The spoof exploits flaws in how the browsers interpret Unicode characters. A link using Unicode characters to replace the letter "a" in "Paypal" will display as www.paypal.com in the browser, but send users to www.xn--pypal-4ve.com - which then displays "www.paypal.com" in its address bar. A similar spoof works on SSL-enabled URLs (https) commonly used on banking and e-commerce sites.
Unicode is a broader character set that includes non-English characters as well as symbols, which is being used on the Internet to support Internationalized Domain Names (IDN). The affected browsers support IDN, while Microsoft's Internet Explorer does not.
The attack can be disabled in Firefox and Mozilla by setting 'network.enableIDN' to false in the browser's configuration (enter about:config in the address bar to access the configuration fucntions). There is no known workaround yet for Opera or Safari, according to a Bugtraq post from Shmoo, which describes itself as "a non-profit think-tank comprised of security professionals" and hosted the Shmoocon conference over the weekend.
URL spoofing exploits are useful to Internet phishing scams, making it easier to trick victims into sharing sensitive information with bogus web sites constructed by fraudsters, which can be coded to present a target institution's URL in the address bar. The impact of the spoofing flaw is limited by the low usage of non-IE browsers, but comes as Firefox is making inroads into Internet Explorer's dominant market position, gaining up to 5 percent of users by some accounts.