Smart cards no match for online spies

Hackers are using a 'smart card proxy' attack to get around smart cards

The U.S. government has been stepping up its use of smart cards to help lock down its computer networks, but hackers have found ways around them.

Over the past 18 months, security consultancy Mandiant has come across several cases where determined attackers were able to get onto computers or networks that required both smart cards and passwords. In a report set to be released Thursday, Mandiant calls this technique a "smart card proxy."

The attack works in several steps. First, the criminals hack their way onto a PC. Often they'll do this by sending a specially crafted e-mail message to someone at the network they're trying to break into. The message will include an malicious attachment that, when opened, gives the hacker a foothold in the network.

After identifying the computers that have card readers, the bad guys install keystroke logging software on those computers to steal the password that is typically used in concert with the smart card.

Then they wait.

When the victim inserts the smart card into the hacked PC, the criminals then try to log into the server or network that requires the smart card for authentication. When the server asks for a digital token from the smart card, the bad guys simply redirect that request to the hacked system, and return it with the token and the previously stolen password.

This is similar to the techniques criminals have been using for several years now to get around the extra authentication technologies used in online banking.

Mandiant is the kind of company that businesses and government agencies call to clean up the mess after they've been hacked. It has done investigations at about 120 organizations overt the past year and a half. Most of them get hacked via a targeted e-mail. But in many cases, they were actually hacked years earlier, but never managed to remove the malicious software from their network, according to the report.

Companies or government agencies that assume that they are secure just because they use smart cards to authenticate, could be in for a nasty surprise some day, said Rob Lee, a director with Mandiant. "Everything is circumventable in the end," he said.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is

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