Google Wallet security holes threaten both rooted and stock devices

If you opened up Google Wallet today, you may have noticed there's an extra $5 sitting on your pre-paid card. It turns out it's not a glitch, it's compensation from Google Wallet in exchange to the provisioning hassles the service has been experiencing this year. In an email to all customers, the company writes:

If you're not up on the entire Google Wallet saga, here's a quick re-cap. On February 9th, it was discovered that it was trivial to access Google Wallet prepaid accounts on a stolen phone by clearing the app's data and re-provisioning it. Google disabled creating new cards, then re-enabled that but let re-provisioning disabled, then re-enabled the whole thing by securing it with a Google Account password. If you've been living through this entire ordeal as a Google Wallet customer, five bucks seems like the least the company could do.

Ever since initial reports about security holes in Google Wallet bloomed into a full-scale problem that gave potential thieves access to pre-paid cards, Google has been scrambling to patch up security holes and ensure users that its mobile payment solution is still more secure than your average credit card. The largest hole involved a simple process of clearing app data and re-initializing the app in order to gain access to a pre-existing pre-paid card. Google first locked down access to new or re-provisioned cards immediately. After a few days, the company opened up the creation of new pre-paid cards while requiring users to call into to Google to re-provision existing cards.

Now three weeks have passed, and the company has gone a step further by allowing users to set up their existing pre-paid cards directly on the phone without calling into Google. In order to make it secure, the Google Wallet app now requires users to re-enter their Google account password on the first launch. We tested the change and, yes, you are made to re-enter your Google account password — but it's a bit of a hack as the dialog only says that "You entered the wrong password or your account has changed." Neither, technically, was the case, but the fact that this is the message we're seeing instead of something that actually describes what's going on (namely, that it's using this password to help verify your identity and protect your money) makes us wonder just how hacked-together this new solution is.

It looks like Google is closing the book on the security concerns surrounding Google Wallet. The search giant released a software update a couple of weeks ago that patched the hole that made prepaid funds vulnerable to theft, and now the company has released its solution for those with rooted devices. According to Droid Life, users on rooted phones are now presented with a warning that their device is not supported by Google Wallet, though the app will still function perfectly fine. Unfortunately, it's not a proper fix — the vulnerability on rooted phones that allowed hackers to crack the security PIN that protects Wallet is alive and well. We still hope that the company will rewrite the program in the future to fix this problem, but for now, be sure to be extra careful (read: enable a screen lock) if you're using Google Wallet on a rooted device.

Google has updated its blog post about the Google Wallet prepaid card security hole, letting us know that it has re-activated provisioning and also put out a fix for the original problem. Last week it was discovered that Google Wallet had a serious security issue that affected all users, in which anybody could clear the app data from Google Wallet, re-open it, and gain access to the prepaid card. In response, Google shut down provisioning for the prepaid cards altogether — until now, that is. Here is Google's updated statement:

We re-tested the original method for gaining access to the prepaid card, clearing our app data and relaunching Google Wallet. This time around, on attempting to re-provision a card, we were simply met with a error message that "Prepaid is unavailable" and offering two options: "Try Again" and "Remove Card." We're not entirely sure that is an ideal fix, but chances are that if you are dealing with a problematic card, Google would like you to call in for assistance just as you would if you lost an actual credit card.

Following discoveries that both rooted and stock Android phones are vulnerable to attack, vice president of Google Wallet and payments Osama Bedier posted a letter today defending the service and reassuring customers that it is still safer than traditional payment methods. He cites that Google Wallet is protected by both an in-app PIN and a screen lock (if you have one set up), and in order to maintain security, he recommends that all Google Wallet users keep their phones unrooted, since it's not hard for a thief to access your Wallet PIN on a rooted phone. Additionally — to help keep stock devices safe following the latest finding that funds could be accessed by simply wiping the application's settings — the team has temporarily turned off provisioning of prepaid cards, preventing you from setting up a new card (old ones should still work just fine).

In the statement the executive also reminds users that Google will help you out if you lose your phone — you can call them up (855-492-5538) and have the app disabled. In the meantime, be sure to turn a screen lock on your phone, will you?

After the news yesterday that it is possible to crack the PIN on the Google Wallet software on rooted Android devices, a second security flaw has been uncovered that affects all users. The "attack" works thusly: if somebody takes your phone, he or she can go into the app settings for Google Wallet and tap "Clear data." This will erase all of the Google Wallet data stored on the phone. When that person then opens Google Wallet, it offers its initial setup process again, including setting up a new PIN and tying Google Wallet to a Google account. That's when the real issue arises, as that person can re-add the default Google Wallet pre-paid card to the app — and since Google Wallet is tied specifically to the hardware instead of to an account, it re-adds the same pre-paid card that was present before. In other words, any funds you have added to the the pre-paid card will be available to the thief. That person will have set up a new PIN as well, so he or she would be free to use it to make payments. This method was uncovered by The Smartphone Champ and we just independently verified that it works, successfully re-adding the same pre-paid card to a reset Google Wallet app, funds and all.

We reached out to Google for a statement and a spokesman for the company verified the security hole, but also said Google is working on a fix: