FBI warns of hacking campaign stealing Microsoft 365 accounts without passwords

The Federal Bureau of Investigation (FBI) recently issued a public warning about a dangerous new hacking platform that allows cybercriminals to hijack Microsoft 365 accounts, including Outlook email, Teams, and OneDrive cloud storage, without ever needing a password.

The announcement posted by the agency raised alarm over a “Phishing-as-a-Service” toolkit called Kali365, explaining that the platform is specifically designed to bypass multi-factor authentication (MFA) – the standard security feature that text-messages or apps a code to prove a user's identity.

How the ‘No-Password’ trap is working for hackers

The FBI warned that Kali365 makes launching advanced cyberattacks so simple that even amateur hackers can easily pull them off.

Instead of trying to guess passwords, the hackers exploit a legitimate Microsoft feature called the “device code flow.” This system is normally used to log users into devices with limited keyboards, like smart TVs or streaming sticks.The scam works in a few deceptive steps where the victim first receives an official-looking phishing email impersonating common workplace tools like SharePoint, OneDrive, or Microsoft Teams.

The email instructs the user to go to Microsoft's actual, legitimate device login webpage and type in a short security code provided in the email.Since the user enters the code on a real Microsoft page and completes their normal MFA checks, Microsoft's system assumes a trusted device is logging in. It then generates an digital “access token” and hands it directly to the attacker. Once the hacker has this token, they have a permanent, wide-open backdoor into the victim's email and corporate files.

They can stay logged in indefinitely without ever needing to know the user's password.According to a report by New York Post, security experts note that this hacking trend is a direct response to better corporate security. Because major tech companies have successfully pushed businesses to adopt MFA, hackers have simply adapted by building tools like Kali365 to bypass it entirely.When asked who is most at risk, Matt Burk, chief information security officer at Bespoke Concierge MD, warned that the threat is universal.

Read FBIs full advisory

Kali365 Phishing-as-a-Service Kit Hijacks Microsoft 365 Access TokensThe Federal Bureau of Investigation (FBI) is issuing this Public Service Announcement (PSA) to warn the public about an emerging Phishing1-as-a-Service2 (PhaaS) platform called Kali365, first seen in April 2026. Kali365 has primarily been distributed via Telegram, enabling cyber threat actors to obtain Microsoft 365 access tokens and bypass multi-factor authentication3 (MFA) protocols without intercepting the user's credentials.Through the Kali365 platform subscription, cyber threat actors can capture "OAuth" tokens and gain persistent access to targeted individuals/entities' Microsoft 365 environments. Kali365 lowers the barrier of entry, providing less-technical attackers access to AI-generated phishing lures, automated campaign templates, real-time targeted individual/entity tracking dashboards, and OAuth token capture capabilities.How the Scam WorksLure: An attacker sends a phishing email impersonating trusted cloud productivity and document-sharing services. This phishing email contains a device code with instructions to visit a legitimate Microsoft verification page and enter the code.Authorization: The targeted individuals/entities navigate to the real Microsoft page and pastes in the device code, unknowingly authorizing the attacker's device to access their account.Token Theft: The attacker captures OAuth access and refresh tokens, granting them access to the targeted individuals/entities' Microsoft 365 account.Persistence: The attacker can now access Microsoft 365 services such as Outlook, Teams, and OneDrive without needing a password or completing any additional MFA challenges.Tips to Protect YourselfRestricting device code flow to limit or block device authentication codes can help prevent or limit this style of attack.Create a conditional access policy to block device code flow for all users, with limited exceptions for required business processes.Audit existing device code flow usage to identify legitimate dependencies before creating a conditional access policy.Block authentication transfer policies to prevent users from transferring authentication from computers to mobile devices.If you cannot completely restrict device code flow usage, exclude emergency access accounts to prevent lockouts.Report ItIf you or someone you know has been impacted by the Kali365 Phishing kit, file a complaint with the Internet Crime Complaint Center (IC3) at www.ic3.gov. Be sure to include any available information, such as:Any phishing emails (email header, body)Suspicious logins (time, IP address, location)Any unauthorized devices or active sessions added to the account