A security researcher in Finland has discovered a cross-site scripting vulnerability on paypal.com that would allow hackers to carry out highly plausible attacks, adding their own content to the site and stealing credentials from users.

The vulnerability is made worse by the fact that the affected page uses an Extended Validation SSL certificate, which causes the browser’s address bar to turn green, assuring visitors that the site – and its content – belongs to PayPal. Two years ago, a similar vulnerability was discovered on a different page of the PayPal site, which also used an SSL certificate.

“Is it safe?” – a message injected on the PayPal website today

Harry Sintonen discovered the vulnerability and announced it to other web application security specialists in an Internet Relay Chat (IRC) channel today. Sintonen told Netcraft that the issue was critical, adding that, “you could easily steal credentials,” and, “PayPal says you can trust the URL if it begins with https://www.paypal.com,” which is not true in this case.

While SSL certificates do indeed provide a higher level of assurance when it comes to site ownership, they cannot guarantee that a site is free from other security problems – including cross-site scripting. There are concerns that hackers may exploit misunderstandings in the significance of the green address bar for their own benefit, piggybacking off the trust that is instilled by EV certificates. Users need to be aware that a green address bar does not guarantee the origin of a page’s contents if there is a cross-site scripting vulnerability on that page.

The vulnerability comes to light only a month after PayPal published a practical approach to managing phishing on their blog, which extols the use of Extended Validation certificates in preventing phishing. The document describes browsers that do not support EV certificates as “unsafe” and announces the company’s plans to block customers from accessing their website from the most unsafe browsers.

PayPal was one of the first companies to adopt EV certificates and the company says it has seen noticeably lower abandonment rates on signup flows for Internet Explorer 7 users versus other browsers. According to the document, PayPal believe this correlates closely to user interface changes triggered by their use of EV certificates.