What are security risks of third-party passkey providers?

While third-party passkey providers offer cross-platform flexibility and independent passkey storage, they introduce security risks that organizations and users should be aware of.

1. Cloud-Based Storage Risks

   • Many third-party providers store passkeys in cloud environments, increasing the risk of data breaches if the cloud infrastructure is compromised.
   • Even though end-to-end encryption is typically applied, the provider still manages encryption keys, which could become a target for attacks.

2. Trust and Compliance Issues

   • Unlike first-party providers (e.g., Apple, Google), third-party providers operate independently and may not be subject to the same strict security standards.
   • Companies must verify if a provider complies with industry regulations like FIDO2, WebAuthn, and GDPR.

3. Phishing and Social Engineering Attacks

   • Some third-party password managers rely on master passwords or weak authentication methods to unlock stored passkeys.
   • If an attacker gains access to a user’s account through phishing or credential stuffing, they could potentially access all stored passkeys.

4. Dependency on the Provider's Infrastructure

   • Users and organizations depend on the provider's uptime and infrastructure security. If the provider suffers a server outage or shutdown, access to stored passkeys may be disrupted.
   • Unlike first-party passkeys, which are often integrated at the OS level, third-party solutions require additional authentication steps, increasing failure points.

5. Potential Lack of Hardware-Level Protection

   • First-party providers leverage secure enclaves or TPMs (Trusted Platform Modules) to safeguard private keys at the hardware level.
   • Some third-party providers may lack this deep integration, making their passkeys potentially more vulnerable to device malware or key extraction techniques.

• Choose a Reputable Provider: Verify that the provider follows FIDO2 standards and has a strong security track record.
• Use Biometric or Strong MFA: Ensure passkey access requires biometric authentication or additional security layers.
• Enable Local Encryption: Some providers allow client-side encryption, ensuring that even the provider cannot access passkeys.
• Regularly Audit Security Practices: Enterprises should perform third-party security assessments before adopting a provider.

While third-party passkey providers enhance cross-device compatibility, they come with security trade-offs. Organizations should evaluate encryption practices, compliance, and infrastructure security to minimize risks.