier, and Christopher Morris:

Abstract: How often do multiple, independent, parties discover the same vulnerability? There are ample models of vulnerability discovery, but little academic work on this issue of rediscovery. The immature state of this research and subsequent debate is a problem for the policy community, where the government’s decision to disclose a given vulnerability hinges in part on that vulnerability’s likelihood of being discovered and used maliciously by another party. Research into the behavior of malicious software markets and the efficacy of bug bounty programs would similarly benefit from an accurate baseline estimate for how often vulnerabilities are discovered by multiple independent parties.

This paper presents a new dataset of more than 4,300 vulnerabilities, and estimates vulnerability rediscovery across different vendors and software types. It concludes that rediscovery happens more than twice as often as the 1-9% range previously reported. For our dataset, 15% to 20% of vulnerabilities are discovered independently at least twice within a year. For just Android, 13.9% of vulnerabilities are rediscovered within 60 days, rising to 20% within 90 days, and above 21% within 120 days. For the Chrome browser we found 12.57% rediscovery within 60 days; and the aggregate rate for our entire dataset generally rises over the eight-year span, topping out at 19.6% in 2016. We believe that the actual rate is even higher for certain types of software.

When combined with an estimate of the total count of vulnerabilities in use by the NSA, these rates suggest that rediscovery of vulnerabilities kept secret by the U.S. government may be the source of up to one-third of all zero-day vulnerabilities detected in use each year. These results indicate that the information security community needs to map the impact of rediscovery on the efficacy of bug bounty programs and policymakers should more rigorously evaluate the costs of non-disclosure of software vulnerabilities.

We wrote a blog post on the paper, and another when we issued a revised version.

Comments on the original paper by Dave Aitel. News articles.

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Security and Human Behavior (SHB 2017)

I’m in Cambridge University, at the tenth Workshop on Security and Human Behavior.

SHB is a small invitational gathering of people studying various aspects of the human side of security, organized each year by Ross Anderson, Alessandro Acquisti, and myself. The 50 or so people in the room include psychologists, economists, computer security researchers, sociologists, political scientists, political scientists, neuroscientists, designers, lawyers, philosophers, anthropologists, business school professors, and a smattering of others. It’s not just an interdisciplinary event; most of the people here are individually interdisciplinary.

The goal is maximum interaction and discussion. We do that by putting everyone on panels. There are eight six-person panels over the course of the two days. Everyone gets to talk for ten minutes about their work, and then there’s half an hour of questions and discussion. We also have lunches, dinners, and receptions — all designed so people from different disciplines talk to each other.

It’s the most intellectually stimulating conference of my year, and influences my thinking about security in many different ways.

This year’s schedule is here. This page lists the participants and includes links to some of their work. As he does every year, Ross Anderson is liveblogging the talks.

Here are my posts on the first, second, third, fourth, fifth, sixth, seventh, eighth, and ninth SHB workshops. Follow those links to find summaries, papers, and occasionally audio recordings of the various workshops.

Next year will be our tenth anniversary. I don’t think any of us imagined that this conference would be around this long.

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Commenting Policy for This Blog

Over the past few months, I have been watching my blog comments decline in civility. I blame it in part on the contentious US election and its aftermath. It’s also a consequence of not requiring visitors to register in order to post comments, and of our tolerance for impassioned conversation. Whatever the causes, I’m tired of it. Partisan nastiness is driving away visitors who might otherwise have valuable insights to offer.

I have been engaging in more active comment moderation. What that means is that I have been quicker to delete posts that are rude, insulting, or off-topic. This is my blog. I consider the comments section as analogous to a gathering at my home. It’s not a town square. Everyone is expected to be polite and respectful, and if you’re an unpleasant guest, I’m going to ask you to leave. Your freedom of speech does not compel me to publish your words.

I like people who disagree with me. I like debate. I even like arguments. But I expect everyone to behave as if they’ve been invited into my home.

I realize that I sometimes express opinions on political matters; I find they are relevant to security at all levels. On those posts, I welcome on-topic comments regarding those opinions. I don’t welcome people pissing and moaning about the fact that I’ve expressed my opinion on something other than security technology. As I said, it’s my blog.

So, please… Assume good faith. Be polite. Minimize profanity. Argue facts, not personalities. Stay on topic. If you want a model to emulate, look at Clive Robinson’s posts.

Schneier on Security is not a professional operation. There’s no advertising, so no revenue to hire staff. My part-time moderator — paid out of my own pocket — and I do what we can when we can. If you see a comment that’s spam, or off-topic, or an ad hominem attack, flag it and be patient. Don’t reply or engage; we’ll get to it. And we won’t always post an explanation when we delete something.

My own stance on privacy and anonymity means that I’m not going to require commenters to register a name or e-mail address, so that isn’t an option. And I really don’t want to disable comments.

I dislike having to deal with this problem. I’ve been proud and happy to see how interesting and useful the comments section has been all these years. I’ve watched many blogs and discussion groups descend into toxicity as a result of trolls and drive-by ideologues derailing the conversations of regular posters. I’m not going to let that happen here.

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