Wired keyboards proven to be vulnerable. Someone could be reading the magnetic waves coming from the keyboard as you type. Two students of the EPFL in Switzerland experimented. Using 11 keyboards they concluded that all 11 are vulnerable to at least one of the four attacks tested.
This article provides additional detail to the previously reported findings. You can visit the original wired and wireless keyboard security article written by Peter Suciu.
Martin Vuagnoux and Sylvain Pasini two students at the computer science lab of EPFL (Security and Cryptography Laboratory in Lausanne) experimented and found the following.
What do you usually type on your keyboard? Passwords to access all online accounts and bank accounts. These passwords could be intercepted. They are able to decode the Electromagnetic Emanations of the keyboard from a distance of 20m (65.6 feet) and even from another room.
The PS/2 keyboard used is removed from it's computer and LCD screen. It's connected to a laptop of which the power adapter is removed. They have to do this to prevent interference of the magnetic waves from these devices.
The eavesdrop computer is a basic desktop PC with a wire antenna of 1m (3.28 feet). They did not reveal how the antenna is hooked up to the computer.
On the Keyboard they now type “trust no one” and on the eavesdrop PC after decoding is done it reads “trust no one” you can watch the video of this on there website link at the bottom of this article.
The keyboard is hooked up like experiment number one. The eavesdrop PC however is in the adjacent room. It now has a Bi conical antenna connected. They type “password” and the eavesdropper it as “password”. This experiment is interesting because they went through a wall that was made of drywall with power outlets in it. And had no problem reading the decoded message on the eavesdrop PC.
They tested 11 keyboards, 9 PS/2 / USB keyboards and two laptops using one of four different ways to fully or partially receive the keystrokes.
Everybody can guess what this means. People putting in their passwords or credit card information and hacker reading the keyboard output on a remote location. As they improve the techniques, this might become usable for both government and hackers alike.