Pigs Defeating RFID-Enabled Feeding Systems
Pretty clever (for a pig, that is).
EDITED TO ADD (10/10): Better link for video.
Entries Tagged "identity theft"
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Eliminating Externalities in Financial Security
This is a good thing:
An Illinois district court has allowed a couple to sue their bank on the novel grounds that it may have failed to sufficiently secure their account, after an unidentified hacker obtained a $26,500 loan on the account using the customers’ user name and password.
[…]
In February 2007, someone with a different IP address than the couple gained access to Marsha Shames-Yeakel’s online banking account using her user name and password and initiated an electronic transfer of $26,500 from the couple’s home equity line of credit to her business account. The money was then transferred through a bank in Hawaii to a bank in Austria.
The Austrian bank refused to return the money, and Citizens Financial insisted that the couple be liable for the funds and began billing them for it. When they refused to pay, the bank reported them as delinquent to the national credit reporting agencies and threatened to foreclose on their home.
The couple sued the bank, claiming violations of the Electronic Funds Transfer Act and the Fair Credit Reporting Act, claiming, among other things, that the bank reported them as delinquent to credit reporting agencies without telling the agencies that the debt in question was under dispute and was the result of a third-party theft. The couple wrote 19 letters disputing the debt, but began making monthly payments to the bank for the stolen funds in late 2007 following the bank’s foreclosure threats.
In addition to these claims, the plaintiffs also accused the bank of negligence under state law.
According to the plaintiffs, the bank had a common law duty to protect their account information from identity theft and failed to maintain state-of-the-art security standards. Specifically, the plaintiffs argued, the bank used only single-factor authentication for customers logging into its server (a user name and password) instead of multi-factor authentication, such as combining the user name and password with a token the customer possesses that authenticates the customer’s computer to the bank’s server or dynamically generates a single-use password for logging in.
As I’ve previously written, this is the only way to mitigate this kind of fraud:
Fraudulent transactions have nothing to do with the legitimate account holders. Criminals impersonate legitimate users to financial institutions. That means that any solution can’t involve the account holders. That leaves only one reasonable answer: financial institutions 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.
It’s an important security principle: ensure that the person who has the ability to mitigate the risk is responsible for the risk. In this case, the account holders had nothing to do with the security of their account. They could not audit it. They could not improve it. The bank, on the other hand, has the ability to improve security and mitigate the risk, but because they pass the cost on to their customers, they have no incentive to do so. Litigation like this has the potential to fix the externality and improve security.
Hacking Two-Factor Authentication
Back in 2005, I wrote about the failure of two-factor authentication to mitigate banking fraud:
Here are two new active attacks we’re starting to see:
- Man-in-the-Middle attack. An attacker puts up a fake bank website and entices user to that website. User types in his password, and the attacker in turn uses it to access the bank’s real website. Done right, the user will never realize that he isn’t at the bank’s website. Then the attacker either disconnects the user and makes any fraudulent transactions he wants, or passes along the user’s banking transactions while making his own transactions at the same time.
- Trojan attack. Attacker gets Trojan installed on user’s computer. When user logs into his bank’s website, the attacker piggybacks on that session via the Trojan to make any fraudulent transaction he wants.
See how two-factor authentication doesn’t solve anything? In the first case, the attacker can pass the ever-changing part of the password to the bank along with the never-changing part. And in the second case, the attacker is relying on the user to log in.
Here’s an example:
The theft happened despite Ferma’s use of a one-time password, a six-digit code issued by a small electronic device every 30 or 60 seconds. Online thieves have adapted to this additional security by creating special programs—real-time Trojan horses—that can issue transactions to a bank while the account holder is online, turning the one-time password into a weak link in the financial security chain. “I think it’s a broken model,” Ferrari says.
Of course it’s a broken model. We have to stop trying to authenticate the person; instead, we need to authenticate the transaction:
One way to think about this is that two-factor authentication solves security problems involving authentication. The current wave of attacks against financial systems are not exploiting vulnerabilities in the authentication system, so two-factor authentication doesn’t help.
Security is always an arms race, and you could argue that this situation is simply the cost of treading water. The problem with this reasoning is it ignores countermeasures that permanently reduce fraud. By concentrating on authenticating the individual rather than authenticating the transaction, banks are forced to defend against criminal tactics rather than the crime itself.
Credit cards are a perfect example. Notice how little attention is paid to cardholder authentication. Clerks barely check signatures. People use their cards over the phone and on the Internet, where the card’s existence isn’t even verified. The credit card companies spend their security dollar authenticating the transaction, not the cardholder.
More on mitigating identity theft.
Stealing 130 Million Credit Card Numbers
Someone has been charged with stealing 130 million credit card numbers.
Yes, it’s a lot, but that’s the sort of quantities credit card numbers come in. They come by the millions, in large database files. Even if you only want ten, you have to steal millions. I’m sure every one of us has a credit card in our wallet whose number has been stolen. It’ll probably never be used for fraudulent purposes, but it’s in some stolen database somewhere.
Years ago, when giving advice on how to avoid identity theft, I would tell people to shred their trash. Today, that advice is completely obsolete. No one steals credit card numbers one by one out of the trash when they can be stolen by the millions from merchant databases.
Small Business Identity Theft and Fraud
The sorts of crimes we’ve been seeing perpetrated against individuals are starting to be perpetrated against small businesses:
In July, a school district near Pittsburgh sued to recover $700,000 taken from it. In May, a Texas company was robbed of $1.2 million. An electronics testing firm in Baton Rouge, La., said it was bilked of nearly $100,000.
In many cases, the advisory warned, the scammers infiltrate companies in a similar fashion: They send a targeted e-mail to the company’s controller or treasurer, a message that contains either a virus-laden attachment or a link that—when opened—surreptitiously installs malicious software designed to steal passwords. Armed with those credentials, the crooks then initiate a series of wire transfers, usually in increments of less than $10,000 to avoid banks’ anti-money-laundering reporting requirements.
The alert states that these scams typically rely on help from “money mules”—willing or unwitting individuals in the United States—often hired by the criminals via popular Internet job boards. Once enlisted, the mules are instructed to set up bank accounts, withdraw the fraudulent deposits and then wire the money to fraudsters, the majority of which are in Eastern Europe, according to the advisory.
This has the potential to grow into a very big problem. Even worse:
Businesses do not enjoy the same legal protections as consumers when banking online. Consumers typically have up to 60 days from the receipt of a monthly statement to dispute any unauthorized charges.
In contrast, companies that bank online are regulated under the Uniform Commercial Code, which holds that commercial banking customers have roughly two business days to spot and dispute unauthorized activity if they want to hold out any hope of recovering unauthorized transfers from their accounts.
And, of course, the security externality means that the banks care much less:
“The banks spend a lot of money on protecting consumer customers because they owe money if the consumer loses money,” Litan said. “But the banks don’t spend the same resources on the corporate accounts because they don’t have to refund the corporate losses.”
Man-in-the-Middle Trucking Attack
For over three years the pair hacked into a Department of Transportation website called Safersys.org, which maintains a list of licensed interstate-trucking companies and brokers, according to an affidavit (.pdf) filed by a DOT investigator. There, they would temporarily change the contact information for a legitimate trucking company to an address and phone number under their control.
The men then took to the web-based “load boards” where brokers advertise cargo in need of transportation. They’d negotiate a deal, for example, to transport cargo from American Canyon, California, to Jessup, Maryland, for $3,500.
But instead of transporting the load, Lakes and Berkovich would outsource the job to another trucking company, the feds say, posing as the legitimate company whose identity they’d hijacked. Once the cargo was delivered, the men invoiced their customer and pocketed the funds. But when the company that actually drove the truck tried to get paid, they’d eventually discover that the firm who’d supposedly hired them didn’t know anything about it.
Actually, not so clever. I’m amazed it went on for three years. You’d think that more than a few of the subcontracters would pick up the phone and call the original customers—and they’d figure out what happened. Maybe there are just so many trucking companies, and so many people who need cargo shipped places, that they were able to hide for three years.
But this scheme was bound to unravel sooner or later. If the criminal middlemen had legitimately subcontracted the work and just pocketed the difference, they might have remained undiscovered forever. But that’s much less profit per contract.
Authenticating Paperwork
It’s a sad, horrific story. Homeowner returns to find his house demolished. The demolition company was hired legitimately but there was a mistake and it demolished the wrong house. The demolition company relied on GPS co-ordinates, but requiring street addresses isn’t a solution. A typo in the address is just as likely, and it would have demolished the house just as quickly.
The problem is less how the demolishers knew which house to knock down, and more how they confirmed that knowledge. They trusted the paperwork, and the paperwork was wrong. Informality works when everybody knows everybody else. When merchants and customers know each other, government officials and citizens know each other, and people know their neighbours, people know what’s going on. In that sort of milieu, if something goes wrong, people notice.
In our modern anonymous world, paperwork is how things get done. Traditionally, signatures, forms, and watermarks all made paperwork official. Forgeries were possible but difficult. Today, there’s still paperwork, but for the most part it only exists until the information makes its way into a computer database. Meanwhile, modern technology—computers, fax machines and desktop publishing software—has made it easy to forge paperwork. Every case of identity theft has, at its core, a paperwork failure. Fake work orders, purchase orders, and other documents are used to steal computers, equipment, and stock. Occasionally, fake faxes result in people being sprung from prison. Fake boarding passes can get you through airport security. This month hackers officially changed the name of a Swedish man.
A reporter even changed the ownership of the Empire State Building. Sure, it was a stunt, but this is a growing form of crime. Someone pretends to be you—preferably when you’re away on holiday—and sells your home to someone else, forging your name on the paperwork. You return to find someone else living in your house, someone who thinks he legitimately bought it. In some senses, this isn’t new. Paperwork mistakes and fraud have happened ever since there was paperwork. And the problem hasn’t been fixed yet for several reasons.
One, our sloppy systems generally work fine, and it’s how we get things done with minimum hassle. Most people’s houses don’t get demolished and most people’s names don’t get maliciously changed. As common as identity theft is, it doesn’t happen to most of us. These stories are news because they are so rare. And in many cases, it’s cheaper to pay for the occasional blunder than ensure it never happens.
Two, sometimes the incentives aren’t in place for paperwork to be properly authenticated. The people who demolished that family home were just trying to get a job done. The same is true for government officials processing title and name changes. Banks get paid when money is transferred from one account to another, not when they find a paperwork problem. We’re all irritated by forms stamped 17 times, and other mysterious bureaucratic processes, but these are actually designed to detect problems.
And three, there’s a psychological mismatch: it is easy to fake paperwork, yet for the most part we act as if it has magical properties of authenticity.
What’s changed is scale. Fraud can be perpetrated against hundreds of thousands, automatically. Mistakes can affect that many people, too. What we need are laws that penalise people or companies—criminally or civilly—who make paperwork errors. This raises the cost of mistakes, making authenticating paperwork more attractive, which changes the incentives of those on the receiving end of the paperwork. And that will cause the market to devise technologies to verify the provenance, accuracy, and integrity of information: telephone verification, addresses and GPS co-ordinates, cryptographic authentication, systems that double- and triple-check, and so on.
We can’t reduce society’s reliance on paperwork, and we can’t eliminate errors based on it. But we can put economic incentives in place for people and companies to authenticate paperwork more.
This essay originally appeared in The Guardian.
Social Networking Identity Theft Scams
I’m going to tell you exactly how someone can trick you into thinking they’re your friend. Now, before you send me hate mail for revealing this deep, dark secret, let me assure you that the scammers, crooks, predators, stalkers and identity thieves are already aware of this trick. It works only because the public is not aware of it. If you’re scamming someone, here’s what you’d do:
Step 1: Request to be “friends” with a dozen strangers on MySpace. Let’s say half of them accept. Collect a list of all their friends.
Step 2: Go to Facebook and search for those six people. Let’s say you find four of them also on Facebook. Request to be their friends on Facebook. All accept because you’re already an established friend.
Step 3: Now compare the MySpace friends against the Facebook friends. Generate a list of people that are on MySpace but are not on Facebook. Grab the photos and profile data on those people from MySpace and use it to create false but convincing profiles on Facebook. Send “friend” requests to your victims on Facebook.
As a bonus, others who are friends of both your victims and your fake self will contact you to be friends and, of course, you’ll accept. In fact, Facebook itself will suggest you as a friend to those people.
(Think about the trust factor here. For these secondary victims, they not only feel they know you, but actually request “friend” status. They sought you out.)
Step 4: Now, you’re in business. You can ask things of these people that only friends dare ask.
Like what? Lend me $500. When are you going out of town? Etc.
The author has no evidence that anyone has actually done this, but certainly someone will do this sometime in the future.
We have seen attacks by people hijacking existing social networking accounts:
Rutberg was the victim of a new, targeted version of a very old scam—the “Nigerian,” or “419,” ploy. The first reports of such scams emerged back in November, part of a new trend in the computer underground—rather than sending out millions of spam messages in the hopes of trapping a tiny fractions of recipients, Web criminals are getting much more personal in their attacks, using social networking sites and other databases to make their story lines much more believable.
In Rutberg’s case, criminals managed to steal his Facebook login password, steal his Facebook identity, and change his page to make it appear he was in trouble. Next, the criminals sent e-mails to dozens of friends, begging them for help.
“Can you just get some money to us,” the imposter implored to one of Rutberg’s friends. “I tried Amex and it’s not going through. … I’ll refund you as soon as am back home. Let me know please.”
The Techniques for Distributing Child Porn
Fascinating history of an illegal industry:
Today’s schemes are technologically very demanding and extremely complex. It starts with the renting of computer servers in several countries. First the Carders are active to obtain the credit cards and client identities wrongfully. These data are then passed to the falsifiers who manufacture wonderful official documents so that they can be used to identify oneself. These identities and credit card infos are then sold as credit card kits to operators. There is still an alternative where no credit card is needed: in the U.S. one can buy so-called Visa or MasterCard gift cards. However, these with a certain amount of money charged Visa or MasterCard cards usually only usable in the U.S.. Since this anonymous gift cards to buy, these are used to over the Internet with fake identities to pay. Using a false identity and well-functioning credit card servers are then rented and domains purchased as an existing, unsuspecting person. Most of the time an ID is required and in that case they will simply send a forged document. There is yet another alternative: a payment system called WebMoney (webmoney.ru) that is in Eastern Europe as widespread as PayPal in Western Europe. Again, accounts are opened with false identities. Then the business is very simple in Eastern Europe: one buys domains and rents servers via WebMoney and uses it to pay.
As soon as the server is available, a qualified server admin connects to it via a chain of servers in various countries with the help of SSH on the new server. Today complete partitions are encrypted with TrueCrypt and all of the operating system logs are turned off. Because people consider the servers in Germany very reliable, fast and inexpensive, these are usually configured as HIDDEN CONTENT SERVERS. In other words, all the illegal files such as pictures, videos, etc. are uploaded on these servers – naturally via various proxies (and since you are still wondering what these proxies can be – I’ll explain that later). These servers are using firewalls, completely sealed and made inaccessible except by a few servers all over the world – so-called PROXY SERVERs or FORWARD SERVERs. If the server is shut down or Someone logs in from the console, the TrueCrypt partition is unmounted. Just as was done on the content servers, logs are turned off and TrueCrypt is installed on the so-called proxy servers or forward servers. The Russians have developed very clever software that can be used as a proxy server (in addition to the possibilities of SSL tunneling and IP Forwarding). These proxy servers accept incoming connections from the retail customers and route them to the content Servers in Germany – COMPLETELY ANONYMOUSLY AND UNIDENTIFIABLY. The communication link can even be configured to be encrypted. Result: the server in Germany ATTRACTS NO ATTENTION AND STAYS COMPLETELY ANONYMOUS because its IP is not used by anyone except for the proxy server that uses it to route the traffic back and forth through a tunnel – using similar technology as is used with large enterprise VPNs. I stress that these proxy servers are everywhere in the world and only consume a lot of traffic, have no special demands, and above all are completely empty.
Networks of servers around the world are also used at the DNS level. The DNS has many special features: the refresh times have a TTL (Time To Live) of approximately 10 minutes, the entries usually have multiple IP entries in the round robin procedure at each request and rotate the visitor to any of the forward proxy servers. But what is special are the different zones of the DNS linked with extensive GeoIP databases … Way, there are pedophiles in authorities and hosting providers, allowing the Russian server administrators access to valuable information about IP blocks etc. that can be used in conjuction with the DNA. Each one who has little technical knowledge will understabd the importance and implications of this… But what I have to report to you is much more significant than this, and maybe they will finally understand to what extent the public is cheated by the greedy politicians who CANNOT DO ANYTHING against child pornography but use it as a means to justify total monitoring.
Using Fear to Sell Pens, Part Two
This ad, for a Uni-ball pen that’s hard to erase, is kind of surreal. They’re using fear to sell pens—again—but it’s the wrong fear. They’re confusing check-washing fraud, where someone takes a check and changes the payee and maybe the amount, with identity theft. And how can someone steal money from me by erasing and changing information on a tax form? Are they going to cause my refund check to be sent to another address? This is getting awfully Byzantine.
Sidebar photo of Bruce Schneier by Joe MacInnis.