Category Archives: First American Financial Corp.

A Little Sunshine, accepted the risk, American Land Title Association, First American Financial Corp., mark rasch, Michael Volkov, New York State Department of Financial Services, simpleshowing.com, The Volkov Law Group, U.S. Securities and Exchange Commission

First American Financial Pays Farcical $500K Fine

In May 2019, KrebsOnSecurity broke the news that the website of mortgage settlement giant First American Financial Corp. [NYSE:FAF] was leaking more than 800 million documents — many containing sensitive financial data — related to real estate transactions dating back 16 years. This week, the U.S. Securities and Exchange Commission settled its investigation into the matter after the Fortune 500 company agreed to pay a paltry penalty of less than $500,000.

First American Financial Corp.

If you bought or sold a property in the last two decades or so, chances are decent that you also gave loads of personal and financial documents to First American. According to data from the American Land Title Association, First American is the second largest mortgage title and settlement company in the United States, handling nearly a quarter of all closings each year.

The SEC says First American derives nearly 92 percent of its revenue from its title insurance segment, earning $7.1 billion last year.

Title insurance protects homebuyers from the prospect of someone contesting their legitimacy as the new homeowner. According to SimpleShowing.com, there are actually two title insurance policies in each transaction — one for the buyer and one for the lender (the latter also needs protection as they’re providing the mortgage to purchase the home).

Title insurance is not mandated by law, but most lenders require it as part of any mortgage transaction. In other words, if you wish to take out a mortgage on a home you will not be able to do so without giving companies like First American gobs of documents about your income, assets and liabilities — including quite a bit of sensitive financial data.

Aside from its core business competency — checking to make sure the property at issue in any real estate transaction is unencumbered by any liens or other legal claims against it — First American basically has one job: Protect the privacy and security of all these documents.

A redacted screenshot of one of many millions of sensitive records exposed by First American’s Web site.

It’s easy to see why companies like First American might not view protecting this data as sacrosanct, as the entire industry’s incentive for safeguarding all those sensitive documents is somewhat misaligned.

That is to say, in the title insurance industry the parties to a real estate transaction aren’t customers, but rather they are are the product. The actual customers of the title insurance companies are principally the banks which back these mortgage transactions.

We see a similar dynamic with social media platforms, where the “user” is not the customer at all but the product whose data is being bought and sold by these platforms.

Roughly five months before KrebsOnSecurity notified First American that anyone with a web browser could view sensitive document in its “Eagle Pro” database online just by changing some characters at the end of a link, an internal security audit at First American flagged the exact same vulnerability.

But the company never acted to fix it until the news media came calling.

The SEC’s administrative proceeding (PDF) explains how things slipped through the cracks. Under First American’s documented vulnerability remediation policies, the data leak was classified as a security weakness with a “level 3” severity, which placed it in the “medium risk” category and required remediation within 45 days.

But rather than recording the vulnerability as a level 3 severity, due to a clerical error the vulnerability was erroneously entered as a level 2 or “low risk” severity in First American’s automated tracking system. Level 2 issues required remediation within 90 days. Even so, First American missed that mark.

The SEC said that under First American’s remediation policies, if the person responsible for fixing the problem is unable to do so based on the timeframes listed above, that employee must have their management contact the company’s information security department to discuss their remediation plan and proposed time estimate.

“If it is not technically possible to remediate the vulnerability, or if remediation is cost prohibitive, the [employee] and their management must contact Information Security to obtain a waiver or risk acceptance approval from the CISO,” the SEC explained. “The [employee] did not request a waiver or risk acceptance from the CISO.”

So, someone within First American accepted the risk, but that person neglected to ensure the higher-ups within the company also were comfortable with that risk. It’s difficult not to hum a tune whenever the phrase “accepted the risk” comes up if you’ve ever seen this excellent infosec industry parody.

The SEC took aim at First American because a few days after our May 24, 2019 story ran, the company issued an 8-K filing with the agency stating First American had no prior indication of any vulnerability.

“That statement demonstrated that First American’s senior management was not properly informed of the prior report of a vulnerability and a failure to remediate the problem,” wrote Michael Volkov, a 30-year federal prosecutor who now runs The Volkov Law Group in Washington, D.C.

Reporting for Reuters Regulatory Intelligence, Richard Satran says the SEC charged First American with violating Rule 13a-15(a) of the Exchange Act.

“The rule broadly requires firms involved in securities issuance to have a compliance process in place to assure material information follows securities laws,” Satran wrote. “The SEC avoided getting into the specific details of the breach and instead focused on the way its disclosure was handled.”

Mark Rasch, also former federal prosecutor in Washington, said the SEC is signaling with this action that it intends to take on more cases in which companies flub security governance in some big way.

“It’s a win for the SEC, and for First America, but it’s hardly justice,” Rasch said. “It’s a paltry fine, and it involves no admission of guilt by First American.”

Rasch said First American’s first problem was labeling the weakness as a medium risk.

“This is lots of sensitive data you’re exposing to anyone with a web browser,” Rasch said. “That’s a high-risk vulnerability. It also means you probably don’t know whether or not anyone has accessed that data. There’s no way to tell unless you can go back through all your logs all those years.”

The SEC said the 800 million+ records had been publicly available on First American’s website since 2013. In August 2019, the company said a third-party investigation into the exposure identified just 32 consumers whose non-public personal information likely was accessed without authorization.

When KrebsOnSecurity asked how long it maintained access logs or how far back in time that review went, First American declined to be more specific, saying only that its logs covered a period that was typical for a company of its size and nature.

However, documents from New York financial regulators show First American was unable to determine whether records were accessed prior to Jun 2018 (one year prior to fixing the weakness).

The records exposed by First American would have been a virtual gold mine for phishers and scammers involved in Business Email Compromise (BEC) scams, which often impersonate real estate agents, closing agencies, title and escrow firms in a bid to trick property buyers into wiring funds to fraudsters. According to the FBI, BEC scams are the most costly form of cybercrime today.

First American is not out of the regulatory woods yet from this enormous data leak. In July 2020, the New York State Department of Financial Services announced the company was the target of their first ever cybersecurity enforcement action in connection with the incident, charges that could bring steep financial penalties. That inquiry is ongoing.

The DFS considers each instance of exposed personal information a separate violation, and the company faces penalties of up to $1,000 per violation. According to the SEC, First American’s EaglePro database contained tens of millions of document images that contained non-public personal information.

Data Breaches, First American Financial Corp., New York State Department of Financial Services, Reuters, The Coming Storm

NY Charges First American Financial for Massive Data Leak

In May 2019, KrebsOnSecurity broke the news that the website of mortgage title insurance giant First American Financial Corp. had exposed approximately 885 million records related to mortgage deals going back to 2003. On Wednesday, regulators in New York announced that First American was the target of their first ever cybersecurity enforcement action in connection with the incident, charges that could bring steep financial penalties.

First American Financial Corp.

Santa Ana, Calif.-based First American [NYSE:FAF] is a leading provider of title insurance and settlement services to the real estate and mortgage industries. It employs some 18,000 people and brought in $6.2 billion in 2019.

As first reported here last year, First American’s website exposed 16 years worth of digitized mortgage title insurance records — including bank account numbers and statements, mortgage and tax records, Social Security numbers, wire transaction receipts, and drivers license images.

The documents were available without authentication to anyone with a Web browser.

According to a filing (PDF) by the New York State Department of Financial Services (DFS), the weakness that exposed the documents was first introduced during an application software update in May 2014 and went undetected for years.

Worse still, the DFS found, the vulnerability was discovered in a penetration test First American conducted on its own in December 2018.

“Remarkably, Respondent instead allowed unfettered access to the personal and financial data of millions of its customers for six more months until the breach and its serious ramifications were widely publicized by a nationally recognized cybersecurity industry journalist,” the DFS explained in a statement on the charges.

A redacted screenshot of one of many millions of sensitive records exposed by First American’s Web site.

Reuters reports that the penalties could be significant for First American: The DFS considers each instance of exposed personal information a separate violation, and the company faces penalties of up to $1,000 per violation.

In a written statement, First American said it strongly disagrees with the DFS’s findings, and that its own investigation determined only a “very limited number” of consumers — and none from New York — had personal data accessed without permission.

In August 2019, the company said a third-party investigation into the exposure identified just 32 consumers whose non-public personal information likely was accessed without authorization.

When KrebsOnSecurity asked last year how long it maintained access logs or how far back in time that review went, First American declined to be more specific, saying only that its logs covered a period that was typical for a company of its size and nature.

But in Wednesday’s filing, the DFS said First American was unable to determine whether records were accessed prior to Jun 2018.

“Respondent’s forensic investigation relied on a review of web logs retained from June 2018 onward,” the DFS found. “Respondent’s own analysis demonstrated that during this 11-month period, more than 350,000 documents were accessed without authorization by automated ‘bots’ or ‘scraper’ programs designed to collect information on the Internet.

The records exposed by First American would have been a virtual gold mine for phishers and scammers involved in so-called Business Email Compromise (BEC) scams, which often impersonate real estate agents, closing agencies, title and escrow firms in a bid to trick property buyers into wiring funds to fraudsters. According to the FBI, BEC scams are the most costly form of cybercrime today.

First American’s stock price fell more than 6 percent the day after news of their data leak was published here. In the days that followed, the DFS and U.S. Securities and Exchange Commission each announced they were investigating the company.

First American released its first quarter 2020 earnings today. A hearing on the charges alleged by the DFS is slated for Oct. 26.

Ben Shoval, Data Breaches, First American Financial Corp., The Coming Storm, U.S. Securities and Exchange Commission

SEC Investigating Data Leak at First American Financial Corp.

The U.S. Securities and Exchange Commission (SEC) is investigating a security failure on the Web site of real estate title insurance giant First American Financial Corp. that exposed more than 885 million personal and financial records tied to mortgage deals going back to 2003, KrebsOnSecurity has learned.

First American Financial Corp.

In May, KrebsOnSecurity broke the news that the Web site for Santa Ana, Calif.-based First American [NYSE:FAF] exposed some 885 million documents related to real estate closings over the past 16 years, including bank account numbers and statements, mortgage and tax records, Social Security numbers, wire transaction receipts and drivers license images. No authentication was required to view the documents.

The initial tip on that story came from Ben Shoval, a real estate developer based in Seattle. Shoval said he recently received a letter from the SEC’s enforcement division which stated the agency was investigating the data exposure to determine if First American had violated federal securities laws.

In its letter, the SEC asked Shoval to preserve and share any documents or evidence he had related to the data exposure.

“This investigation is a non-public, fact-finding inquiry,” the letter explained. “The investigation does not mean that we have concluded that anyone has violated the law.”

The SEC did not respond to requests for comment.

Word of the SEC investigation comes weeks after regulators in New York said they were investigating the company in what could turn out to be the first test of the state’s strict new cybersecurity regulation, which requires financial companies to periodically audit and report on how they protect sensitive data, and provides for fines in cases where violations were reckless or willful. First American also is now the target of a class action lawsuit that alleges it “failed to implement even rudimentary security measures.”

First American has issued a series of statements over the past few months that seem to downplay the severity of the data exposure, which the company said was the result of a “design defect” in its Web site.

On June 18, First American said a review of system logs by an outside forensic firm, “based on guidance from the company, identified 484 files that likely were accessed by individuals without authorization. The company has reviewed 211 of these files to date and determined that only 14 (or 6.6%) of those files contain non-public personal information. The company is in the process of notifying the affected consumers and will offer them complimentary credit monitoring services.”

In a statement on July 16, First American said its now-completed investigation identified just 32 consumers whose non-public personal information likely was accessed without authorization.

“These 32 consumers have been notified and offered complimentary credit monitoring services,” the company said.

First American has not responded to questions about how long this “design defect” persisted on its site, how far back it maintained access logs, or how far back in those access logs the company’s review extended.

A Little Sunshine, Data Breaches, First American Financial Corp., New York Department of Financial Services, New York Times, Stacy Cowley

NY Investigates Exposure of 885 Million Mortgage Documents

New York regulators are investigating a weakness that exposed 885 million mortgage records at First American Financial Corp. [NYSE:FAF] as the first test of the state’s strict new cybersecurity regulation. That measure, which went into effect in March 2019 and is considered among the toughest in the nation, requires financial companies to regularly audit and report on how they protect sensitive data, and provides for fines in cases where violations were reckless or willful.

On May 24, KrebsOnSecurity broke the news that First American had just fixed a weakness in its Web site that exposed approximately 885 million documents — many of them with Social Security and bank account numbers — going back at least 16 years. No authentication was needed to access the digitized records.

On May 29, The New York Times reported that the inquiry by New York’s Department of Financial Services is likely to be followed by other investigations from regulators and law enforcement.

First American says it has hired a third-party security firm to investigate, and that it shut down external access to the records.

The Times says few people outside the real estate industry are familiar with First American, but millions have entrusted their data to the company when they go to close the deal on buying or selling a new home.

“First American provides title insurance and settlement services for property sales, which typically require buyers to hand over extensive financial records to other parties in their transactions,” wrote Stacy Cowley. “The company is one of the largest insurers in the United States, handling around one in every four transactions, according to the American Land Title Association.”

News also emerged this week that First American is now the target of a class action lawsuit alleging the Fortune 500 mortgage industry giant “failed to implement even rudimentary security measures.”

Ben Shoval, Data Breaches, First American Financial Corp.

First American Financial Corp. Leaked Hundreds of Millions of Title Insurance Records

The Web site for Fortune 500 real estate title insurance giant First American Financial Corp. [NYSE:FAF] leaked hundreds of millions of documents related to mortgage deals going back to 2003, until notified this week by KrebsOnSecurity. The digitized records — including bank account numbers and statements, mortgage and tax records, Social Security numbers, wire transaction receipts, and drivers license images — were available without authentication to anyone with a Web browser.

First American Financial Corp. Image: Linkedin.

Santa Ana, Calif.-based First American is a leading provider of title insurance and settlement services to the real estate and mortgage industries. It employs some 18,000 people and brought in more than $5.7 billion in 2018.

Earlier this week, KrebsOnSecurity was contacted by a real estate developer in Washington state who said he’d had little luck getting a response from the company about what he found, which was that a portion of its Web site (firstam.com) was leaking tens if not hundreds of millions of records. He said anyone who knew the URL for a valid document at the Web site could view other documents just by modifying a single digit in the link.

And this would potentially include anyone who’s ever been sent a document link via email by First American.

KrebsOnSecurity confirmed the real estate developer’s findings, which indicate that First American’s Web site exposed approximately 885 million files, the earliest dating back more than 16 years. No authentication was required to read the documents.

Many of the exposed files are records of wire transactions with bank account numbers and other information from home or property buyers and sellers. Ben Shoval, the developer who notified KrebsOnSecurity about the data exposure, said that’s because First American is one of the most widely-used companies for real estate title insurance and for closing real estate deals — where both parties to the sale meet in a room and sign stacks of legal documents.

“Closing agencies are supposed to be the only neutral party that doesn’t represent someone else’s interest, and you’re required to have title insurance if you have any kind of mortgage,” Shoval said.

“The title insurance agency collects all kinds of documents from both the buyer and seller, including Social Security numbers, drivers licenses, account statements, and even internal corporate documents if you’re a small business. You give them all kinds of private information and you expect that to stay private.”

Shoval shared a document link he’d been given by First American from a recent transaction, which referenced a record number that was nine digits long and dated April 2019. Modifying the document number in his link by numbers in either direction yielded other peoples’ records before or after the same date and time, indicating the document numbers may have been issued sequentially.

The earliest document number available on the site – 000000075 — referenced a real estate transaction from 2003. From there, the dates on the documents get closer to real time with each forward increment in the record number.

A redacted screenshot of one of many millions of sensitive records exposed by First American’s Web site.

As of the morning of May 24, firstam.com was returning documents up to the present day (885,000,000+), including many PDFs and post-dated forms for upcoming real estate closings. By 2 p.m. ET Friday, the company had disabled the site that served the records. It’s yet not clear how long the site remained in its promiscuous state.

First American wouldn’t comment on the overall number of records potentially exposed via their site, or how long those records were publicly available. But a spokesperson for the company did share the following statement:

“First American has learned of a design defect in an application that made possible unauthorized access to customer data.  At First American, security, privacy and confidentiality are of the highest priority and we are committed to protecting our customers’ information. The company took immediate action to address the situation and shut down external access to the application. We are currently evaluating what effect, if any, this had on the security of customer information. We will have no further comment until our internal review is completed.”

I should emphasize that these documents were merely available from First American’s Web site; I do not have any information on whether this fact was known to fraudsters previously, nor do I have any information to suggest the documents were somehow mass-harvested (although a low-and-slow or distributed indexing of this data would not have been difficult for even a novice attacker).

Nevertheless, the information exposed by First American would be a virtual gold mine for phishers and scammers involved in so-called Business Email Compromise (BEC) scams, which often impersonate real estate agents, closing agencies, title and escrow firms in a bid to trick property buyers into wiring funds to fraudsters. According to the FBI, BEC scams are the most costly form of cybercrime today.

Armed with a single link to a First American document, BEC scammers would have an endless supply of very convincing phishing templates to use. A database like this also would give fraudsters a constant feed of new information about upcoming real estate financial transactions — including the email addresses, names and phone numbers of the closing agents and buyers.

As noted in past stories here, these types of data exposures are some of the most common yet preventable. In December 2018, the parent company of Kay Jewelers and Jared Jewelers fixed a weakness in their site that exposed the order information for all of their online customers.

In August 2018, financial industry giant Fiserv Inc. fixed a bug reported by KrebsOnSecurity that exposed personal and financial details of countless customers across hundreds of bank Web sites.

In July 2018, identity theft protection service LifeLock corrected an information disclosure flaw that exposed the email address of millions of subscribers. And in April 2018, PaneraBread.com remedied a weakness exposing millions of customer names, email and physical addresses, birthdays and partial credit card numbers.