The Cyber Safety Review Board (Board) issued a report entitled, Review of the Attacks Associates with Lapsus$ and Related Threat Groups (Report), released by the Department of Homeland Security on August 10, 2023. The Report begins with a message from the Board’s Chair and Vice Chair discussing WarGames, a movie with interesting parallels to the present day – the leveraging of AI and large language models into systems (see Joshua/WOPR) and teenagers compromising sophisticated systems (Matthew Broderick as a high school student hacking into the Dept. of Defense). The Report looks at “Lapsus$,” described as a loosely organized group of threat actors, that included juveniles in some cases, which gained lots of attention after providing a window into its inner workings.

“Lapsus$ made clear just how easy it was for its members (juveniles, in some instances) to infiltrate well-defended organizations.”

Established under President Biden’s Executive Order (EO) 14028 on ‘Improving the Nation’s Cybersecurity’, the role of the Board is to review major cyber events and make concrete recommendations that would drive improvements. The Report does not disappoint in terms of its description of the targeting and nature of attack by Lapsus$ and similar groups, as well as the Board’s recommendations, one being to move toward a “passwordless” world.

While we cannot cover all of the critical and helpful information in the 59-page Report, here are a few highlights.

Multi-factor Authentication Implementations Used Broadly Today are Insufficient.

A reliable joke at any data security conference is how “password” or “123456” continue to be the most popular passwords. Another weakness is the use of the same account credentials across multiple accounts. Multi-factor authentication (MFA) was designed to address these practices by going beyond the password to require one or more additional authenticators before access is permitted. MFA often comes highly recommended to help protect against one of the most financially damaging online crimes, business email compromise (BEC).

Perhaps a bit unsettling for many that have implemented MFA thinking it is the answer to system access vulnerabilities, the Report explains:

the Board saw a collective failure to sufficiently account for and mitigate the risks associated with using Short Message Service (SMS) and voice calls for MFA. In several instances, attackers gained initial access to targeted organizations through Subscriber Identity Module (SIM) swapping attacks, which allowed them to intercept one-time passcodes and push notifications sent via SMS, effectively defeating this widely used MFA control. A lucrative SIM swap criminal market further enabled this pay-foraccess to a target’s mobile phone services. Despite these factors, adopting more advanced MFA capabilities remains a challenge for many organizations and individual consumers due to workflow and usability issues.

As expected, however, some methods of MFA are better than others. The Report observed that application or token-based MFA methods, for example, were more resilient.

If you are not familiar with SIM swaps, the process goes something like this, as detailed in the Report:

  1. Attacker collects data on victim through social media, phishing, etc.
  2. Attacker uses victim’s credentials to request SIM swap from telecommunications provider.
  3. Telecommunications provider approves the attacker’s fraudulent SIM swap.
  4. With full account takeover, attacker can navigate MFA, access victim’s personal account, including their employer’s systems.

“Lapsus$ took over online accounts via sign-in and account recovery workflows that sent one-time links or MFA passcodes via SMS or voice calls”

Insider Recruitment

Many organizations might not realize or want to believe it, but employees are vulnerable to monetary incentives to assist with providing system access to the attackers. The Report notes that in some cases these incentives could be as high as $20,000 per week. Compromised employees might hand over access credentials, approving upstream MFA requests, conduct SIM swaps, and perform other actions to assist the attackers with getting access to the organization’s systems.

Supply chain attacks

Lapsus$ and similar groups do not just directly attack organizations, they also go after targets that provide access to many organizations – third-party service providers and business process outsourcers (BPOs). Evidence of this strategy by threat actor groups are the recent attacks on secure file transfer services, such as Accellion and the GoAnywhere service offered by Fortra. By gaining access to these services, the attackers have entrée to files uploaded to these services by their many customers. 

Per the report:

In January 2022, a threat actor studied for this report gained access to privileged internal tools of a third-party service provider by compromising the computer of a customer support contractor from one of its BPOs. The real target of this attack was not the third-party service provider, nor the BPO, but rather the downstream customers of the service provider itself. This is a remarkable example of a creative three-stage supply chain attack used by this class of threat actors.


The Board outlines several recommendations, some are more likely to be within an organization’s power to mitigate risk than others. The recommendations fall into four main categories

  • strengthening identity and access management (IAM);
  • mitigating telecommunications and reseller vulnerabilities;
  • building resiliency across multi-party systems with a focus on business process outsourcers (BPOs); and
  • addressing law enforcement challenges and juvenile cybercrime.

As noted above, one of the strongest suggestions for enhancing IAM is moving away from passwords. The Board encourages increased use of Fast IDentity Online (FIDO)2-compliant, hardware backed solutions. In short, FIDO authentication would permit users to sign in with passkeys, usually a biometric or security key. Of course, biometrics raise other compliance risks, but the Board observes this technology avoids the vulnerability and suboptimal practices that have developed around passwords.

Another recommendation is to develop and test cyber incident response plans. As we have discussed on this blog several times (e.g., here and here), no system of safeguards is perfect. So, as an organization works to prevent an attack, it also must plan to respond should one be successful. Among other things, these plans should:

  • identify critical data, systems, and assets that should be prioritized during an attack,
  • outline a tested process for recovering from back-ups,
  • have an internal communications plan,
  • involve BPOs and third-party service providers in the developing and practicing of the plan,
  • identify and maintain contact information for internal and external individuals and groups that are critical to the response process – key employees, DFIR firms, law enforcement, outside counsel, insurance carriers, etc.

The Report is a great read for anyone involved in some way in addressing data risk to an organization. A critical take-away for anyone reading this report is threats are evolving and come in many forms. A control implemented in year 1 may become a significant vulnerability in year 2. Forty years later, the movie WarGames continues to be relevant, even if only to show that some of the most secure systems can be compromised by a handful of curious teenagers.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.