What is point of SSL if fiddler 2 can decrypt all calls over HTTPS?
Solution 1:
This is covered here: http://www.fiddlerbook.com/fiddler/help/httpsdecryption.asp
Fiddler2 relies on a "man-in-the-middle" approach to HTTPS interception. To your web browser, Fiddler2 claims to be the secure web server, and to the web server, Fiddler2 mimics the web browser. In order to pretend to be the web server, Fiddler2 dynamically generates a HTTPS certificate.
Essentially, you manually trust whatever certificate Fiddler provides, the same will be true if you manually accept certificate from random person that does not match domain name.
EDIT: There are ways to prevent Fiddler/man-in-the-middle attack - i.e. in custom application, using SSL, one can require particular certificates to be used for communication. In case of browsers, they have UI to notify user of certificate mismatch, but eventually allow such communication.
As a publicly available sample for explicit certificates, you can try to use Azure services (i.e. with PowerShell tools for Azure) and sniff traffic with Fiddler. It fails due to explicit cert requirement.
Solution 2:
You could set up your web-service to require a Client-side certification for SSL authentication, as well as the server side. This way Fiddler wouldn't be able to connect to your service. Only your application, which has the required certificate would be able to connect.
Of course, then you have the problem of how to protect the certificate within the app, but you've got that problem now with your username & password, anyway. Someone who really wants to crack your app could have a go with Reflector, or even do a memory search for the private key associated with the client-side cert.
There's no real way to make this 100% bullet proof. It's the same problem the movie industry has with securing DVD content. If you've got software capable of decrypting the DVD and playing back the content, then someone can do a memory dump while that software is in action and find the decryption key.
Solution 3:
The point of SSL/TLS in general is so that the occasional eavesdropper with Wireshark isn't able to see your payloads. Fiddler/Burp means that you interacted with the system. Yes, it is a very simple interaction, but it does require (one) of the systems to be compromised.
If you want to enhance the security by rendering these MITM programs useless at such a basic level, you would require client certificate authentication (2-way SSL) and pin both the server and client certificates (e.g. require that only the particular certificate is valid for the comms). You would also encrypt the payloads transferred on the wire with the public keys of each party, and ensure that the private keys only reside on the systems they belong to. This way even if one party (Bob) is compromised the attacker can only see what is sent to Bob, and not what Bob sent to Alice. You would then take the encrypted payloads and sign the data with a verifiable certificate to ensure the data has not been tampered with (there is a lot of debate on whether to encrypt first or sign first, btw). On top of that, you can hash the signature using several passes of something like sha2 to ensure the signature is 'as-sent' (although this is largely an obscure step).
This would get you about as far in the security way as achievable reasonably when you do not control (one) of the communicating systems.
As others mentioned, if an attacker controls the system, they control the RAM and can modify all method calls in memory.