Entries Tagged "cybercrime"

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The State of Cyberinsurance

Good essay on the current state of cyberinsurance.

So where does that leave the growing cyber insurance industry as it tries to figure out what losses it should cover and appropriate premiums and deductibles? One implication is that the industry faces much greater challenges than trying to quantify or cover intangible—and perhaps largely imaginary—losses to brands’ reputations. In light of the evidence that these losses may be fairly short-lived, that problem pales next to the challenges of determining what should be required of the insured under such policies. Insurers—just like the rest of us—don’t have a good handle on what security practices and controls are most effective, so they don’t know what to require of their customers. If I’m going to insure you against some type of risk, I want to know that you’re taking appropriate steps to prevent that risk yourself 00 installing smoke detectors or wearing your seat belt or locking your door. Insurers require these safety measures when they can because there’s a worry that you’ll be so reliant on the insurance coverage that you’ll stop taking those necessary precautions, a phenomenon known as moral hazard. Solving the moral hazard problem for cyberinsurance requires collecting better data than we currently have on what works—and what doesn’t—to prevent security breaches.

Posted on June 16, 2014 at 1:29 PM • View Comments

Brian Krebs

Nice profile of Brian Krebs, cybersecurity journalist:

Russian criminals routinely feed Mr. Krebs information about their rivals that they obtained through hacks. After one such episode, he began receiving daily calls from a major Russian cybercriminal seeking his files back. Mr. Krebs is writing a book about the ordeal, called “Spam Nation,” to be published by Sourcebooks this year.

In the meantime, hackers have been competing in a dangerous game of one-upmanship to see who can pull the worst prank on Mr. Krebs. They often steal his identity. One opened a $20,000 credit line in his name. Admirers have made more than $1,000 in bogus PayPal donations to his blog using hacked accounts. Others have paid his cable bill for three years with stolen credit cards.

The antics can be dangerous. In March, as Mr. Krebs was preparing to have his mother over for dinner, he opened his front door to find a police SWAT team pointing semiautomatic guns in his direction. Only after his wife returned home from the grocery store to find him handcuffed did the police realize Mr. Krebs had been the victim of “swatting.” Someone had called the police and falsely reported a murder at their home.

Four months after that, someone sent packets of heroin to Mr. Krebs’s home, then spoofed a call from his neighbor to the police. But Mr. Krebs had already been tipped off to the prank. He was tracking the fraud in a private forum—where a criminal had posted the shipment’s tracking number ­- and had alerted the local police and the F.B.I.

Posted on February 20, 2014 at 4:09 PM • View Comments

The Battle for Power on the Internet

We’re in the middle of an epic battle for power in cyberspace. On one side are the traditional, organized, institutional powers such as governments and large multinational corporations. On the other are the distributed and nimble: grassroots movements, dissident groups, hackers, and criminals. Initially, the Internet empowered the second side. It gave them a place to coordinate and communicate efficiently, and made them seem unbeatable. But now, the more traditional institutional powers are winning, and winning big. How these two sides fare in the long term, and the fate of the rest of us who don’t fall into either group, is an open question—and one vitally important to the future of the Internet.

In the Internet’s early days, there was a lot of talk about its “natural laws”—how it would upend traditional power blocks, empower the masses, and spread freedom throughout the world. The international nature of the Internet circumvented national laws. Anonymity was easy. Censorship was impossible. Police were clueless about cybercrime. And bigger changes seemed inevitable. Digital cash would undermine national sovereignty. Citizen journalism would topple traditional media, corporate PR, and political parties. Easy digital copying would destroy the traditional movie and music industries. Web marketing would allow even the smallest companies to compete against corporate giants. It really would be a new world order.

This was a utopian vision, but some of it did come to pass. Internet marketing has transformed commerce. The entertainment industries have been transformed by things like MySpace and YouTube, and are now more open to outsiders. Mass media has changed dramatically, and some of the most influential people in the media have come from the blogging world. There are new ways to organize politically and run elections. Crowdfunding has made tens of thousands of projects possible to finance, and crowdsourcing made more types of projects possible. Facebook and Twitter really did help topple governments.

But that is just one side of the Internet’s disruptive character. The Internet has emboldened traditional power as well.

On the corporate side, power is consolidating, a result of two current trends in computing. First, the rise of cloud computing means that we no longer have control of our data. Our e-mail, photos, calendars, address books, messages, and documents are on servers belonging to Google, Apple, Microsoft, Facebook, and so on. And second, we are increasingly accessing our data using devices that we have much less control over: iPhones, iPads, Android phones, Kindles, ChromeBooks, and so on. Unlike traditional operating systems, those devices are controlled much more tightly by the vendors, who limit what software can run, what they can do, how they’re updated, and so on. Even Windows 8 and Apple’s Mountain Lion operating system are heading in the direction of more vendor control.

I have previously characterized this model of computing as “feudal.” Users pledge their allegiance to more powerful companies who, in turn, promise to protect them from both sysadmin duties and security threats. It’s a metaphor that’s rich in history and in fiction, and a model that’s increasingly permeating computing today.

Medieval feudalism was a hierarchical political system, with obligations in both directions. Lords offered protection, and vassals offered service. The lord-peasant relationship was similar, with a much greater power differential. It was a response to a dangerous world.

Feudal security consolidates power in the hands of the few. Internet companies, like lords before them, act in their own self-interest. They use their relationship with us to increase their profits, sometimes at our expense. They act arbitrarily. They make mistakes. They’re deliberately—and incidentally—changing social norms. Medieval feudalism gave the lords vast powers over the landless peasants; we’re seeing the same thing on the Internet.

It’s not all bad, of course. We, especially those of us who are not technical, like the convenience, redundancy, portability, automation, and shareability of vendor-managed devices. We like cloud backup. We like automatic updates. We like not having to deal with security ourselves. We like that Facebook just works—from any device, anywhere.

Government power is also increasing on the Internet. There is more government surveillance than ever before. There is more government censorship than ever before. There is more government propaganda, and an increasing number of governments are controlling what their users can and cannot do on the Internet. Totalitarian governments are embracing a growing “cyber sovereignty” movement to further consolidate their power. And the cyberwar arms race is on, pumping an enormous amount of money into cyber-weapons and consolidated cyber-defenses, further increasing government power.

In many cases, the interests of corporate and government powers are aligning. Both corporations and governments benefit from ubiquitous surveillance, and the NSA is using Google, Facebook, Verizon, and others to get access to data it couldn’t otherwise. The entertainment industry is looking to governments to enforce its antiquated business models. Commercial security equipment from companies like BlueCoat and Sophos is being used by oppressive governments to surveil and censor their citizens. The same facial recognition technology that Disney uses in its theme parks can also identify protesters in China and Occupy Wall Street activists in New York. Think of it as a public/private surveillance partnership.

What happened? How, in those early Internet years, did we get the future so wrong?

The truth is that technology magnifies power in general, but rates of adoption are different. The unorganized, the distributed, the marginal, the dissidents, the powerless, the criminal: they can make use of new technologies very quickly. And when those groups discovered the Internet, suddenly they had power. But later, when the already-powerful big institutions finally figured out how to harness the Internet, they had more power to magnify. That’s the difference: the distributed were more nimble and were faster to make use of their new power, while the institutional were slower but were able to use their power more effectively.

So while the Syrian dissidents used Facebook to organize, the Syrian government used Facebook to identify dissidents to arrest.

All isn’t lost for distributed power, though. For institutional power, the Internet is a change in degree, but for distributed power, it’s a qualitative one. The Internet gives decentralized groups—for the first time—the ability to coordinate. This can have incredible ramifications, as we saw in the SOPA/PIPA debate, Gezi, Brazil, and the rising use of crowdfunding. It can invert power dynamics, even in the presence of surveillance, censorship, and use control. But aside from political coordination, the Internet allows for social coordination as well—to unite, for example, ethnic diasporas, gender minorities, sufferers of rare diseases, and people with obscure interests.

This isn’t static: Technological advances continue to provide advantage to the nimble. I discussed this trend in my book Liars and Outliers. If you think of security as an arms race between attackers and defenders, any technological advance gives one side or the other a temporary advantage. But most of the time, a new technology benefits the nimble first. They are not hindered by bureaucracy—and sometimes not by laws or ethics, either. They can evolve faster.

We saw it with the Internet. As soon as the Internet started being used for commerce, a new breed of cybercriminal emerged, immediately able to take advantage of the new technology. It took police a decade to catch up. And we saw it on social media, as political dissidents made use of its organizational powers before totalitarian regimes did.

This delay is what I call a “security gap.” It’s greater when there’s more technology, and in times of rapid technological change. Basically, if there are more innovations to exploit, there will be more damage resulting from society’s inability to keep up with exploiters of all of them. And since our world is one in which there’s more technology than ever before, and a faster rate of technological change than ever before, we should expect to see a greater security gap than ever before. In other words, there will be an increasing time period during which nimble distributed powers can make use of new technologies before slow institutional powers can make better use of those technologies.

This is the battle: quick vs. strong. To return to medieval metaphors, you can think of a nimble distributed power—whether marginal, dissident, or criminal—as Robin Hood; and ponderous institutional powers—both government and corporate—as the feudal lords.

So who wins? Which type of power dominates in the coming decades?

Right now, it looks like traditional power. Ubiquitous surveillance means that it’s easier for the government to identify dissidents than it is for the dissidents to remain anonymous. Data monitoring means easier for the Great Firewall of China to block data than it is for people to circumvent it. The way we all use the Internet makes it much easier for the NSA to spy on everyone than it is for anyone to maintain privacy. And even though it is easy to circumvent digital copy protection, most users still can’t do it.

The problem is that leveraging Internet power requires technical expertise. Those with sufficient ability will be able to stay ahead of institutional powers. Whether it’s setting up your own e-mail server, effectively using encryption and anonymity tools, or breaking copy protection, there will always be technologies that can evade institutional powers. This is why cybercrime is still pervasive, even as police savvy increases; why technically capable whistleblowers can do so much damage; and why organizations like Anonymous are still a viable social and political force. Assuming technology continues to advance—and there’s no reason to believe it won’t—there will always be a security gap in which technically advanced Robin Hoods can operate.

Most people, though, are stuck in the middle. These are people who don’t have the technical ability to evade large governments and corporations, avoid the criminal and hacker groups who prey on us, or join any resistance or dissident movements. These are the people who accept default configuration options, arbitrary terms of service, NSA-installed back doors, and the occasional complete loss of their data. These are the people who get increasingly isolated as government and corporate power align. In the feudal world, these are the hapless peasants. And it’s even worse when the feudal lords—or any powers—fight each other. As anyone watching Game of Thrones knows, peasants get trampled when powers fight: when Facebook, Google, Apple, and Amazon fight it out in the market; when the US, EU, China, and Russia fight it out in geopolitics; or when it’s the US vs. “the terrorists” or China vs. its dissidents.

The abuse will only get worse as technology continues to advance. In the battle between institutional power and distributed power, more technology means more damage. We’ve already seen this: Cybercriminals can rob more people more quickly than criminals who have to physically visit everyone they rob. Digital pirates can make more copies of more things much more quickly than their analog forebears. And we’ll see it in the future: 3D printers mean that the computer restriction debate will soon involves guns, not movies. Big data will mean that more companies will be able to identify and track you more easily. It’s the same problem as the “weapons of mass destruction” fear: terrorists with nuclear or biological weapons can do a lot more damage than terrorists with conventional explosives. And by the same token, terrorists with large-scale cyberweapons can potentially do more damage than terrorists with those same bombs.

It’s a numbers game. Very broadly, because of the way humans behave as a species and as a society, every society is going to have a certain amount of crime. And there’s a particular crime rate society is willing to tolerate. With historically inefficient criminals, we were willing to live with some percentage of criminals in our society. As technology makes each individual criminal more powerful, the percentage we can tolerate decreases. Again, remember the “weapons of mass destruction” debate: As the amount of damage each individual terrorist can do increases, we need to do increasingly more to prevent even a single terrorist from succeeding.

The more destabilizing the technologies, the greater the rhetoric of fear, and the stronger institutional powers will get. This means increasingly repressive security measures, even if the security gap means that such measures become increasingly ineffective. And it will squeeze the peasants in the middle even more.

Without the protection of his own feudal lord, the peasant was subject to abuse both by criminals and other feudal lords. But both corporations and the government—and often the two in cahoots—are using their power to their own advantage, trampling on our rights in the process. And without the technical savvy to become Robin Hoods ourselves, we have no recourse but to submit to whatever the ruling institutional power wants.

So what happens as technology increases? Is a police state the only effective way to control distributed power and keep our society safe? Or do the fringe elements inevitably destroy society as technology increases their power? Probably neither doomsday scenario will come to pass, but figuring out a stable middle ground is hard. These questions are complicated, and dependent on future technological advances that we cannot predict. But they are primarily political questions, and any solutions will be political.

In the short term, we need more transparency and oversight. The more we know of what institutional powers are doing, the more we can trust that they are not abusing their authority. We have long known this to be true in government, but we have increasingly ignored it in our fear of terrorism and other modern threats. This is also true for corporate power. Unfortunately, market dynamics will not necessarily force corporations to be transparent; we need laws to do that. The same is true for decentralized power; transparency is how we’ll differentiate political dissidents from criminal organizations.

Oversight is also critically important, and is another long-understood mechanism for checking power. This can be a combination of things: courts that act as third-party advocates for the rule of law rather than rubber-stamp organizations, legislatures that understand the technologies and how they affect power balances, and vibrant public-sector press and watchdog groups that analyze and debate the actions of those wielding power.

Transparency and oversight give us the confidence to trust institutional powers to fight the bad side of distributed power, while still allowing the good side to flourish. For if we’re going to entrust our security to institutional powers, we need to know they will act in our interests and not abuse that power. Otherwise, democracy fails.

In the longer term, we need to work to reduce power differences. The key to all of this is access to data. On the Internet, data is power. To the extent the powerless have access to it, they gain in power. To the extent that the already powerful have access to it, they further consolidate their power. As we look to reducing power imbalances, we have to look at data: data privacy for individuals, mandatory disclosure laws for corporations, and open government laws.

Medieval feudalism evolved into a more balanced relationship in which lords had responsibilities as well as rights. Today’s Internet feudalism is both ad-hoc and one-sided. Those in power have a lot of rights, but increasingly few responsibilities or limits. We need to rebalance this relationship. In medieval Europe, the rise of the centralized state and the rule of law provided the stability that feudalism lacked. The Magna Carta first forced responsibilities on governments and put humans on the long road toward government by the people and for the people. In addition to re-reigning in government power, we need similar restrictions on corporate power: a new Magna Carta focused on the institutions that abuse power in the 21st century.

Today’s Internet is a fortuitous accident: a combination of an initial lack of commercial interests, government benign neglect, military requirements for survivability and resilience, and computer engineers building open systems that worked simply and easily.

We’re at the beginning of some critical debates about the future of the Internet: the proper role of law enforcement, the character of ubiquitous surveillance, the collection and retention of our entire life’s history, how automatic algorithms should judge us, government control over the Internet, cyberwar rules of engagement, national sovereignty on the Internet, limitations on the power of corporations over our data, the ramifications of information consumerism, and so on.

Data is the pollution problem of the information age. All computer processes produce it. It stays around. How we deal with it—how we reuse and recycle it, who has access to it, how we dispose of it, and what laws regulate it—is central to how the information age functions. And I believe that just as we look back at the early decades of the industrial age and wonder how society could ignore pollution in their rush to build an industrial world, our grandchildren will look back at us during these early decades of the information age and judge us on how we dealt with the rebalancing of power resulting from all this new data.

This won’t be an easy period for us as we try to work these issues out. Historically, no shift in power has ever been easy. Corporations have turned our personal data into an enormous revenue generator, and they’re not going to back down. Neither will governments, who have harnessed that same data for their own purposes. But we have a duty to tackle this problem.

I can’t tell you what the result will be. These are all complicated issues, and require meaningful debate, international cooperation, and innovative solutions. We need to decide on the proper balance between institutional and decentralized power, and how to build tools that amplify what is good in each while suppressing the bad.

This essay previously appeared in the Atlantic.

EDITED TO ADD (11/5): This essay has been translated into Danish.

Posted on October 30, 2013 at 6:50 AM • View Comments

Why It's Important to Publish the NSA Programs

The Guardian recently reported on how the NSA targets Tor users, along with details of how it uses centrally placed servers on the Internet to attack individual computers. This builds on a Brazilian news story from a mid-September that, in part, shows that the NSA is impersonating Google servers to users; a German story on how the NSA is hacking into smartphones; and a Guardian story from early September on how the NSA is deliberately weakening common security algorithms, protocols, and products.

The common thread among these stories is that the NSA is subverting the Internet and turning it into a massive surveillance tool. The NSA’s actions are making us all less safe, because its eavesdropping mission is degrading its ability to protect the US.

Among IT security professionals, it has been long understood that the public disclosure of vulnerabilities is the only consistent way to improve security. That’s why researchers publish information about vulnerabilities in computer software and operating systems, cryptographic algorithms, and consumer products like implantable medical devices, cars, and CCTV cameras.

It wasn’t always like this. In the early years of computing, it was common for security researchers to quietly alert the product vendors about vulnerabilities, so they could fix them without the “bad guys” learning about them. The problem was that the vendors wouldn’t bother fixing them, or took years before getting around to it. Without public pressure, there was no rush.

This all changed when researchers started publishing. Now vendors are under intense public pressure to patch vulnerabilities as quickly as possible. The majority of security improvements in the hardware and software we all use today is a result of this process. This is why Microsoft’s Patch Tuesday process fixes so many vulnerabilities every month. This is why Apple’s iPhone is designed so securely. This is why so many products push out security updates so often. And this is why mass-market cryptography has continually improved. Without public disclosure, you’d be much less secure against cybercriminals, hacktivists, and state-sponsored cyberattackers.

The NSA’s actions turn that process on its head, which is why the security community is so incensed. The NSA not only develops and purchases vulnerabilities, but deliberately creates them through secret vendor agreements. These actions go against everything we know about improving security on the Internet.

It’s folly to believe that any NSA hacking technique will remain secret for very long. Yes, the NSA has a bigger research effort than any other institution, but there’s a lot of research being done—by other governments in secret, and in academic and hacker communities in the open. These same attacks are being used by other governments. And technology is fundamentally democratizing: today’s NSA secret techniques are tomorrow’s PhD theses and the following day’s cybercrime attack tools.

It’s equal folly to believe that the NSA’s secretly installed backdoors will remain secret. Given how inept the NSA was at protecting its own secrets, it’s extremely unlikely that Edward Snowden was the first sysadmin contractor to walk out the door with a boatload of them. And the previous leakers could have easily been working for a foreign government. But it wouldn’t take a rogue NSA employee; researchers or hackers could discover any of these backdoors on their own.

This isn’t hypothetical. We already know of government-mandated backdoors being used by criminals in Greece, Italy, and elsewhere. We know China is actively engaging in cyber-espionage worldwide. A recent Economist article called it “akin to a government secretly commanding lockmakers to make their products easier to pick—and to do so amid an epidemic of burglary.”

The NSA has two conflicting missions. Its eavesdropping mission has been getting all the headlines, but it also has a mission to protect US military and critical infrastructure communications from foreign attack. Historically, these two missions have not come into conflict. During the cold war, for example, we would defend our systems and attack Soviet systems.

But with the rise of mass-market computing and the Internet, the two missions have become interwoven. It becomes increasingly difficult to attack their systems and defend our systems, because everything is using the same systems: Microsoft Windows, Cisco routers, HTML, TCP/IP, iPhones, Intel chips, and so on. Finding a vulnerability—or creating one—and keeping it secret to attack the bad guys necessarily leaves the good guys more vulnerable.

Far better would be for the NSA to take those vulnerabilities back to the vendors to patch. Yes, it would make it harder to eavesdrop on the bad guys, but it would make everyone on the Internet safer. If we believe in protecting our critical infrastructure from foreign attack, if we believe in protecting Internet users from repressive regimes worldwide, and if we believe in defending businesses and ourselves from cybercrime, then doing otherwise is lunacy.

It is important that we make the NSA’s actions public in sufficient detail for the vulnerabilities to be fixed. It’s the only way to force change and improve security.

This essay previously appeared in the Guardian.

Posted on October 8, 2013 at 6:44 AM • View Comments

DDOS as Civil Disobedience

For a while now, I have been thinking about what civil disobedience looks like in the Internet Age. Certainly DDOS attacks, and politically motivated hacking in general, is a part of that. This is one of the reasons I found Molly Sauter’s recent thesis, “Distributed Denial of Service Actions and the Challenge of Civil Disobedience on the Internet,” so interesting:

Abstract: This thesis examines the history, development, theory, and practice of distributed denial of service actions as a tactic of political activism. DDOS actions have been used in online political activism since the early 1990s, though the tactic has recently attracted significant public attention with the actions of Anonymous and Operation Payback in December 2010. Guiding this work is the overarching question of how civil disobedience and disruptive activism can be practiced in the current online space. The internet acts as a vital arena of communication, self expression, and interpersonal organizing. When there is a message to convey, words to get out, people to organize, many will turn to the internet as the zone of that activity. Online, people sign petitions, investigate stories and rumors, amplify links and videos, donate money, and show their support for causes in a variety of ways. But as familiar and widely accepted activist tools—petitions, fundraisers, mass letter-writing, call-in campaigns and others—find equivalent practices in the online space, is there also room for the tactics of disruption and civil disobedience that are equally familiar from the realm of street marches, occupations, and sit-ins? This thesis grounds activist DDOS historically, focusing on early deployments of the tactic as well as modern instances to trace its development over time, both in theory and in practice. Through that examination, as well as tool design and development, participant identity, and state and corporate responses, this thesis presents an account of the development and current state of activist DDOS actions. It ends by presenting an analytical framework for the analysis of activist DDOS actions.

One of the problems with the legal system is that it doesn’t make any differentiation between civil disobedience and “normal” criminal activity on the Internet, though it does in the real world.

Posted on May 22, 2013 at 6:24 AM • View Comments

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Sidebar photo of Bruce Schneier by Joe MacInnis.