A cross-site scripting (XSS) flaw that compromises the security of users has been identified by PayPal.

The flaw, which could be used to steal user credentials or cookies, was discovered on the eBay-owned website by Finnish researcher Harry Sintonen and featured on a page using an Extended Validation SSL (EV-SSL) certificate. The discovery now casts doubt on claims the EV-SSL certificate offers more secure web pages

The flaw surfaced just as PayPal was hit by a technical bug that has caused chaos for many e-commerce websites.

Sintonen demonstrated how the use of cross-site scripting could be used to prompt users for their login credentials and then send the credentials to an unauthorised server. Sintonen also injected code that caused a pop-up window to appear on the page and said the flaw could be used to steal user cookies.

In a statement, PayPal said it was not aware of any phishing attacks carried out using the flaw. "As soon as we were informed of this exploit, we began working very quickly to shut it down," the company stated.

The page affected uses an EV-SSL certificate, a type of certificate that requires more extensive checks into the identity of the body requesting the certificate than conventional SSL certificates.

Newer browsers, such as Internet Explorer 7 and the upcoming Firefox 3, change the colour of the address bar to green when displaying a site using EV-SSL.

The mechanism was devised as a response to the increasing use of SSL certificates by fraudulent websites in order to give their sites an aura of security.

In April, PayPal argued EV-SSL was critical for combating fraud and said browsers that don't support the standard are "insecure" and should be blocked from the PayPal site.

While EV-SSL requires validation of the identity of the requesting website, it does not guarantee that a page is free from security flaws. During Sintonen's demonstration, for instance, the address bar remained green.