Researchers at SR Labs have found a serious flaw in USB technology that can allow hackers or other similar parties to spy on you, steal information or simply infect your PC at any time. The problem is perhaps the most serious that has happened to USB technology and the bad news is that there is no solution and there will likely never be as the flaw is hidden in the way USB works. In addition it affects all USB devices in existence.
The problem is rather simple – the firmware that controls a certain USB device can be reverse engineered and then malicious code can be inserted inside the USB device firmware. The code will be executed any time you plug the USB device into a computer or in any other device that supports USB technology. The bad part is that the malicious code is hard to find and it will not be picked by antivirus programs. In addition formatting the USB device will not help either.
Right now it is not clear if there will be a technical solution to the issue ever. Up until then do not store that much sensitive information on a USB device – you never know where your information may end up.
Source: Techsport.com