Phishing 20: Tycoon2FA Exploits Microsoft 365 with Malformed URLs and 2FA Bypass

Cybercriminals Launch Innovative Phishing Campaign Using Browser Loopholes and Cloud Infrastructure

A new, highly deceptive phishing campaign has emerged, targeting Microsoft 365 users through an alarming twist in URL structure. Orchestrated by the notorious Tycoon2FA group, this cyberattack employs malformed links that cleverly dodge conventional email security systems. Researchers from SpiderLabs and Trustwave have uncovered the tactics behind this stealth operation, which is leveraging familiar platforms like Azure and Cloudflare to add a deceptive layer of legitimacy.

The use of malformed URLs — where a backslash replaces the traditional forward slash in web addresses — allows attackers to slip through filters designed to flag suspicious links. Even though these URLs don’t follow internet standards, modern browsers still interpret them correctly, seamlessly redirecting users to phishing sites designed to mimic real Microsoft 365 login pages. This tactic significantly increases the chances of credential theft, with attackers harvesting usernames and passwords to carry out further infiltration, espionage, or even ransomware deployment.

The Tycoon2FA group isn’t working alone. As a provider of phishing-as-a-service (PhaaS), they supply pre-built kits to other malicious actors. These kits are increasingly outfitted with tools to bypass two-factor authentication (2FA), further compromising accounts even when users believe they’re protected. The incorporation of trusted cloud services into these operations also helps attackers avoid detection, since traffic passing through these services is less likely to be flagged as malicious.

To counter this threat, cybersecurity professionals are urged to update detection systems, monitor for abnormal URL formats, and educate users on recognizing phishing attempts — even those cloaked in authenticity. As threat actors get smarter, so too must defenses, particularly in an age where traditional safeguards like URL awareness are no longer enough.

Phishing Campaign Breakdown: How Tycoon2FA Is Exploiting Microsoft 365 Users

A recent phishing campaign traced back to the Tycoon2FA group is pushing the limits of cyber deception by targeting Microsoft 365 users with uniquely crafted URLs that escape detection. This new method makes use of malformed URLs where backslashes (\) are used instead of the standard forward slashes (/). Although these URLs don’t conform to official specifications, browsers still process them — meaning users can be redirected to fake login pages without noticing anything suspicious.

Because these malformed links bypass many email gateways and spam filters, they offer cybercriminals a reliable delivery mechanism. The phishing operation hosts these URLs on trusted infrastructures like Microsoft Azure Front Door and Cloudflare Workers, which helps obscure their true intentions and avoid blacklisting. These platforms also provide fast, global reach for the malicious payloads.

Once the unsuspecting user clicks one of these links, they’re directed to a fake Microsoft 365 login portal. These pages are meticulously crafted to look identical to legitimate ones. After entering their credentials, the user has essentially handed over their login information to the attackers. In some cases, even two-factor authentication is bypassed using modules embedded in the Tycoon2FA toolkit.

This campaign is part of a broader trend involving phishing-as-a-service (PhaaS), where criminal groups like Tycoon2FA develop sophisticated phishing tools and lease them out to other cybercriminals. These kits are often updated with advanced evasion techniques, including detection resistance, anti-bot mechanisms, and 2FA bypass capabilities. As a result, even smaller threat actors can launch highly effective phishing operations with minimal technical skill.

Cybersecurity researchers recommend strengthening inbound email monitoring systems, especially to detect unusual URL structures. They also urge enterprises to revisit user training, as traditional advice on inspecting URLs is less effective against this new wave of deception. Even vigilant users can fall for these tricks, since their browsers clean up malformed URLs and display them as if they were valid.

Indicators of compromise (IOCs) linked to the campaign include typo-squatted domains and encoded redirect links. Several phishing pages have been hosted on Microsoft Azure and Cloudflare platforms, blending malicious activities with trusted services to evade scrutiny. Organizations must stay proactive and anticipate further innovation from the PhaaS ecosystem.

What Undercode Say:

The Tycoon2FA phishing wave marks a new era of intelligent, engineered cyberattacks. While phishing has been a longstanding threat, the tactics employed here go beyond traditional lures. By using malformed URLs that exploit the way browsers handle web addresses, attackers gain a critical edge — one that neutralizes most email security protocols. This shows just how agile and responsive today’s cybercriminals have become.

Another important factor is the abuse of trusted infrastructure. Hosting malicious content on Microsoft Azure and Cloudflare not only provides scale and speed but also significantly reduces the chances of detection. Security tools typically rely on domain reputation to filter malicious content. But when the domain belongs to a known and trusted provider, it’s much harder to flag the content as dangerous.

The phishing-as-a-service (PhaaS) model amplifies the reach of these attacks. Tycoon2FA doesn’t need to execute every campaign directly. Instead, it empowers a wider network of cybercriminals by offering advanced, modular phishing kits. These kits now come equipped with two-factor authentication bypass capabilities — an especially troubling development. This allows attackers to compromise even accounts that are otherwise considered secure.

In terms of user defense, the usual advice — check the URL, verify the sender — may not suffice. Most users aren’t trained to detect subtle anomalies in links, and modern browsers hide or auto-correct these discrepancies. What’s more, organizations often lag in updating their email and web filtering systems to accommodate newer forms of attacks.

The use of encoded ad links and typo-squatted domains further complicates detection. These strategies demonstrate how attackers are thinking several moves ahead, blending technical creativity with psychological manipulation. The phishing pages themselves are high-quality imitations, increasing the likelihood of victims entering sensitive information.

From a defense perspective, this means enterprises need to adopt behavior-based analysis and anomaly detection rather than relying solely on blacklists or URL parsing. Machine learning and AI-driven threat detection systems are better equipped to recognize abnormal traffic and suspicious user behavior that could indicate credential harvesting.

Finally, continuous education is key. But instead of generic training, organizations should run simulated phishing attacks that replicate these advanced tactics. Only through hands-on, real-world simulations can users build the instincts necessary to avoid falling for them.

The Tycoon2FA campaign is not an isolated incident — it’s a preview of what’s coming next in cybercrime. The combination of infrastructure abuse, evasion of standard protocols, and mass distribution through PhaaS signals a broader evolution in phishing attacks. It’s time for defenders to match that pace of innovation.

Fact Checker Results ✅

🔎 The Tycoon2FA campaign is real, confirmed by security researchers from SpiderLabs and Trustwave.
📡 Malformed URLs and abuse of Azure and Cloudflare infrastructure are verified tactics in this phishing campaign.
🛡️ Phishing-as-a-service (PhaaS) operations, including 2FA bypass, are increasingly being offered to criminal groups.

Prediction 🔮

Expect future phishing campaigns to lean heavily into malformed or obfuscated URL strategies, making traditional detection increasingly ineffective. PhaaS kits will likely expand into AI-assisted phishing tools, creating adaptive and personalized lures. Cloud infrastructure will remain a key battleground, forcing service providers to implement stricter vetting and monitoring of hosted content. As user education becomes less effective alone, behavior-based detection and automated threat response will dominate the cybersecurity landscape.