Two weeks after the Australian privacy watchdog filed a lawsuit against Medibank for failure to protect personal information of its citizens in a 2022 data breach, the Information Commissioner's office this week made public a comprehensive analysis of the security failures that led to the incident. Medibank, a prominent Australian health insurance provider, faced a devastating cyberattack in October 2022 that compromised the personal data of 9.7 million current and former customers. According to the report from the Office of the Australian Information Commissioner (OAIC), the attack was likely caused by a lack of basic cybersecurity measures like requiring its workers to use multi-factor authentication to log onto its VPN.

The Sequence of Events in the Medibank Breach

The attack on Medibank began when an IT service desk operator at a third-party contractor used his personal browser profile on a work computer and inadvertently synced his Medibank credentials to his home computer. This home device was infected with information-stealing malware, which allowed hackers to obtain these credentials, including those with elevated access permissions. The attackers first breached Medibank’s Microsoft Exchange server using these credentials on August 12, 2022, before logging into Medibank’s Palo Alto Networks Global Protect VPN. Incidentally, the VPN did not require multi-factor authentication (MFA), making it easier for the attackers to gain access. It was only in mid-October that Medibank brought in a threat intelligence firm to investigate a Microsoft Exchange ProxyNotShell incident, when they discovered data was previously stolen in a cyberattack.

"During the Relevant Period, the Admin Account had access to most (if not all) of Medibank's systems, including network drives, management consoles, and remote desktop access to jump box servers (used to access certain Medibank directories and databases)." - the OAIC report.

Security Failures and Missed Alerts

Lack of Multi-Factor Authentication (MFA)

One of the critical failures in the Medibank breach was the health insurer’s neglect to implement MFA for VPN access. The OAIC report said that during the relevant period, the VPN was configured to allow access with just a device certificate or a username and password. It did not require the additional security layer provided by MFA. This oversight significantly lowered the barrier for unauthorized access.

Operational and Alert Management Failures

Despite receiving several security alerts from their Endpoint Detection and Response (EDR) software about suspicious activities on August 24 and 25, these alerts were not appropriately triaged or escalated. This delay allowed the attackers to continue their operations undetected for an extended period, which ultimately led to the exfiltration of approximately 520 gigabytes of sensitive data from the company's MARS Database and MPLFiler systems.

Data Compromised and Consequences

The stolen data included highly sensitive information such as customers' names, dates of birth, addresses, phone numbers, email addresses, Medicare numbers, passport numbers and extensive health-related data. The exposure of such information has severe implications for the affected individuals, ranging from identity theft to potential misuse of medical data in various frauds and scams. The attackers linked to the ransomware gang BlogXX, which is believed to be an offshoot of the notorious REvil group, leaked the data on the dark web. This incident not only caused significant distress to millions of Australians but also highlighted the grave consequences of inadequate cybersecurity measures.

Legal and Regulatory Actions Follow

The OAIC said that Medibank was aware “of serious deficiencies in its cybersecurity and information security,” prior to the hack. For example, citing an Active Directory Risk Assessment report from Datacom in June 2020, OAIC said Medibank had an excessive number of individuals who had access to Active Directory (being the Microsoft directory service used for management of all Medibank users, group policies and domains).

"A number of individuals had been given excessive privileges to perform simple daily routines, and that MFA had not been enabled for privileged and nonprivileged users which was described as a “critical” defect."

Given the nature and the volume of the data Medibank stores and collects, “it was reasonable” for the company to adopt the security measures recommended by Australia’s privacy regulator, but “these measures were not implemented, or, alternatively, not properly implemented or enforced, by Medibank,” OAIC said.

Thus, in response to the breach and the negligence that led to it, Australia's data protection regulator OAIC, announced legal action against Medibank for failing to protect personal information. The company faces potential fines exceeding AU$2 million.

A spokesperson for the health insurer did not detail the plan of action against the lawsuit but earlier told The Cyber Express that ”Medibank intends to defend the proceedings.”

Medibank Hacker Sanctioned and Arrested

Earlier this year, the U.S., Australia, and the U.K. sanctioned Aleksandr Gennadievich Ermakov, believed to be behind the 2022 Medibank hack. Ermakov, also known by aliases such as AlexanderErmakov and JimJones, was subsequently arrested by Russian police along with two others for violating Article 273, which prohibits creating or spreading harmful computer code. Extradition of Ermakov is unlikely given the current political climate.

Lessons and Recommendations

The Medibank breach underscores several critical lessons for organizations regarding cybersecurity: 1. Implementation of Multi-Factor Authentication: Utilizing MFA for all access points, especially VPNs, is essential. MFA adds an additional layer of security, making it significantly harder for attackers to exploit stolen credentials. 2. Proper Alert Management: Organizations must ensure that security alerts are promptly and effectively managed. Implementing robust procedures for triaging and escalating suspicious activities can prevent prolonged unauthorized access. 3. Regular Security Audits: Conducting regular security audits to identify and rectify vulnerabilities is crucial. These audits should include evaluating the effectiveness of existing security measures and compliance with best practices. 4. Employee Training: Continuous training for employees on cybersecurity best practices, including safe browsing habits and the importance of using corporate credentials responsibly, is vital to minimize the risk of breaches originating from human error.

The Australian privacy watchdog on Wednesday filed a lawsuit against Medibank, the country's largest private health insurer, for failing to protect its 9.7 million customers' personal information in a 2022 data breach incident.

The Australian Information Commissioner said in a civil penalty proceedings filed in the Federal Court that Medibank "seriously interfered" with the privacy of Australians by failing to take reasonable steps to protect their data from misuse and unauthorized access. These issues are allegedly in breach of the country's Privacy Act 1988, according to the OAIC.