Entries Tagged "databases"

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Mitigating Identity Theft

Identity theft is the new crime of the information age. A criminal collects enough personal data on someone to impersonate a victim to banks, credit card companies, and other financial institutions. Then he racks up debt in the person’s name, collects the cash, and disappears. The victim is left holding the bag. While some of the losses are absorbed by financial institutions—credit card companies in particular—the credit-rating damage is borne by the victim. It can take years for the victim to clear his name.

Unfortunately, the solutions being proposed in Congress won’t help. To see why, we need to start with the basics. The very term “identity theft” is an oxymoron. Identity is not a possession that can be acquired or lost; it’s not a thing at all. Someone’s identity is the one thing about a person that cannot be stolen.

The real crime here is fraud; more specifically, impersonation leading to fraud. Impersonation is an ancient crime, but the rise of information-based credentials gives it a modern spin. A criminal impersonates a victim online and steals money from his account. He impersonates a victim in order to deceive financial institutions into granting credit to the criminal in the victim’s name. He impersonates a victim to the Post Office and gets the victim’s address changed. He impersonates a victim in order to fool the police into arresting the wrong man. No one’s identity is stolen; identity information is being misused to commit fraud.

The crime involves two very separate issues. The first is the privacy of personal data. Personal privacy is important for many reasons, one of which is impersonation and fraud. As more information about us is collected, correlated, and sold, it becomes easier for criminals to get their hands on the data they need to commit fraud. This is what’s been in the news recently: ChoicePoint, LexisNexis, Bank of America, and so on. But data privacy is more than just fraud. Whether it is the books we take out of the library, the websites we visit, or the contents of our text messages, most of us have personal data on third-party computers that we don’t want made public. The posting of Paris Hilton’s phone book on the Internet is a celebrity example of this.

The second issue is the ease with which a criminal can use personal data to commit fraud. It doesn’t take much personal information to apply for a credit card in someone else’s name. It doesn’t take much to submit fraudulent bank transactions in someone else’s name. It’s surprisingly easy to get an identification card in someone else’s name. Our current culture, where identity is verified simply and sloppily, makes it easier for a criminal to impersonate his victim.

Proposed fixes tend to concentrate on the first issue—making personal data harder to steal—whereas the real problem is the second. If we’re ever going to manage the risks and effects of electronic impersonation, we must concentrate on preventing and detecting fraudulent transactions.

Fraudulent transactions have nothing to do with the legitimate account holders. Criminals impersonate legitimate users to financial intuitions. That means that any solution can’t involve the account holders. That leaves only one reasonable answer: financial intuitions need to be liable for fraudulent transactions. They need to be liable for sending erroneous information to credit bureaus based on fraudulent transactions.

They can’t claim that the user must keep his password secure or his machine virus free. They can’t require the user to monitor his accounts for fraudulent activity, or his credit reports for fraudulently obtained credit cards. Those aren’t reasonable requirements for most users. The bank must be made responsible, regardless of what the user does.

If you think this won’t work, look at credit cards. Credit card companies are liable for all but the first $50 of fraudulent transactions. They’re not hurting for business; and they’re not drowning in fraud, either. They’ve developed and fielded an array of security technologies designed to detect and prevent fraudulent transactions. They’ve pushed most of the actual costs onto the merchants. And almost no security centers around trying to authenticate the cardholder.

That’s an important lesson. Identity theft solutions focus much too much on authenticating the person. Whether it’s two-factor authentication, ID cards, biometrics, or whatever, there’s a widespread myth that authenticating the person is the way to prevent these crimes. But once you understand that the problem is fraudulent transactions, you quickly realize that authenticating the person isn’t the way to proceed.

Again, think about credit cards. Store clerks barely verify signatures when people use cards. People can use credit cards to buy things by mail, phone, or Internet, where no one verifies the signature or even that you have possession of the card. Even worse, no credit card company mandates secure storage requirements for credit cards. They don’t demand that cardholders secure their wallets in any particular way. Credit card companies simply don’t worry about verifying the cardholder or putting requirements on what he does. They concentrate on verifying the transaction.

This same sort of thinking needs to be applied to other areas where criminals use impersonation to commit fraud. I don’t know what the final solutions will look like, but I do know that once financial institutions are liable for losses due to these types of fraud, they will find solutions. Maybe there’ll be a daily withdrawal limit, like there is on ATMs. Maybe large transactions will be delayed for a period of time, or will require a call-back from the bank or brokerage company. Maybe people will no longer be able to open a credit card account by simply filling out a bunch of information on a form. Likely the solution will be a combination of solutions that reduces fraudulent transactions to a manageable level, but we’ll never know until the financial institutions have the financial incentive to put them in place.

Right now, the economic incentives result in financial institutions that are so eager to allow transactions—new credit cards, cash transfers, whatever—that they’re not paying enough attention to fraudulent transactions. They’ve pushed the costs for fraud onto the merchants. But if they’re liable for losses and damages to legitimate users, they’ll pay more attention. And they’ll mitigate the risks. Security can do all sorts of things, once the economic incentives to apply them are there.

By focusing on the fraudulent use of personal data, I do not mean to minimize the harm caused by third-party data and violations of privacy. I believe that the U.S. would be well-served by a comprehensive Data Protection Act like the European Union. However, I do not believe that a law of this type would significantly reduce the risk of fraudulent impersonation. To mitigate that risk, we need to concentrate on detecting and preventing fraudulent transactions. We need to make the entity that is in the best position to mitigate the risk to be responsible for that risk. And that means making the financial institutions liable for fraudulent transactions.

Doing anything less simply won’t work.

Posted on April 15, 2005 at 9:17 AM • View Comments

ChoicePoint Feeling the Heat

AP says:

An executive of embattled data broker ChoicePoint Inc. says the company is developing a system that would allow people
to review their personal information that is sold to law enforcement agencies, employers, landlords and businesses. ChoicePoint’s announcement comes a month after it disclosed
that thieves used previously stolen identities to create what appeared to be legitimate businesses seeking personal
records.

Posted on April 2, 2005 at 9:09 AM • View Comments

Sybase Practices Dumb Security

From Computerworld:

A threat by Sybase Inc. to sue a U.K.-based security research firm if it publicly discloses the details of eight holes it found in Sybase’s database software last year is evoking sharp criticism from some IT managers but sympathetic comments from others.

I can see why Sybase would prefer it if people didn’t know about vulnerabilities in their software—it’s bad for business—but disclosure is the reason companies are fixing them. If researchers are prohibited from publishing, then software developers are free to ignore security problems.

Posted on April 1, 2005 at 1:24 PM • View Comments

ID Theft is Inescapable

The Register says what I’ve been saying all along:

While this is nothing new, there is an important observation here that’s worth emphasizing: none of these cases involved online transactions.

Many people innocently believe that they’re safe from credit card fraud and identity theft in the brick and mortar world. Nothing could be farther from the truth. The vast majority of incidents can be traced to skimming, dumpster diving, and just plain stupidity among those who “own” our personal data.

Only a small fraction of such incidents result from online transactions. Every time you pay by check, use a debit or credit card, or fill out an application for insurance, housing, credit, employment, or education, you lose control of sensitive data.

In the US, a merchant is at liberty to do anything he pleases with the information, and this includes selling it to a third party without your knowledge or permission, or entering it into a computerized database, possibly with lax access controls, and possibly connected to the Internet.

Sadly, Congress’s response has been to increase the penalties for identity theft, rather than to regulate access to, and use of, personal data by merchants, marketers, and data miners. Incredibly, the only person with absolutely no control over the collection, storage, security, and use of such sensitive information is its actual owner.

For this reason, it’s literally impossible for an individual to prevent identity theft and credit card fraud, and it will remain impossible until Congress sees fit to regulate the privacy invasion industry.

Posted on March 30, 2005 at 7:35 AM • View Comments

TSA Lied About Protecting Passenger Data

According to the AP:

The Transportation Security Administration misled the public about its role in obtaining personal information about 12 million airline passengers to test a new computerized system that screens for terrorists, according to a government investigation.

The report, released Friday by Homeland Security Department Acting Inspector General Richard Skinner, said the agency misinformed individuals, the press and Congress in 2003 and 2004. It stopped short of saying TSA lied.

I’ll say it: the TSA lied.

Here’s the report. It’s worth reading. And when you read it, keep in mind that it’s written by the DHS’s own Inspector General. I presume a more independent investigator would be even more severe. Not that the report isn’t severe, mind you.

Another AP article has more details:

The report cites several occasions where TSA officials made inaccurate statements about passenger data:

  • In September 2003, the agency’s Freedom of Information Act staff received hundreds of requests from Jet Blue passengers asking if the TSA had their records. After a cursory search, the FOIA staff posted a notice on the TSA Web site that it had no JetBlue passenger data. Though the FOIA staff found JetBlue passenger records in TSA’s possession in May, the notice stayed on the Web site for more than a year.
  • In November 2003, TSA chief James Loy incorrectly told the Governmental Affairs Committee that certain kinds of passenger data were not being used to test passenger prescreening.
  • In September 2003, a technology magazine reporter asked a TSA spokesman whether real data were used to test the passenger prescreening system. The spokesman said only fake data were used; the responses “were not accurate,” the report said.

There’s much more. The report reveals that TSA ordered Delta Air Lines to turn over passenger data in February 2002 to help the Secret Service determine whether terrorists or their associates were traveling in the vicinity of the Salt Lake City Olympics.

It also reveals that TSA used passenger data from JetBlue in the spring of 2003 to figure out how to change the number of people who would be selected for more screening under the existing system.

The report says that one of the TSA’s contractors working on passenger prescreening, Lockheed Martin, used a data sample from ChoicePoint.

The report also details how outside contractors used the data for their own purposes. And that “the agency neglected to inquire whether airline passenger data used by the vendors had been returned or destroyed.” And that “TSA did not consistently apply privacy protections in the course of its involvement in airline passenger data transfers.”

This is major stuff. It shows that the TSA lied to the public about its use of personal data again and again and again.

Right now the TSA is in a bit of a bind. It is prohibited by Congress from fielding Secure Flight until it meets a series of criteria. The Government Accountability Office is expected to release a report this week that details how the TSA has not met these criteria.

I’m not sure the TSA cares. It’s already announced plans to roll out Secure Flight.

With little fanfare, the Transportation Security Administration late last month announced plans to roll out in August its highly contentious Secure Flight program. Considered by some travel industry experts a foray into operational testing, rather than a viable implementation, the program will begin, in limited release, with two airlines not yet named by TSA.

My own opinions of Secure Flight are well-known. I am participating in a Working Group to help evaluate the privacy of Secure Flight. (I’ve blogged about it here and here.) We’ve met three times, and it’s unclear if we’ll ever meet again or if we’ll ever produce the report we’re supposed to. Near as I can tell, it’s all a big mess right now.

Edited to add: The GAO report is online (PDF format).

Posted on March 27, 2005 at 12:34 PM • View Comments

T-Mobile Hack

For at least seven months last year, a hacker had access to T-Mobile’s customer network. He’s known to have accessed information belonging to 400 customers—names, Social Security numbers, voicemail messages, SMS messages, photos—and probably had the ability to access data belonging to any of T-Mobile’s 16.3 million U.S. customers. But in its fervor to report on the security of cell phones, and T-Mobile in particular, the media missed the most important point of the story: The security of much of our data is not under our control.

This is new. A dozen years ago, if someone wanted to look through your mail, they would have to break into your house. Now they can just break into your ISP. Ten years ago, your voicemail was on an answering machine in your house; now it’s on a computer owned by a telephone company. Your financial data is on Websites protected only by passwords. The list of books you browse, and the books you buy, is stored in the computers of some online bookseller. Your affinity card allows your supermarket to know what food you like. Data that used to be under your direct control is now controlled by others.

We have no choice but to trust these companies with our privacy, even though the companies have little incentive to protect that privacy. T-Mobile suffered some bad press for its lousy security, nothing more. It’ll spend some money improving its security, but it’ll be security designed to protect its reputation from bad PR, not security designed to protect the privacy of its customers.

This loss of control over our data has other effects, too. Our protections against police abuse have been severely watered down. The courts have ruled that the police can search your data without a warrant, as long as that data is held by others. The police need a warrant to read the e-mail on your computer; but they don’t need one to read it off the backup tapes at your ISP. According to the Supreme Court, that’s not a search as defined by the 4th Amendment.

This isn’t a technology problem, it’s a legal problem. The courts need to recognize that in the information age, virtual privacy and physical privacy don’t have the same boundaries. We should be able to control our own data, regardless of where it is stored. We should be able to make decisions about the security and privacy of that data, and have legal recourse should companies fail to honor those decisions. And just as the Supreme Court eventually ruled that tapping a telephone was a Fourth Amendment search, requiring a warrant—even though it occurred at the phone company switching office—the Supreme Court must recognize that reading e-mail at an ISP is no different.

This essay appeared in eWeek.

Posted on February 14, 2005 at 4:26 PM • View Comments

American Airlines Data Collection

From BoingBoing:

Last week on a trip from London to the US, American Airlines demanded that I write out a list of the names and addresses of all the friends I would be staying with in the USA. They claimed that this was due to a TSA regulation, but refused to state which regulation required them to gather this information, nor what they would do with it once they’d gathered it. I raised a stink, and was eventually told that I wouldn’t have to give them the requested dossier because I was a Platinum AAdvantage Card holder (i.e., because I fly frequently with AA).

The whole story is worth reading. It’s hard to know what’s really going on, because there’s so much information I don’t have. But it’s chilling nonetheless.

Posted on January 20, 2005 at 9:28 AM • View Comments

Airline Passenger Profiling

From an anonymous reader who works for the airline industry in the United States:

There are two initiatives in the works, neither of which leaves me feeling very good about privacy rights.

The first is being put together by the TSA and is called the “Secure Flight Initiative.” An initial test of this program was performed recently and involved each airline listed in the document having to send in passenger information (aka PNR data) for every passenger that “completed a successful domestic trip” during June 2004. A sample of some of the fields that were required to be sent: name, address, phone (if available), itinerary, any comments in the PNR record made by airline personnel, credit card number and expiration date, and any changes made to the booking before the actual flight.

This test data was transmitted to the TSA via physical CD. The requirement was that we “encrypt” it using pkzip (or equivalent) before putting it on the CD. We were to then e-mail the password to the Secure Flight Initiative e-mail address. Although this is far from ideal, it is in fact a big step up. The original process was going to have people simply e-mail the above data to the TSA. They claim to have a secure facility where the data is stored.

As far as the TSA’s retention of the data, the only information we have been given is that as soon as the test phase is over, they will securely delete the data. We were given no choice but had to simply take their word for it.

Rollout of the Secure Flight initiative is scheduled for “next year” sometime. They’re going to start with larger carriers and work their way down to the smaller carriers. It hasn’t been formalized (as far as I know) yet as to what data will be required to be transmitted when. My suspicion is that upon flight takeoff, all PNR data for all passengers on board will be required to be sent. At this point, I still have not heard as to what method will be used for data transmission.

There is another initiative being implemented by the Customs and Border Protection, which is part of the Department of Homeland Security. This (unnamed) initiative is essentially the same thing as the Secure Flight program. That’s right—two government agencies are requiring us to transmit the information separately to each of them. So much for information sharing within the government.

Most larger carriers are complying with this directive by simply allowing the CBP access to their records directly within their
reservation systems (often hosted by folks like Sabre, Worldspan, Galileo, etc). Others (such as the airline I work for) are opting to
only transmit the bare requirements without giving direct access to our system. The data is transmitted over a proprietary data network that is used by the airline industry.

There are a couple of differences between the Secure Flight program and the one being instituted by the CBP. The CBP’s program requires that PNR data for all booked passengers be transmitted:

  • 72 hours before flight time
  • 24 hours before flight time
  • 8 hours before flight time
  • and then again immediately after flight departure

The other major difference is that it looks as though there will be a requirement that we operate in a way that allows them to send a request for data for any flight at any time which we must send back in an automated fashion.

Oh, and just as a kick in the pants, the airlines are expected to pay the costs for all these data transmissions (to the tune of several thousand dollars a month).

Posted on December 22, 2004 at 10:06 AM • View Comments

The Digital Person

Last week, I stayed at the St. Regis hotel in Washington, DC. It was my first visit, and the management gave me a questionnaire, asking me things like my birthday, my spouse’s name and birthday, my anniversary, and my favorite fruits, drinks, and sweets. The purpose was clear; the hotel wanted to be able to offer me a more personalized service the next time I visited. And it was a purpose I agreed with; I wanted more personalized service. But I was very uneasy about filling out the form.

It wasn’t that the information was particularly private. I make no secret of my birthday, or anniversary, or food preferences. Much of that information is even floating around the Web somewhere. Secrecy wasn’t the issue.

The issue was control. In the United States, information about a person is owned by the person who collects it, not by the person it is about. There are specific exceptions in the law, but they’re few and far between. There are no broad data protection laws, as you find in the European Union. There are no Privacy Commissioners, as you find in Canada. Privacy law in the United States is largely about secrecy: if the information is not secret, there’s little you can do to control its dissemination.

As a result, enormous databases exist that are filled with personal information. These databases are owned by marketing firms, credit bureaus, and the government. Amazon knows what books we buy. Our supermarket knows what foods we eat. Credit card companies know quite a lot about our purchasing habits. Credit bureaus know about our financial history, and what they don’t know is contained in bank records. Health insurance records contain details about our health and well-being. Government records contain our Social Security numbers, birthdates, addresses, mother’s maiden names, and a host of other things. Many driver’s license records contain digital pictures.

All of this data is being combined, indexed, and correlated. And it’s being used for all sorts of things. Targeted marketing campaigns are just the tip of the iceberg. This information is used by potential employers to judge our suitability as employees, by potential landlords to determine our suitability as renters, and by the government to determine our likelihood of being a terrorist.

Some stores are beginning to use our data to determine whether we are desirable customers or not. If customers take advantage of too many discount offers or make too many returns, they may be profiled as “bad” customers and be treated differently from the “good” customers.

And with alarming frequency, our data is being abused by identity thieves. The businesses that gather our data don’t care much about keeping it secure. So identity theft is a problem where those who suffer from it—the individuals—are not in a position to improve security, and those who are in a position to improve security don’t suffer from the problem.

The issue here is not about secrecy, it’s about control. The issue is that both government and commercial organizations are building “digital dossiers” about us, and that these dossiers are being used to judge and categorize us through some secret process.

A new book by George Washington University Law Professor Daniel Solove examines the problem of the growing accumulation of personal information in enormous databases. The book is called The Digital Person: Technology and Privacy in the Information Age, and it is a fascinating read.

Solove’s book explores this problem from a legal perspective, explaining what the problem is, how current U.S. law fails to deal with it, and what we should do to protect privacy today. It’s an unusually perceptive discussion of one of the most
vexing problems of the digital age—our loss of control over our personal information. It’s a fascinating journey into the almost surreal ways personal information is hoarded, used, and abused in the digital age.

Solove argues that our common conceptualization of the privacy problem as Big Brother—some faceless organization knowing our most intimate secrets—is only one facet of the issue. A better metaphor can be found in Franz Kafka’s The Trial. In the book, a vast faceless bureaucracy constructs a huge dossier about a person, who can’t find out what information exists about him in the dossier, why the information has been gathered, or what it will be used for. Privacy is not about intimate secrets; it’s about who has control of the millions of pieces of personal data that we leave like droppings as we go through our daily life. And until the U.S. legal system recognizes this fact, Americans will continue to live in an world where they have little control over their digital person.

In the end, I didn’t complete the questionnaire from the St. Regis Hotel. While I was fine with the St. Regis in Washington, DC, having that information to make my subsequent stays a little more personal, and was probably fine with that information being shared among other St. Regis hotels, I wasn’t comfortable with the St. Regis doing whatever they wanted with that information. I wasn’t comfortable with them selling the information to a marketing database. I wasn’t comfortable with anyone being able to buy that information. I wasn’t comfortable with that information ending up in a database of my habits, my preferences, my proclivities. It wasn’t the primary use of that information that bothered me, it was the secondary uses.

Solove has done much more thinking about this issue than I have. His book provides a clear account of the social problems involving information privacy, and haunting predictions of current U.S. legal policies. Even more importantly, the legal solutions he provides are compelling and worth serious consideration. I recommend his book highly.

The book’s website

Order the book on Amazon

Posted on December 9, 2004 at 9:18 AM • View Comments

License Plate "Guns" and Privacy

New Haven police have a new law enforcement tool: a license-plate scanner. Similar to a radar gun, it reads the license plates of moving or parked cars and links with remote police databases, immediately providing information about the car and owner. Right now the police check if there are any taxes owed on the car, if the car or license plate is stolen, and if the car is unregistered or uninsured. A car that comes up positive is towed.

On the face of it, this is nothing new. The police have always been able to run a license plate. The difference is they would do it manually, and that limited its use. It simply wasn’t feasible for the police to run the plates of every car in a parking garage, or every car that passed through an intersection. What’s different isn’t the police tactic, but the efficiency of the process.

Technology is fundamentally changing the nature of surveillance. Years ago, surveillance meant trench-coated detectives following people down streets. It was laborious and expensive, and was only used when there was reasonable suspicion of a crime. Modern surveillance is the policeman with a license-plate scanner, or even a remote license-plate scanner mounted on a traffic light and a policeman sitting at a computer in the station. It’s the same, but it’s completely different. It’s wholesale surveillance.

And it disrupts the balance between the powers of the police and the rights of the people.

Wholesale surveillance is fast becoming the norm. New York’s E-Z Pass tracks cars at tunnels and bridges with tolls. We can all be tracked by our cell phones. Our purchases are tracked by banks and credit card companies, our telephone calls by phone companies, our Internet surfing habits by Web site operators. Security cameras are everywhere. If they wanted, the police could take the database of vehicles outfitted with the OnStar tracking system, and immediately locate all of those New Haven cars.

Like the license-plate scanners, the electronic footprints we leave everywhere can be automatically correlated with databases. The data can be stored forever, allowing police to conduct surveillance backwards in time.

The effects of wholesale surveillance on privacy and civil liberties is profound; but unfortunately, the debate often gets mischaracterized as a question about how much privacy we need to give up in order to be secure. This is wrong. It’s obvious that we are all safer when the police can use all techniques at their disposal. What we need are corresponding mechanisms to prevent abuse, and that don’t place an unreasonable burden on the innocent.

Throughout our nation’s history, we have maintained a balance between the necessary interests of police and the civil rights of the people. The license plate itself is such a balance. Imagine the debate from the early 1900s: The police proposed affixing a plaque to every car with the car owner’s name, so they could better track cars used in crimes. Civil libertarians objected because that would reduce the privacy of every car owner. So a compromise was reached: a random string of letter and numbers that the police could use to determine the car owner. By deliberately designing a more cumbersome system, the needs of law enforcement and the public’s right to privacy were balanced.

The search warrant process, as prescribed in the Fourth Amendment, is another balancing method. So is the minimization requirement for telephone eavesdropping: the police must stop listening to a phone line if the suspect under investigation is not talking.

For license-plate scanners, one obvious protection is to require the police to erase data collected on innocent car owners immediately, and not save it. The police have no legitimate need to collect data on everyone’s driving habits. Another is to allow car owners access to the information about them used in these automated searches, and to allow them to challenge inaccuracies.

We need to go further. Criminal penalties are severe in order to create a deterrent, because it is hard to catch wrongdoers. As they become easier to catch, a realignment is necessary. When the police can automate the detection of a wrongdoing, perhaps there should no longer be any criminal penalty attached. For example, both red light cameras and speed-trap cameras all issue citations without any “points” assessed against the driver.

Wholesale surveillance is not simply a more efficient way for the police to do what they’ve always done. It’s a new police power, one made possible with today’s technology and one that will be made easier with tomorrow’s. And with any new police power, we as a society need to take an active role in establishing rules governing its use. To do otherwise is to cede ever more authority to the police.

This essay was originally published in the New Haven Register.

Posted on October 4, 2004 at 7:05 PM • View Comments

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Sidebar photo of Bruce Schneier by Joe MacInnis.