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Yahoo says all three billion accounts hacked in 2013 data theft

By Jonathan Stempel and Jim Finkle

(Reuters) – Yahoo on Tuesday said that all 3 billion of its accounts were hacked in a 2013 data theft, tripling its earlier estimate of the size of the largest breach in history, in a disclosure that attorneys said sharply increased the legal exposure of its new owner, Verizon Communications Inc <VZ.N>.

The news expands the likely number and claims of class action lawsuits by shareholders and Yahoo account holders, they said. Yahoo, the early face of the internet for many in the world, already faced at least 41 consumer class-action lawsuits in U.S. federal and state courts, according to company securities filing in May.

John Yanchunis, a lawyer representing some of the affected Yahoo users, said a federal judge who allowed the case to go forward still had asked for more information to justify his clients’ claims.

“I think we have those facts now,” he said. “It’s really mind-numbing when you think about it.”

Yahoo said last December that data from more than 1 billion accounts was compromised in 2013, the largest of a series of thefts that forced Yahoo to cut the price of its assets in a sale to Verizon.

Yahoo on Tuesday said “recently obtained new intelligence” showed all user accounts had been affected. The company said the investigation indicated that the stolen information did not include passwords in clear text, payment card data, or bank account information.

But the information was protected with outdated, easy-to-crack encryption, according to academic experts. It also included security questions and backup email addresses, which could make it easier to break into other accounts held by the users.

Many Yahoo users have multiple accounts, so far fewer than 3 billion were affected, but the theft ranks as the largest to date, and a costly one for the internet pioneer.

Verizon in February lowered its original offer by $350 million for Yahoo assets in the wake of two massive cyber attacks at the internet company.

Some lawyers asked whether Verizon would look for a new opportunity to address the price.

“This is a bombshell,” said Mark Molumphy, lead counsel in a shareholder derivative lawsuit against Yahoo’s former leaders over disclosures about the hacks.

Verizon did not respond to a request for comment about any possible lawsuit over the deal.

Verizon, the likely main target of legal actions, also could be challenged as it launches a new brand, Oath, to link its Yahoo, AOL and Huffington Post internet properties.

In August in the separate lawsuit brought by Yahoo’s users, U.S. Judge Lucy Koh in San Jose, California, ruled Yahoo must face nationwide litigation brought on behalf of owners accounts who said their personal information was compromised in the three breaches. Yanchunis, the lawyer for the users, said his team planned to use the new information later this month to expanding its allegations.

Also on Tuesday, Senator John Thune, chairman of the U.S. Senate Commerce Committee, said he plans to hold a hearing later this month over massive data breaches at Equifax Inc <EFX.N> and Yahoo. The U.S. Securities and Exchange Commission already had been probing Yahoo over the hacks.

The closing of the Verizon deal, which was first announced in July, had been delayed as the companies assessed the fallout from two data breaches that Yahoo disclosed last year. The company paid $4.48 billion for Yahoo’s core business.

A Yahoo official emphasized Tuesday that the 3 billion figure included many accounts that were opened but that were never, or only briefly, used.

The company said it was sending email notifications to additional affected user accounts.

The new revelation follows months of scrutiny by Yahoo, Verizon, cybersecurity firms and law enforcement that failed to identify the full scope of the 2013 hack.

The investigation underscores how difficult it was for companies to get ahead of hackers, even when they know their networks had been compromised, said David Kennedy, chief executive of cybersecurity firm TrustedSEC LLC.

Companies often do not have systems in place to gather up and store all the network activity that investigators could use to follow the hackers’ tracks.

“This is a real wake up call,” Kennedy said. “In most guesses, it is just guessing what they had access to.”

(Reporting by Munsif Vengattil, Jim Finkle, Jim Christie, Jon Stempel, and David Shepardson; writing by Stephen Nellis in San Francisco; Editing by Andrew Hay and Lisa Shumaker)

Equifax apologizes as U.S. watchdog calls for more oversight

FILE PHOTO: Credit reporting company Equifax Inc. corporate offices are pictured in Atlanta, Georgia, U.S., September 8, 2017. REUTERS/Tami Chappell/File Photo

By John McCrank

(Reuters) – Equifax Inc promised to make it easier for consumers to control access to their credit records in the wake of the company’s massive breach after the top U.S. consumer financial watchdog called on the industry to introduce such a system.

Equifax’s interim chief executive officer, Paulino do Rego Barros Jr., vowed to introduce a free service by Jan. 31 that will let consumers control access to their own credit records.

Barros, who was named interim CEO on Tuesday as Richard Smith stepped down from the post amid mounting criticism over the handling of the cyber attack, also apologized for providing inadequate support to consumers seeking information after the breach was disclosed on Sept. 7. He promised to add call-center representatives and bolster a breach-response website.

“I have heard the frustration and fear. I know we have to do a better job of helping you,” Barros said in a statement published in The Wall Street Journal.

Equifax announced the free credit freeze service after the Consumer Financial Protection Bureau’s (CFPB) director, Richard Cordray, told CNBC earlier in the day that the agency would beef up oversight of Equifax and its rivals.

“The old days of just doing what they want and being subject to lawsuits now and then are over,” Cordray said.

He also called for implementing a scheme of preventive credit monitoring.

“They are going to have to accept that. They are going to have to welcome it. They are going to have to be very forthcoming,” Cordray said.

The Equifax hack compromised sensitive data of up to 143 million Americans and prompted investigations by lawmakers and regulators, including the New York Department of Financial Services (DFS), which issued a subpoena to Equifax demanding more information about the breach.

Federal laws give the CFPB the power to supervise and examine large credit-reporting firms to ensure the quality of information they provide. In January, the CFPB fined TransUnion and Equifax $5.5 million in total for deceiving customers about the usefulness and cost of their credit scores.

Cordray called for expanded powers to cover data security to prevent breaches and suggested placing monitors inside credit reporting firms, borrowing a tactic from the regulatory regime for banks.

The CFPB is working with the Federal Trade Commission and New York’s DFS on a new regulatory framework, Cordray said. He also called for Congress to tighten oversight of the industry.

TransUnion said in a statement that it had “long been subject to regulatory oversight from state and federal regulators including the CFPB.”

Experian did not respond to requests for comment.

(Reporting by John McCrank in New York; Additional reporting by Lisa Lambert in Washington and Jim Finkle in Toronto; Writing by Michelle Price; Editing by Tom Brown and Leslie Adler)

Where consumers should turn after the Equifax breach

By Gail MarksJarvis

NEW YORK (Reuters) – There is a widespread sense of fear hanging over consumers in the aftermath of the data breach at credit-monitoring firm Equifax revealed in early September that approximately 143 million consumers’ personal and financial records were exposed.

It would be bad enough if people were merely worried about crooks using their Social Security numbers to empty their bank accounts or steal tax refunds. But they also have a feeling of defenselessness as they come to the realization that they cannot even trust where to go for help.

“Trust has vanished completely,” says Neal O’Farrell, executive director of the Identity Theft Council. “If you don’t know who to trust anymore, you don’t even know who to go to for help.”

A worried Chicago resident echoed this in an email after going to the Equifax website to get a credit freeze: “I received the follow-up email a few days ago and had to give the last four digits of my Social Security number and answer some credit questions from my credit history. Now I am wondering if even that email response to my filing for the freeze is even legitimate. I’ve become paranoid about giving any information over the Internet.”

While the main Equifax line (1-866-349-5191) consistently gives out a busy signal if you seek an agent, cyber security experts believe that technologically clever crooks could be creating phony emails and websites that look legit.

The emails may appear to be from the four credit bureaus – Equifax, Experian, TransUnion and Innovis – or financial institutions, credit monitoring firms and even the government.

“Scammers will use realistic-looking sites,” said John Krebs, who heads the Federal Trade Commission’s identity theft program. “Emails may create a sense of urgency so people click on a link.”

But clicking on a link can allow scammers to infiltrate your computer and get your data, if they do not have it already. To stay safe, do not answer questions in emails or phone numbers in those emails, said Krebs. Instead, look up a main number for that institution and call them directly.

You can find contacts at the Federal Trade Commissions website on identity theft (https://identitytheft.gov/Top-Company-Contacts).

BEWARE OF SPOOFS

In one example of vulnerability, a spoof site was created recently to look just like the actual Equifax site (equifaxsecurity2017.com) where people could ask whether their Social Security numbers were stolen. It was so convincing that at one point, an Equifax representative on Twitter mistakenly directed people to the fake site, said Brian Krebs, an investigative reporter for KrebsonSecurity.com – and no relation to the FTC’s John Krebs.

Luckily, the fake site was created by an individual simply to show the weaknesses in the system and it was taken down after making its point, Brian Krebs noted.

There are other alarming signs that you are vulnerable even when trying to protect yourself. KrebsOnSecurity.com recently reported that a credit freeze to keep crooks from opening lines of credit may not be as solid as you think.

The site found a weakness on Experian that would allow a crook to start the process of retrieving a PIN and unlocking the freeze simply by using the Social Security numbers and addresses stolen from Equifax.

Some security questions are also included, but Brian Krebs thinks answers would be easy to figure out using Internet searches. In a statement, Experian said the process of retrieving PINs goes beyond that.

Still, with trust shaken, Brian Krebs worries: “People are going to throw up their hands and say, ‘Who cares?’ But that does them no good.”

Instead, he recommends going through the steps to put the freezes on their credit at the four bureaus while keeping a vigilant eye out for the next scam.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Beth Pinsker and G Crosse)

Equifax CEO retires following massive cyber attack

By Dustin Volz and John McCrank

(Reuters) – Equifax Inc said on Tuesday its Chief Executive Officer Richard Smith will step down and forgo his annual bonus, a move that came weeks into a mounting crisis at the credit-monitoring firm stemming from a massive data breach.

Equifax is being investigated by the U.S. Federal Trade Commission, and faces a barrage of questions from Congress and public ire over what has widely been viewed as a bungled response to a hack that exposed the personal details of up to 143 million U.S. consumers.

The credit-monitoring firm disclosed on Sept. 7 that hackers had access to its systems between mid-May and July.

The announcement that Smith, 57, would depart came ten days after the company said its chief information officer and chief security officer were retiring.

Shares of Equifax were down 1.6 percent at $103.35 early on Tuesday.

“At this critical juncture, I believe it is in the best interests of the company to have new leadership to move the company forward,” Smith said in a statement.

Paulino do Rego Barros, 61, who was most recently president of Equifax’s Asia-Pacific operations, will be interim CEO.

The announcement comes a week before Smith was expected to testify before multiple congressional committees about the cyber attack.

A spokeswoman for the U.S. House Energy and Commerce Committee said Smith, whose retirement was effective on Tuesday, would still testify before the panel on Oct. 3. The Senate Banking Committee did not immediately respond when asked if Smith would appear as scheduled on Oct. 4.

“Rick Smith is scheduled to testify before Congress. It’s up to the committee to decide if they want another executive,” an Equifax spokeswoman said in an emailed statement. “We will fully cooperate with Congress, as we have since this cybersecurity incident was first disclosed.”

The company and Smith agreed that Equifax will defer any decision related to “any obligations or benefits” owed to him until the company’s board completes an independent review of the breach, according to a regulatory filing. Smith earned a total of $14.96 million in 2016.

Equifax shares have fallen more than 30 percent since the disclosure of the breach amid mounting criticism from lawmakers, regulators and consumers about the hack and the company’s response to it.

In 2014, Target CEO Greg Steinhafel left the retailer after it was revealed hackers had accessed credit card and personal information belonging to tens of millions of shoppers.

(Reporting by John McCrank in New York, Dustin Volz in Washinton and Supantha Mukherjee in Bengaluru; Editing by Sai Sachin Ravikumar and Meredith Mazzilli)

New York governor wants credit-reporting firms to follow cyber rules

Credit reporting company Equifax Inc. corporate offices are pictured in Atlanta, Georgia, U.S., September 8, 2017. REUTERS/Tami Chappell

By Diane Bartz and Suzanne Barlyn

WASHINGTON/NEW YORK (Reuters) – New York Governor Andrew Cuomo said on Monday that he wants credit-reporting firms to comply with the state’s cyber-security regulations, the latest government official to crack down on the industry in the wake of the massive Equifax hack.

Also on Monday, Bloomberg News reported that federal authorities have opened a criminal probe into stock sales by three Equifax Inc <EFX.N> executives before the company disclosed the massive data breach, news that has weighed heavily on the stock price.

The company has said the executives were unaware of the hack when they sold the stock for $1.8 million.

Equifax’s legal woes worsened as the U.S Attorney’s office in Atlanta issued a statement saying it was working with the FBI on a criminal investigation into the breach and theft of personal information.

Equifax shares rose 1.5 percent on Monday after losing about a third of their value since the hack was announced. The Equifax breach discovered on July 29 exposed sensitive data like Social Security numbers of up to 143 million people.

Cuomo said he planned to require all credit-reporting agencies to register with the state and comply with its cyber-security rules.

The proposed regulation would take effect in February, Cuomo said in a statement. If the companies do not register, they risk being barred from doing business with financial companies regulated by New York state.

The state would be able to bar credit-reporting agencies, including TransUnion <TRU.N> and Experian Plc <EXPN.L>, as well as Equifax, from doing business in New York if the state found they engaged in “unfair, deceptive or predatory practices,” Cuomo said.

“The Equifax breach was a wake-up call,” Cuomo said. “And with this action, New York is raising the bar for consumer protections that we hope will be replicated across the nation.”

Proposed regulations are typically subject to a period for public comment before they become final.

A New York state cyber-security regulation, the first of its kind in the United States, took effect on March 1. It requires financial firms to take measures to protect networks and customer data from hackers and disclose cyber events to regulators.

Maine is the only U.S. state that requires credit agencies to register, said William Lund, superintendent of the Maine Bureau of Consumer Credit Protection. But its law does not cover cyber security, an issue the bureau will have to consider, Lund said.

Maine, which has been registering credit-reporting agencies since the 1990s, has 30 such agencies on its roster, ranging from the largest to those dealing with everything from check approval to tenants’ rental histories, he added.

The three credit-reporting agencies did not respond to requests for comment on Cuomo’s plan.

Bloomberg reported on Monday that the U.S. Justice Department is investigating whether Equifax’s chief financial officer, John Gamble, and two other executives broke insider-trading rules by selling stock after the breach was discovered in July and weeks before it was disclosed this month.

Reuters was not able to confirm the Bloomberg report.

Separately, the company issued a statement saying a second Bloomberg report late on Monday about a second cyber attack in March referred to a breach at Equifax payroll unit that was previously reported to regulators, customers and consumers and also been covered by the press.

“Equifax complied fully with all consumer notification requirements related to the March incident. The two events are not related,” the statement said.

(Reporting by Diane Bartz and Suzanne Barlyn; Additional reporting by Sarah N. Lynch, David Shepardson and Dustin Volz; Editing by Jim Finkle, Leslie Adler and Michael Perry)

China beefs up cyber defenses with centralized threat database

A map of China is seen through a magnifying glass on a computer screen showing binary digits in Singapore in this January 2, 2014 photo illustration. REUTERS/Edgar Su

BEIJING (Reuters) – China said on Wednesday it will create a national data repository for information on cyber attacks and require telecom firms, internet companies and domain name providers to report threats to it.

The Ministry of Industry and Information Technology (MIIT) said companies and telcos as well as government bodies must share information on incidents including Trojan malware, hardware vulnerabilities, and content linked to “malicious” IP addresses to the new platform.

An MIIT policy note also said that the ministry, which is creating the platform, will be liable for disposing of threats under the new rules, which will take effect on Jan. 1.

Companies and network providers that fail to follow the rules will be subject to “warnings, fines and other administrative penalties”, it said, without giving any details.

The law is the latest in a series of moves by Chinese authorities designed to guard core infrastructure and private enterprises against large-scale cyber attacks.

In June, China’s cyber watchdog formalized a nationwide cyber emergency response plan, which included the construction of a central response system and mandated punitive measures for government units that failed to safeguard the system.

Earlier this year, the same ministry introduced rules requiring state telecommunications firms to take a more active role in removing VPNs and other tools used to subvert China’s so-called Great Firewall.

(Reporting by Cate Cadell; Editing by Richard Borsuk)

Key U.S. senators demand answers on Equifax hacking

By David Shepardson and Dustin Volz

WASHINGTON (Reuters) – Two key U.S. senators on Monday asked Equifax Inc <EFX.N> to answer detailed questions about a breach of information affecting up to 143 million Americans, including whether U.S. government agency records were compromised in the hack.

Senator Orrin Hatch, who chairs the Finance Committee, and ranking Democrat Ron Wyden, also demanded that Equifax Chief Executive Rick Smith provide a timeline of the breach and its discovery. They asked for information on when authorities and the company’s board were notified and when three executives who sold stock in the company in August were first told of the data breach.

Equifax did not immediately respond to a request for comment on the letter. It came amid mounting scrutiny of the company’s response to the breach from lawmakers, regulators and security experts, prompting the credit-monitoring services to issue an apology on Friday and pledge to dedicate more resources to helping affected consumers.

“The scope and scale of this breach appears to make it one of the largest on record, and the sensitivity of the information compromised may make it the most costly to taxpayers and consumers,” the letter said.

Equifax announced last week that it learned on July 29 that hackers had infiltrated its systems in mid-May, pilfering names, birthdays, addresses and Social Security and driver’s license numbers. Cyber security experts said it was among the largest data hacks ever recorded and was particularly troubling due to the richness of the information exposed.

Three days after Equifax discovered the breach, three top Equifax executives, including Chief Financial Officer John Gamble and a president of a unit, sold Equifax shares or exercised options to dispose of stock worth about $1.8 million, regulatory filings show.

Equifax said in a statement last week that the executives were not aware that an intrusion had occurred when they sold their shares.

Hatch and Wyden asked Smith to respond by Sept. 28. Other congressional committees have announced plans to hold hearings investigating the Equifax breach and want answers.

The senators want to know if Equifax has a chief information security officer and over the past two years “how many times has Equifax employed third-party cyber security experts to conduct penetration tests of its internal and external systems?” The senators want copies of all Equifax penetration test and audit reports by outside cyber security firms.

Separately, a group of 20 Democratic senators asked Equifax to end its use of forced arbitration agreements, which limit the ability of consumers to pursue claims, and not to lobby to reverse a new rule from the Consumer Financial Protection Bureau to limit the use of forced arbitration in the financial services sector.

(Reporting by Dustin Volz and David Shepardson; Editing by Andrew Hay and Jonathan Oatis)

Exclusive: India and Pakistan hit by spy malware – cybersecurity firm

FILE PHOTO: A Symantec security app is seen on a phone in this illustration photo taken May 23, 2017. REUTERS/Thomas White/Illustration/File Photo

By Rahul Bhatia

MUMBAI (Reuters) – Symantec Corp, a digital security company, says it has identified a sustained cyber spying campaign, likely state-sponsored, against Indian and Pakistani entities involved in regional security issues.

In a threat intelligence report that was sent to clients in July, Symantec said the online espionage effort dated back to October 2016.

The campaign appeared to be the work of several groups, but tactics and techniques used suggest that the groups were operating with “similar goals or under the same sponsor”, probably a nation state, according to the threat report, which was reviewed by Reuters. It did not name a state.

The detailed report on the cyber spying comes at a time of heightened tensions in the region.

India’s military has raised operational readiness along its border with China following a face-off in Bhutan near their disputed frontier, while Indo-Pakistan tensions are also simmering over the disputed Kashmir region.

A spokesman for Symantec said the company does not comment publicly on the malware analysis, investigations and incident response services it provides clients.

Symantec did not identify the likely sponsor of the attack. But it said that governments and militaries with operations in South Asia and interests in regional security issues would likely be at risk from the malware. The malware utilizes the so-called “Ehdoor” backdoor to access files on computers.

“There was a similar campaign that targeted Qatar using programs called Spynote and Revokery,” said a security expert, who requested anonymity. “They were backdoors just like Ehdoor, which is a targeted effort for South Asia.”

CLICKBAIT

To install the malware, Symantec found, the attackers used decoy documents related to security issues in South Asia. The documents included reports from Reuters, Zee News, and the Hindu, and were related to military issues, Kashmir, and an Indian secessionist movement.

The malware allows spies to upload and download files, carry out processes, log keystrokes, identify the target’s location, steal personal data, and take screenshots, Symantec said, adding that the malware was also being used to target Android devices.

In response to frequent cyber-security incidents, India in February established a center to help companies and individuals detect and remove malware. The center is operated by the Indian Computer Emergency Response Team (CERT-In).

Gulshan Rai, the director general of CERT-In, declined to comment specifically on the attack cited in the Symantec report, but added: “We took prompt action when we discovered a backdoor last October after a group in Singapore alerted us.” He did not elaborate.

Symantec’s report said an investigation into the backdoor showed that it was constantly being modified to provide “additional capabilities” for spying operations.

A senior official with Pakistan’s Federal Investigation Agency said it had not received any reports of malware incidents from government information technology departments. He asked not to be named due to the sensitivity of the matter.

A spokesman for FireEye, another cybersecurity company, said that based on an initial review of the malware, it had concluded that an internet protocol address in Pakistan had submitted the malware to a testing service. The spokesman requested anonymity, citing company policy.

Another FireEye official said the attack reported by Symantec was not surprising.

“South Asia is a hotbed of geopolitical tensions, and wherever we find heightened tensions we expect to see elevated levels of cyber espionage activity,” said Tim Wellsmore, FireEye’s director of threat intelligence for the Asia Pacific region.

The Symantec report said the ‘Ehdoor’ backdoor was initially used in late 2016 to target government, military and military-affiliated targets in the Middle East and elsewhere.

(Reporting by Rahul Bhatia. Additional reporting by Jeremy Wagstaff in Singapore.; Editing by Euan Rocha and Philip McClellan)

Ukraine cyber security firm warns of possible new attacks

KIEV (Reuters) – Ukrainian cyber security firm ISSP said on Tuesday it may have detected a new computer virus distribution campaign, after security services said Ukraine could face cyber attacks similar to those which knocked out global systems in June.

The June 27 attack, dubbed NotPetya, took down many Ukrainian government agencies and businesses, before spreading rapidly through corporate networks of multinationals with operations or suppliers in eastern Europe.

ISPP said that, as with NotPetya, the new malware seemed to originate in accounting software and could be intended to take down networks when Ukraine celebrates its Independence Day on Aug. 24.

“This could be an indicator of a massive cyber attack preparation before National Holidays in Ukraine,” it said in a statement.

In a statement, the state cyber police said they also had detected new malicious software.

The incident is “in no way connected with global cyber attacks like those that took place on June 27 of this year and is now fully under control,” it said.

The state cyber police and the Security and Defence Council have said Ukraine could be targeted with a NotPetya-style attack aimed at destabilizing the country as it marks its 1991 independence from the Soviet Union.

Last Friday, the central bank said it had warned state-owned and private lenders of the appearance of new malware, spread by opening email attachments of word documents.

Ukraine – regarded by some, despite Kremlin denials, as a guinea pig for Russian state-sponsored hacks – is fighting an uphill battle in turning pockets of protection into a national strategy to keep state institutions and systemic companies safe.

(Reporting by Natalia Zinets; Additional reporting by Pavel Polityuk; Writing by Alessandra Prentice; editing by Mark Heinrich and Richard Balmforth)

Ukraine central bank warns of new cyber-attack risk

By Natalia Zinets

KIEV (Reuters) – The Ukrainian central bank said on Friday it had warned state-owned and private lenders of the appearance of new malware as security services said Ukraine faced cyber attacks like those that knocked out global systems in June.

Kiev’s central bank has since been working with the government-backed Computer Emergency Response Team (CERT) and police to boost the defenses of the Ukrainian banking sector by quickly sharing information.

“Therefore on Aug. 11…, the central bank promptly informed banks about the appearance of new malicious code, its features, compromise indicators and the need to implement precautionary measures to prevent infection,” the central bank told Reuters in emailed comments.

According to its letter to banks, seen by Reuters, the new malware is spread by opening email attachments of word documents.

“The nature of this malicious code, its mass distribution, and the fact that at the time of its distribution it was not detected by any anti-virus software, suggest that this attack is preparation for a mass cyber-attack on the corporate networks of Ukrainian businesses,” the letter said.

The state cyber police and Security and Defence Council have said Ukraine could be targeted on Aug. 24 with a NotPetya-style attack aimed at destabilizing the country as it celebrates its 1991 independence from the Soviet Union.

(Writing by Alessandra Prentice; editing by Mark Heinrich)

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