Killing Passwords (Without Killing Productivity): A Practical Guide to Phishing-Resistant Authentication

Passwords are the flip phones of cybersecurity — nostalgic, yes, but utterly obsolete.
In a Zero Trust world, passwords are no longer your friend; they’re your weakest link.

Microsoft’s password scrambline initiative is not just another shiny idea. It’s a deliberate move towards a world where passwords simply don’t exist.
Combine that with enforcing passwordless authentication for risky users, and you’re finally on the path to a secure, modern identity ecosystem.

🧩 What Password Scrambling Actually Means (and Why It Matters)

Think of it like deleting your house keys because you’ve moved into a smart home.
Password scrambling ensures that even if someone wanted to log in with a password — they simply couldn’t.

Once implemented, no one (not even the user) knows their password. The only valid way in is through phishing-resistant, passwordless methods such as:
Windows Hello, FIDO2 keys, or Microsoft Authenticator.

In hybrid setups (Active Directory + Entra ID), you scramble passwords at the AD level, making them unusable across both local and cloud systems.

Alternatively, you can run scripts that regularly assign long, random passwords to accounts — impossible to remember, impossible to use.

Bottom line: scrambled passwords eliminate phishing, brute-force attempts, and “just one weak link” disasters.

🛠 Scrambling Methods in Hybrid Environments

1. SCRIL (Smart Card Required for Interactive Logon)

This is the most elegant and built-in option. Enabling SmartcardLogonRequired = true in Active Directory forces the system to:

• Regenerate an unknown, random password.

• Disable normal sign-ins.

• Allow access only via secure, passwordless methods.

Because password hashes replicate into Entra ID, this effect extends to the cloud as well.

Pros: native, secure, clean.
Cons: must ensure users are fully ready with Windows Hello, smart cards, or other passwordless options. Rolling this out without preparation is a surefire way to lock out your workforce.

2. Script-Based Password Randomisation

For more granular control, PowerShell can generate 64-character random passwords and apply them to accounts automatically.
This can even run on a schedule to maintain “scrambled” state permanently.

Caveats:

• Protect the scripts and logs — never store generated passwords anywhere.

• Disable password resets (SSPR) and writeback to prevent reversion.

• Test in small batches before full rollout.

🔐 Blocking Risky Users with Passwordless Enforcement

Now, let’s get serious. Not all users are equal — and some shouldn’t be trusted with password access at all.

Key takeaway: you can (and should) enforce phishing-resistant methods only for “risky” roles — administrators, contractors, or elevated privilege accounts.

Here’s how:

• Targeted Conditional Access Policies:
  Apply “phishing-resistant authentication strength” only to defined groups. If you’re an admin, you log in with FIDO2 or not at all.

• Password Sign-In Block:
  Disable password-based logins entirely for those users. If they try, log the event as a risk indicator.

• Mandatory Registration:
  Enforce registration for at least two passwordless methods — say, FIDO2 key + Authenticator.

• Audit & Monitoring:
  Track login attempts using legacy methods. Treat them as red flags — someone’s either unaware or compromised.

This approach protects the crown jewels without overwhelming standard users.

🌐 Cloud-Only Users: Cleaning Up in Entra ID

For cloud-only users, the same logic applies:

• Assign a random password via Graph API so the user doesn’t know it.

• Disable SSPR and password writeback.

• Turn off password expiry — there’s no point renewing something that doesn’t exist.

• Enforce passwordless logins through Conditional Access.

This guarantees that cloud identities are truly passwordless, not just “password-ignored.”

✅ Passwordless, Phishing-Resistant Methods That Actually Work

Each should be deployed as part of a multi-method portfolio — two methods per user minimum.

⚠ Common Pitfalls and Lessons Learned

• Legacy apps that only understand passwords will fail — wrap them with Azure App Proxy or upgrade them.

• Device loss without a fallback key = downtime.

• Licensing traps: Entra ID Premium is required for several key policies.

• Broken synchronisation: outdated Entra Connect agents can desynchronise scrambled passwords.

• User confusion: communication and training are essential — otherwise, your helpdesk will explode.

• Monitoring gaps: without Entra reports, you won’t know who’s still using passwords or trying to bypass policy.

🧠 Final Thoughts

Password scramblin’ and risky-user blocking aren’t “nice to have.” They’re table stakes for modern identity management.

Do it like this:

1. Start with a pilot group (admins, privileged users).

2. Scramble their passwords, enforce passwordless only.

3. Roll out Conditional Access to block password sign-ins.

4. Monitor, adjust, then expand org-wide.

It’s like switching from training wheels to a jet engine — intimidating at first, liberating afterwards.

In the end, true leaders in IT security don’t just trust passwordless authentication — they design their infrastructure so that passwords aren’t even an option.

Have a good day my dear friend!

rgds,

Alex