diff --git a/.jules/sentinel.md b/.jules/sentinel.md
new file mode 100644
index 0000000..2746210
--- /dev/null
+++ b/.jules/sentinel.md
@@ -0,0 +1,4 @@
+## 2026-08-31 - JWT Secret Hardcoded Fallback
+**Vulnerability:** JWT authentication fallback key `'jwt-secret'` was hardcoded when `JWT_SECRET_KEY` env var was missing, permitting token forgery.
+**Learning:** Default fallbacks for secret credentials in utility classes can lead to accidental deployment with known default keys.
+**Prevention:** Fail fast by raising exceptions (or returning validation failure) when required cryptographic secrets are missing from configuration.
diff --git a/auth/utils.py b/auth/utils.py
index 4bded89..04d3830 100644
--- a/auth/utils.py
+++ b/auth/utils.py
@@ -37,6 +37,11 @@ class JWTUtils:
     @staticmethod
     def create_tokens(user_id: str, username: str) -> Tuple[str, str]:
         """Create access and refresh tokens"""
+        secret_key = os.getenv('JWT_SECRET_KEY')
+        if not secret_key:
+            # SECURITY: Do not use default/hardcoded fallback secret key
+            raise RuntimeError("JWT_SECRET_KEY environment variable is not configured.")
+
         access_token = jwt.encode(
             {
                 'user_id': user_id,
@@ -44,7 +49,7 @@ def create_tokens(user_id: str, username: str) -> Tuple[str, str]:
                 'exp': datetime.utcnow() + timedelta(hours=1),
                 'type': 'access'
             },
-            os.getenv('JWT_SECRET_KEY', 'jwt-secret'),
+            secret_key,
             algorithm='HS256'
         )
         
@@ -55,7 +60,7 @@ def create_tokens(user_id: str, username: str) -> Tuple[str, str]:
                 'exp': datetime.utcnow() + timedelta(days=30),
                 'type': 'refresh'
             },
-            os.getenv('JWT_SECRET_KEY', 'jwt-secret'),
+            secret_key,
             algorithm='HS256'
         )
         
@@ -64,10 +69,15 @@ def create_tokens(user_id: str, username: str) -> Tuple[str, str]:
     @staticmethod
     def decode_token(token: str) -> Optional[dict]:
         """Decode and verify token"""
+        secret_key = os.getenv('JWT_SECRET_KEY')
+        if not secret_key:
+            # SECURITY: Do not verify tokens with a fallback secret key
+            return None
+
         try:
             payload = jwt.decode(
                 token,
-                os.getenv('JWT_SECRET_KEY', 'jwt-secret'),
+                secret_key,
                 algorithms=['HS256']
             )
             return payload
diff --git a/tests/test_auth_utils.py b/tests/test_auth_utils.py
new file mode 100644
index 0000000..fc5b2f2
--- /dev/null
+++ b/tests/test_auth_utils.py
@@ -0,0 +1,45 @@
+import os
+import pytest
+import sys
+
+# Ensure auth module can be imported
+sys.path.insert(0, os.path.abspath(os.path.join(os.path.dirname(__file__), '..')))
+
+from unittest.mock import MagicMock
+
+# Mock cache_db module dependencies if not installed
+sys.modules.setdefault("cache_db", MagicMock())
+sys.modules.setdefault("cache_db.redis_client", MagicMock())
+sys.modules.setdefault("cache_db.models", MagicMock())
+
+from auth.utils import JWTUtils, PasswordUtils
+
+
+def test_password_hashing():
+    pwd = "securepassword123"
+    hashed = PasswordUtils.hash_password(pwd)
+    assert PasswordUtils.verify_password(pwd, hashed) is True
+    assert PasswordUtils.verify_password("wrongpassword", hashed) is False
+
+
+def test_jwt_utils_requires_secret_key(monkeypatch):
+    monkeypatch.delenv("JWT_SECRET_KEY", raising=False)
+
+    with pytest.raises(RuntimeError, match="JWT_SECRET_KEY environment variable is not configured"):
+        JWTUtils.create_tokens("user123", "alice")
+
+    assert JWTUtils.decode_token("dummy.token.string") is None
+
+
+def test_jwt_utils_with_secret_key(monkeypatch):
+    monkeypatch.setenv("JWT_SECRET_KEY", "test-secret-key-12345")
+
+    access_token, refresh_token = JWTUtils.create_tokens("user123", "alice")
+    assert access_token is not None
+    assert refresh_token is not None
+
+    decoded = JWTUtils.decode_token(access_token)
+    assert decoded is not None
+    assert decoded.get("user_id") == "user123"
+    assert decoded.get("username") == "alice"
+    assert decoded.get("type") == "access"