The Blizzard authenticator uses a technology called SecurID [http://en.wikipedia.org/wiki/SecurID], which is what many banks and other financial institutions provide to their customers. The technology itself is VERY secure. However, most security systems are still vulnerable to a man-in-the-middle attack.John Funk said:And don't ask me how it does this - I have one and I can't figure out how it works).
Doing a MitM attack with a keylogger is absolutely trivial and I'm shocked that it took this long for it to manifest. It's not that it "took them four years to crack", I'd say it's more like it was more effort than it was worth. Now that there is an increasing number of protected accounts, hackers have decided it's worth doing.
The problem is that the SecurID token is being used at an insecure location, ie. your PC. If you run an operating system that is a greater target for keyloggers and you don't have the latest antivirus software installed (assuming the latest AV updates can catch it), you have no guarantee that your system is secure. If you are using your SecurID token at a relatively secure location (such as an ATM or actually AT the bank), you're not going to have any problems.
From Wikipedia:Khell_Sennet said:Blizzard comes out with this stupid fucking device that you use to access your games, which the player has to pay for, but it promises that your account will be secured against account theft... Then, their ten-dollar cash-grab doesn't even fucking work?
While RSA SecurID tokens offer a level of protection against password replay attacks, they might fail to provide adequate protection against man in the middle type attacks. In the attack model where an attacker is able to manipulate the authentication data flow between a user and the server, the attacker will be able to then forward this authentication information on to the server themselves, effectively masquerading as the given user. If the attacker manages to block the authorised user from authenticating to the server until the next token code will be valid, he will be able to log in to the server.
This is not Blizzard's fault, it is an inherent flaw in SecurID. SecurID is still in my opinion the best choice for account security. If you're running any version of Windows (given that it's the largest target for viruses), you would be rather silly to not be running some form of antivirus software anyway. If you still get hit with a keylogger, either you're not paying attention to your AV updates or you were unlucky enough to pick it up within the day or two before AV companies release a fix.