Researchers Demo Hack Against African Micro-Finance Accounts

mask.of.sanity writes "Security researchers have shown how to raid Africa micro-finance bank accounts en masse using fake audio one time passwords. The banks use audio one-time passwords to authenticate users logging into their accounts, but failed to implement properly security controls across numerous systems. Crucially, the researchers did not reveal how they cracked the encryption in order to protect users."

Comments

A *lot* of microfinance is just a scam

[crazyjj]

I know this is somewhat off-topic, but I was a big supporter of the whole micro-finance thing at one time myself. Sounds like a great idea and all, right? But then I saw former micro-financier Hugh Sinclair's BookTv segment and read his book and it opened my eyes to how much of this micro-finance fad has become a feeding ground for scammers, con men, and other vultures in the countries they're ostensibly supposed to be helping--and how much corruption there is in many of these "charitable" non-profits and financiers that sell the idea of micro-finance to well-meaning supporters.

Again, I know it's not directly related to the hack. But every time micro-finance comes up, I like to point out this info--since the vast majority of people still think of the subject in very naive and rosy terms, oblivious to the deep corruption that has become so pervasive in its execution.

Re:A *lot* of microfinance is just a scam

[Trepidity]

I think this is on a slightly different use of the term "microfinance", though there's overlap. The books you link are about microcredit specifically, a hyped-up approach to poverty reduction based on very small loans spread throughout a community, which Grameen Bank made famous. But the kind of microfinance this article talks about is more about regular banking: accounts and transactions, usually via a mobile phone. It's become popular in Africa because of the lack of traditional financial networks, and the increasing ubiquity of mobile phones as the main link into modern systems.

Re:A *lot* of microfinance is just a scam

[h4rr4r]

The entire thing is a scam and they are quite upfront with it.

I the charitable 1st worlder give free money to some bank in the 3rd world who supposedly gives a loan to a needy person.

This means I make no profit and a bank gets to charge interest to another person. Why the hell would I ever do that?

If it is my capital I want at least half the interest or just give the guy the money, either way at least some banker is not getting rich for free off my money.

Re:A *lot* of microfinance is just a scam

[girlinatrainingbra]

yep, it's the same as the "mother teresa" scam, in which the PR is such that everyone thinks that this "saint" is helping out the poor, but the reality is that the poverty is being continued and no actual help is being given out, and the dontations taken in are used to perpetuate and strengthen the infrastructure of the so-called "charity organization".
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Wait a minute, that's the same type of scam pulled by the Red Cross and the United Way: they all come out of the woodwork during disasters and ask for a lot of donations and money (because they can skim off the top [heavily skim] of money, but not of actual goods) which can be put towards expensive cherry desks and mahogany paneling and half-a-million-dollars-per-year executive salaries.
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Sadly, the business and MBA types find every possible way that people like to part with their money (whether it's for food you need, or toys you want or lust after, or donations you gladly give to help others or assuage their own consciences) and insert themselves into the equation to take the majority of the money as "overhead costs" for running the schemes themselves.

Re:A *lot* of microfinance is just a scam

[crazyjj]

I once heard someone say that you can tell how corrupt a charity is by the kind of car its director drives. If a charity's director is driving a new Mercedes, it's a pretty safe bet that most of your donations aren't going to feed hungry children. So now that's my rule of thumb for a charity: look into the intentions and lifestyles of the heads of the charity and you will probably see its true heart.