Here's the part of the story where some poor guy's account get's completely f-ed. This thief had been bounced to the out-sourced to security so often that he must have made a check list of any possible questions they would ask him. Through whatever means, he managed to get the answers to these questions. Now when he called, he could give us the information we were asking for, but by this point we knew his voice so well that we still tried to get him to security. It worked like this: We put him on hold and dial the extension for security. We get a security rep and start to explain the situation; we tell them he was able to give the right information, but that we know is the same guy that's been calling for weeks and we are certain he is not the account holder. They begrudgingly take the call. Minutes later another one of us gets a call from a security rep saying they are giving us a customer who has been cleared by them. And here the thief was back in our department. For those of us who had come to know him, the fight waged on night after night.

When a data owner's (a business) sensitive data is breached it is difficult to quantify the monetary loss. According to respectable survey sources, the average cost of sensitive data breach for a large size company is about $50,000. I am attempting here to think about this in simple mathametical terms:

There is a data breach. From the data owner's perspective the loss is:

Loss = Cost to protect data + Loss of business due to data theft aka cost of competitive disadvantage

From the data thief's perspective

Net Gain= [Cost of producing the data  *  Data freshness factor] - Cost to steal the data + Profit of business due to data aka gain of competitive advantage

From the above two equations it is very clear that this is not a zero sum game. There is a clear cost asymmetry for a data owner and for a data thief. When there is an asymmetry there is an opportunity. Data owner would not even know that the data is lost because the original copy of the data may be still intact - data thief could have simply copied the data. Data theft does not look like a car theft, there is no vacuum left behind. 

This motivates a data thief to keep the cost to steal low, steal highly valuable data that has a long shelf life and in a way that data owner will never even be aware of theft.

From a data thief's perspective, the cost to steal data if kept high would disincentive him. Moreover, Data freshness factor, i.e. how valuable this data is over period of time plays an important role. A good example is content of today's newspaper is hardly valuable tomorrow, but the content of newspaper two days ahead (if can be procured)would be invaluable. Data relevance is a function of time and other marketplace variables -  Data freshness Factor accounts for that variable. A good way to discourage data thief is to increase his/her cost to steal the data. There are other inferences from the above equation. If there exists no competitive advantage with the stolen data, hardly any thief would even venture to steal the data in the first place. If the cost of producing data is very low, then probably thief can just produce the data himself and would not attempt to steal the data. If the cost of theft is kept high, it would definitely deter the data thief from stealing data using technical mechanisms, then the data thief would exploit weak links in data security such as use of social engineering to get access to the data.

From data owner perspective protecting data becomes very important. How much would the owner be willing to spend? Not definitely the cost equal to cost of producing the data. 1% to 10% of cost of producing data is considered prudent. For a data owner it is difficult to estimate cost of data protection of a specific data, because it is not easy to chunkify data protection costs. Moreover, as Dan Geer says in his book, a data owner has to protect himself from number of intruders not just one.

It pays for a data owner to: be aware of data breaches (or data leaks), employ appropriate mechanisms to protect the data; the cost of protection which is fractional cost of the valuable data and enhance information security awareness of personnel who handle the data.

Data loss is not a zero sum game. The advantage is in favor of a data thief (data thieves rather). Data owner does not give much thought on the value of data unless there is a data theft. But, a data thief has every reason to think about economics of data theft before he acts to steal the data else data thief won't survive in this game and he is very well aware of his advantageous position.

Thanks to a software program called a zapper, even technologically illiterate restaurant and store owners can siphon cash from computer cash registers and cheat tax officials.

[...]

Zappers alter the electronic sales records in a cash register. To satisfy tax collectors, the tally of food orders, for example, must match the register's final cash total. To hide the removal of cash from the till, a crooked business owner has to erase the record of food orders equal to the amount of cash taken; otherwise, the imbalance is obvious to any auditor.

[...]

The more sophisticated zappers are easy to use, according to several experts. A dialogue box, which shows the day's tally, pops up on the register's screen.

In a second dialogue box, the thief chooses to take a dollar amount or percentage of the till. The program then calculates which orders to erase to get close to the amount of cash the person wants to remove. Then it suggests how much cash to take, and it erases the entries from the books and a corresponding amount in orders, so the register balances.

Here's the story. Every Oyster card has a radio-frequency identification chip that communicates with readers mounted on the ticket barrier. That chip, the "Mifare Classic" chip, is used in hundreds of other transport systems as well — Boston, Los Angeles, Brisbane, Oslo, Amsterdam, Taipei, Shanghai, Rio de Janeiro — and as an access pass in thousands of companies, schools, hospitals, and government buildings around Britain and the rest of the world.

The security of Mifare Classic is terrible. This is not an exaggeration; it's kindergarten cryptography. Anyone with any security experience would be embarrassed to put his name to the design. NXP attempted to deal with this embarrassment by keeping the design secret.

The group that broke Mifare Classic is from Radboud University Nijmegen in the Netherlands. They demonstrated the attack by riding the Underground for free, and by breaking into a building. Their two papers (one is already online) will be published at two conferences this autumn.

The second paper is the one that NXP sued over. They called disclosure of the attack "irresponsible," warned that it will cause "immense damages," and claimed that it "will jeopardize the security of assets protected with systems incorporating the Mifare IC." The Dutch court would have none of it: "Damage to NXP is not the result of the publication of the article but of the production and sale of a chip that appears to have shortcomings."

Exactly right. More generally, the notion that secrecy supports security is inherently flawed. Whenever you see an organization claiming that design secrecy is necessary for security — in ID cards, in voting machines, in airport security — it invariably means that its security is lousy and it has no choice but to hide it. Any competent cryptographer would have designed Mifare's security with an open and public design.

Secrecy is fragile. Mifare's security was based on the belief that no one would discover how it worked; that's why NXP had to muzzle the Dutch researchers. But that's just wrong. Reverse-engineering isn't hard. Other researchers had already exposed Mifare's lousy security. A Chinese company even sells a compatible chip. Is there any doubt that the bad guys already know about this, or will soon enough?

Publication of this attack might be expensive for NXP and its customers, but it's good for security overall. Companies will only design security as good as their customers know to ask for. NXP's security was so bad because customers didn't know how to evaluate security: either they don't know what questions to ask, or didn't know enough to distrust the marketing answers they were given. This court ruling encourages companies to build security properly rather than relying on shoddy design and secrecy, and discourages them from promising security based on their ability to threaten researchers.

It's unclear how this break will affect Transport for London. Cloning takes only a few seconds, and the thief only has to brush up against someone carrying a legitimate Oyster card. But it requires an RFID reader and a small piece of software which, while feasible for a techie, are too complicated for the average fare dodger. The police are likely to quickly arrest anyone who tries to sell cloned cards on any scale. TfL promises to turn off any cloned cards within 24 hours, but that will hurt the innocent victim who had his card cloned more than the thief.

The vulnerability is far more serious to the companies that use Mifare Classic as an access pass. It would be very interesting to know how NXP presented the system's security to them.

And while these attacks only pertain to the Mifare Classic chip, it makes me suspicious of the entire product line. NXP sells a more secure chip and has another on the way, but given the number of basic cryptography mistakes NXP made with Mifare Classic, one has to wonder whether the "more secure" versions will be sufficiently so.

This essay originally appeared in the Guardian.