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The Economy of Online Crime

Posted by Zonk on Sat May 13, 2006 08:36 PM
from the honor-among-thieves dept.
Security The Internet
hdtv writes "You might call the thugs or thieves, but on their own closed forums and referral-only Web sites, they value honesty and reputation. Fortune magazine looks into the black market for stolen credit card numbers and identities. What's interesting is that so few of the criminals retrieve their information via breaking into online stores." From the article: "Gaffan says these credit card numbers and data are almost never obtained by criminals as a result of legitimate online card use. More often the fraudsters get them through offline credit card number thefts in places like restaurants, when computer tapes are stolen or lost, or using 'pharming' sites, which mimic a genuine bank site and dupe cardholders into entering precious private information. Another source of credit card data are the very common 'phishing' scams, in which an e-mail that looks like it's from a bank prompts someone to hand over personal data."
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  • pharming? (Score:3, Informative)

    by ergo98 (9391) on Saturday May 13 2006, @08:40PM (#15327502) Homepage Journal
    Isn't pharming when DNS is actually hacked in some manner? How many cases of this actually happening have been documented? Simply setting up a website that mimics a legitimate financial institution or pertinent party (e.g. Ebay), is, and has always been, phishing. The phishing emails are just lures to the bait of the phishing websites.

    • Re:pharming? (Score:5, Funny)

      by Aardpig (622459) on Saturday May 13 2006, @09:45PM (#15327731)
      In fact, I thought 'pharming' referred to genetic manipulation of animals and plants to produce pharmaceutical products. For instance, one might produce a strain of cows that express Viagra in their milk. Of course, they'd be a right bugger to milk...
      • Of course, they'd be a right bugger to milk...

        Here's a hint; if it only has one teat instead of four ... don't try to milk it. Just stop and walk away, before you owe it dinner.

    • Its very easy to do on wireless networks. There is a program called KARMA which will make a wifi card mimic an AP. It waits for computers to probe for a SSID and then mimics an AP with that SSID. once they think your computer is an AP its amazingly easy to phish them for data. Makes you wonder about all of those places with free wireless (St*rbucks, P@nera)...
    • Yes. Pharming is when DNS is subverted to direct traffic intended for legitimate sites towards other sites. On a real computer, you need to be root {because of privilege separation} in order to create bogus zonefiles and reconfigure the local nameserver to make it appear to be authoritative for those domains. On a toy computer, however, there is no local nameserver. Instead, there is a file called "hosts" which is checked before DNS queries are sent to the outside world. In the absence of privilege se
  • Is there a source that even tried to identify online stores as a source of credit card numbers? I wouldn't have ever thought that someone would try to use them as a large source.
    • They aren't. Most organizations these days have the sense not to store complete card numbers in the first place. They don't want the liability. And with "reference" transactions, there's really no need.

  • Phising getting more and more "important" (Score:5, Insightful)

    by Opportunist (166417) on Saturday May 13 2006, @08:51PM (#15327540)
    No kidding. We're seeing an incredible increase in phishing attacks, either in the form of fake pages (and the corresponding spam mails telling you to go there), or in the form of trojans that hook into the browser.

    It's interesting. Place a person, a very clever person, master degree in commerce or law, with a Ph.D., people who're worth their 6 digits a year, place them in front of a computer and you will be amazed. Something inside this computer turns the smartest person into a gullible idiot.

    Ok, idiot being too hard a word. But it is VERY intriguing to see people who would never ever fall for a con job in real life to fall without even thinking twice for one online.

    And I wonder why. What makes an e-mail more credible than snail mail? If they got a mail from their "bank", telling them to send their CC number or other details, they would NEVER do that. Online? No problem.

    Why? Why are online scams so much more successful than offline?
    • Why? Why are online scams so much more successful than offline?

      It's easier to attempt to scam more people at a time online, thus the ratio of suckers is higher.
      Also, and more importantly, most people still don't understand the internet / web / email, etc and how it all works. So they're going to be in a far more vunerable position online. Most people don't think to check to see what web site that link takes them to - it looks like eBay - that's good enough. Most people wouldn't even think to look at that ugly URL bar in the browser and why would they - they can't make sense of it - dozens of letters, numbers and squiggles.

      Learning the internet is like learning another language and another culture in the real world and it can take a great deal of time and experience to get to grips with it. For example, I bet it's much easier to scam a tourist or a new immigrant visiting your local country than it is to scam them in their home country.
      You move to a new country - most people will learn as much as they can about it. You want to use the internet? same thing - but how many people are there who really want to learn about it - most people just want to use it but it doesn't work that way. Well it can, but like in the real world - you end up making yourself more vunerable and more susecptable to making mistakes.
    • Why? Why are online scams so much more successful than offline? As far as I understand the mechanisms, there's several at play:
      • The technicalities of spoofing an address are lost on most people. So "if it says it's from my bank and it looks like it is, so it must be".
      • The second problem, to me, is pattern recognition. We've been trained to identify stores or banks by their corporate identity. It is perfectly obvious that the combination of that color and that logo represents that corporation. Nobody else uses these colors, this logo. So everything with these characteristics is automatically associated with that corporation. And since item one is not understood, there's no reason to doubt that assumption.
      • The third problem is that people want to believe. They want to believe that something is done to keep them and their money safe because it is oh so unsafe and dangerous out there. This has a much wider area of applicability, of course, but on topic, the fact that the bank does something to keep my money safe is good. I want to keep my money safe and so do they. If they want my cooperation in doing that, that's fine. It's in my interst as well. And since they do not understand the implications of spoofing, they accept things on face value. You probably know that line of thought.
      • The fourth problem that I see is that we've gotten used to being treated as a number. So a mail that does not correctly identify me with my full name and only states "Dear Sir or Madam" or "Dear Customer" is considered acceptable.
      • The fifth item I think plays a role is the fact that non-technical computer users have become accustomed to do things that they do not understand. If you told them that performing a rain dance every morning over their machine will keep it from crashing, they will do it, because it's no more arcane to them than a sequence of finger-breaking key combinations that they are so accustomed to. This extends to error messages and application failures, etc. Even when there's evidently a problem, the software more often than not does a rotten job at explaning what's wrong. This is why "we have increased the security of your credit card. Please enter all your data." works so fine. It's nonsensical, but it's no more arcane than any number of other messages our machines give us every day.
      • This leads into the last issue of today. Tunnel-vision. I believe that computer users know exactly as much as they need to to perform a specific task. They look neither left nor right. The classic example is people overlooking UI elements that are right next tho those they've been using for years, simply because they do not use them. Once you leave that comfort zone of things that they know and use regularly, all is new, all is strange. And they have learned that it's lots of work to find out what is going on. It's easier to go with the flow. Unfortunately.

      • Insightful post, thank you. I have an alternate view on one of your points: It is somewhat related to posts above, too.

        ... pattern recognition. We've been trained to identify stores or banks by their corporate identity. [...] So everything with these characteristics is automatically associated with that corporation. And since item one is not understood, there's no reason to doubt that assumption

        I think much of the problem lies in pattern recognition, but in a different way. It may be a lack of pattern r

    • It's pretty simple...

      It's relatively easy for scammers to set up a website for a few hours or days, on a computer they don't own, located in a country far away from them, and get a couple of quick hits, with it being somewhat hard for authorities to track down the location that the scammer actually connects to the internet.

      If scammers tried this with snail-mail, they would have to wait a week at least to wait for the responses. Also, while it's probably possible to hide your identity when receiving sna

    • Why are online scams so much more successful than offline?

      Immediate response without time to think about it.

      I once got a phishing email supposedly from Amazon.com. I had had too much to drink, and I had been up for about 20 hours. I clicked the link and gave them my Amazon password, where they had access to my credit card information, address, etc. As I hit enter, the fact that it was fake finally penetrated the fog in my head. I quickly changed the password on my account, and have not had a problem. I

      • Apparently your degrees aren't advanced enough. While they might have had access to your addresses, at no point in time did they have access to your credit card information. When asked Amazon only shows the last four digits of your card, not the complete number. Moreover, should they have attempted to buy something and have it shipped to them, Amazon would have asked for a new number.

        About the worst they could have done was order 500 romance novels in your name and have them delivered to you. The modern equ
    • Actually, it's quite possible to use snail mail to this day to get compromising information. Phishers just pose them as contest entries, and ask for information like a social security number, birth date, etc. A lot of people are more than willing to jot this down if it looks like a prize is headed their way.

      Some less-than-scrupulous telemarketers do the same thing by calling people and telling them that they just won something, and then asking for a subscription to a magazine or whatnot as almost a side por
      • I said explicitely "non-stupid people".

        It can't be. I mean, anyone could write anything on the 'net. Or are we already so indoctrinated to believe anything said "on TV" (and I can quite easily see people being unable to discriminate between the 'net and TV) has to be invariably true?

  • Phishing (Score:5, Insightful)

    by Joebert (946227) on Saturday May 13 2006, @09:02PM (#15327595) Homepage
    What if thoose sites are phishing sites setup by law enforcement to catch phishers ?
    What kind of criminal masterminds would fall for their own scams ?!
    • This has happened in the past, with great success. Criminals are taking more care now to protect themselves, and it is becoming harder for law enforcement to infiltrate the groups - parallels with other organised crime (and law enforcement's response to it) are very clear.

  • The Problem Is The Credit Card (Score:5, Interesting)

    by omegashenron (942375) on Saturday May 13 2006, @09:03PM (#15327598)

    I work at a b&b where we continually get reservations by people wanting to pay with a credit card. Our customers make their bookings over the phone, fax and even e-mail - to process a payment, all we need is the card number and expiry date. When a receipt is printed (from entering the numbers), it actually has the card details on it!

    I have seen many people collect their receipts from us upon checkin and just throw them away, without any thought about the information contained. Anyone willing to stick their hand in the bin would be able to collect these numbers for themselves.

    I often think a better credit card system would be to have a credit card number and require the use of a temporary code for a transaction to take place (similar to my online banking) where we have an electronic device [hsbc.com.au] which has a changing code, of course, this would only be practical for over the phone and website bookings rather than fax/e-mail (although fax/e-mail bookings are insecure now as e-mails may not be deleted from the system and fax's could be just thrown away with the numbers on them).

    • Here in New Zealand receipts typically miss off six or so digits, so you get something saying that the card used was number 2435 43.. .... 1654. Which is enough to identify whose card it was from a limited set, but not enough to place orders with.

      Of course, the old zip zap machines happily put the entire number on the receipt you get. And people who don't want to pay for mobile EFTPOS [wikipedia.org] equipment, such as some of the shuttle companies, tend to be keen on them...
    • I often think a better credit card system would be to have a credit card number and require the use of a temporary code for a transaction to take place (similar to my online banking) where we have an electronic device [hsbc.com.au] which has a changing code...

      Something similar has already been done to achieve the very goal you're after. It's called the American Express Blue card. The idea was that when you want to shop online, you ran your card through a card reader (some USB device that reads a microchip o

      • As such, temp credit card numbers are no longer used either.

        Actually, they are.

        MBNA has such a program called ShopSafe. I use it all the time.

        It's been quite a while since I did any web transaction with the regular number.

        That did cause some trouble on eBay in early March. I had a temporary number on PayPal with a $25 maximum limit. When I won three bids one day (easy since they were all "Buy It Now"), I created a new temporary number with a maximum high enough to handle all three bids. The total amo

      • in fact, that's becoming the law in many american states...
      • Yes and no. On the customer copy you get the last four digits of the card, but the merchant copy gets both. Where you get a problem is when the merchant give the customer a copy of the merchant copy. If you have a signiture line then you have a copy of the merchant slip.
        • No, when you key in the digits manually, the full credit card number prints up on BOTH receipts, the only time it does not is when you swipe the card - for us, when we swipe the card, the last for digits appear on both merchant or customer copies.

        • Re:The Problem Is The Credit Card (Score:4, Informative)

          by 44BSD (701309) on Saturday May 13 2006, @11:10PM (#15327979)
          Interesting. IANAL, but it looks like your B+B better get with the program, or it will be breaking a federal law [gpo.gov]:
          SEC. 113. TRUNCATION OF CREDIT CARD AND DEBIT CARD ACCOUNT NUMBERS.

          Section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c) is
          amended by adding at the end the following:
          ``(g) Truncation of Credit Card and Debit Card Numbers.--
          ``(1) In general.--Except as otherwise provided in this
          subsection, no person that accepts credit cards or debit cards
          for the transaction of business shall print more than the last 5
          digits of the card number or the expiration date upon any
          receipt provided to the cardholder at the point of the sale or
          transaction.
          ``(2) Limitation.--This <<NOTE: Applicability.>> subsection
          shall apply only to receipts that are electronically printed,
          and shall not apply to transactions in which the sole means of
          recording a credit card or debit card account number is by
          handwriting or by an imprint or copy of the card.

  • The banks really don't seem to care... (Score:4, Insightful)

    by Ritz_Just_Ritz (883997) on Saturday May 13 2006, @09:06PM (#15327608)
    They are raking in such huge margins on credit card debt that until very very recently, they seemed to more or less wink at online fraud. Only now that it's starting to really cut into their margins are they really taking notice and making half-hearted attempts to deal with the problem.

    As much as I want to blame the "online idiot" who falls victim to phishing and other scams, the banks really bear a lot of blame themselves for making it so damn easy to steal from these people.

    • Re:The banks really don't seem to care... (Score:5, Insightful)

      by Anonymous Coward on Saturday May 13 2006, @09:19PM (#15327648)
      Why would they care? Banks never EVER lose a dime on fraud, except for a some labor involved in procesing chargeback requests. ALL fraudulent transactions and chargebacks are immediately deducted from the vendor's account. The customer is fully protected. The banks NEVER take a loss. Only the vendors get farked. Over and over again.

      Yes, I am a vendor with my own merchant account. :-(

  • good and bad (Score:5, Funny)

    by Umbral Blot (737704) on Saturday May 13 2006, @09:16PM (#15327635) Homepage
    Well it's nice to know that my online shopping is safe, it is somewhat scary to know that real life shopping is less secure. Just one more reason to never leave the room.

    • My First Credit Card Theft (Score:2, Interesting)

      by Anonymous Coward
      my first credit card theft occured in the mid-80s while living in Indianapolis... i used my Amex card to pay for dinner with friends at a local Japanese restaurant... i rarely used the card (and have never been over my head w/CC debt), but was surprised to see a charge from a florist in Chicago...

      this really ticked me off, so i called the florist, got the order number, product, and phone number and address of the delivery...

      apparently, someone at the restaurant had a girlfriend in Chicago, and used my card
  • Clearly a secret identity is insufficient to protect your money. Debit cards are widely accepted; I wonder what motivates a retailer or credit company to allow signatures as authentication in this day and age, if not to profit from fraudulent purchases.

    • Re:Rumpelstiltskin (Score:5, Informative)

      by rabel (531545) on Saturday May 13 2006, @09:43PM (#15327727)
      Remember that you don't sign the receipt as "authentication", you sign it to indicate you agree to the terms of the credit. That's the only purpose. If a store attempts to verify your signature against the back of the credit card, well, that's sort of bonus, but not required by the credit company.

      For reference, see this link [zug.com]

      In my own life, I have my daughter sign the credit card bill (and compute the tip, if necessary) and since she's an art student she has been coming up with some pretty creative signature designs.
    • Well, the thing with debit is there's a fee.

      Credit doesn't have it ON THE SAME CARD.

  • Honesty and reputation? (Score:5, Insightful)

    by 77Punker (673758) <{ude.tniophgih} {ta} {40rcneps}> on Saturday May 13 2006, @09:34PM (#15327697)
    Honesty my ass. They're all just being extra careful not to get caught.

  • Why so cheap? (Score:3, Interesting)

    by Beryllium Sphere(tm) (193358) on Saturday May 13 2006, @09:47PM (#15327737) Homepage Journal
    >$3 per CVV, or $20 for a card number with CVV and the user's date of birth

    For a card which may have a $10,000 credit limit or higher. Either it's hard to turn a stolen card into money, or the supply is more than meeting the demand.

    Contrariwise, why so expensive? Mail theft rings, bribed insiders, credit report lookups by crooked merchants -- there are so many sources that maybe the price should be lower. After all, what's the cost of a botnet PC to a crook who wants to use it?
    • All of the illegal stuff gets *expensive* fast. I lurk over at specialham.com, the spammer forum, to keep abreast of new changes I need to make to the spam filter I'm coding. People want several hundred dollars for a script to verify addresses for one major ISP, etc. And "cashers" have the most dangerous job in the criminal supply chain, since they're the ones that have to associate a physical identity (even a fake or obfuascated one) with the theft to make their money. The guy who just nabs the informa
  • I've been to one of these credit card forums (not as a user, I don't have that kind of moral flexibility) and the thoroughness of these forums is quite amazing. The one I went to in particular required that if you wanted sell something, i.e. CC numbers, fake IDs, card skimming equipment (ATM bezels and strip readers), etc. you first had to provide free samples to the administrators of the forum to verify the quality of your product. If your product was found to be satisfactory, you would be allowed to sell your products, but first you had to put up a certain amount of cash (like $500, iirc) to be held by the administrators -- this cash would be used to refund your customers money in case you didn't deliver your products to them.

  • The real victims of cc fraud: merchants (Score:3, Interesting)

    by Zaphod2016 (971897) on Saturday May 13 2006, @10:41PM (#15327873) Homepage

    Back in the day, I had a small business where I accepted the "big 4" credit cards. We were selling sporting gear via mail order and the web.

    One day, some kid called up and placed a decent-sized order for about $1,000 worth of gear. Naturally, I demanded to speak with the card holder, and he put his mom on the line who prompty told me "no problem".

    Week later, Dad calls me up furious. You guessed it: divorce. Kid and mom are getting back at a dead beat dad, and he's none too amused about it. Dad calls the CC issuer, demands a chargeback. I get hit for $1,000 refund, plus the fees coming in, plus the fees going out, plus some other "service charges" for the "bad order".

    Of course...I'm still out $1,000 in gear! I call mom and kid, explain that *I* am none too amused either, and that I'd like my gear back. She implies that my parents were never married, and that I might wish to visit Satan.

    Having accepted that this situation could only get worse, I called the police. They explained that no crime had occured: a) mom had "paid" for the goods and b) she had the legal right to use her husband's credit card. I called my bank, and my credit card services, and they each told me it was my own damn fault for selling a quality product at a fair price and that no one could force her to mail back goods because (by then) she was claiming she had never recieved the order in the first place.

    I am sure some merchants have done lousy things, but as one of the "good guys" it simply blows my mind when I think about this, even now years later.

    Epilogue: never got the gear back, but funny enough, I *did* win about a grand from a scratch off ticket the week I closed the business. Save your mod points, I must have some real karma around here somewhere. =)

  • I do systems work for a major card issuer.... (Score:5, Informative)

    by Anonymous Coward on Saturday May 13 2006, @11:31PM (#15328058)
    I am one of the people who tries to plug the holes, and build the systems that help our agents fix fraud. So I know my way around some of this stuff, and I'd like to clear up a few things.

    - I don't know how things were "back in the day", but these days, if a family member racks up a credit card bill without permission, and the cardholder won't press criminal charges and file a police report, the cardholder is stuck with the bill. That said, if a merchant just gets approval from "the cardholder's wife", then it's no wonder the merchant got stuck holding the bill and with a penalty to boot. Both are part of the agreement you signed that allowed you to accept credit cards. You did read that, right? Just askin'.

    -Banks are actually very serious about stopping fraud. Not only do banks end up covering a fair amount of the tab because the hoops you have to jump through to get Visa/MC to cover it get harder and harder (and in the world of banking, profits are generated by pennies a transaction, so even $50 of fraud is significant in terms of lost profits), but all the major issuers understand that no one wants to be the next one caught with their security wanting. The bad press associated with lost laptops, wayward tapes and hacked websites is something no one wants - and, in fact, it practically killed CardSystems. We are under major pressure to make sure our bank isn't next - because you do lose a lot of customers from this sort of thing. And reissuing cards to a swath of cardholders is both expensive and time-consuming. The bank I work for hasn't been involved in any of this so far, but we make a point not to brag about it - it just invites trouble.

    -You DO sign the receipt as a verification. Signatures are not necessary for certain types of transactions, or for transactions under a certain fairly low limit, but if there is fraud or a dispute, the merchant has to produce the signature. Or they lose the dispute. This is why many merchants now use the CVV2, although, as you can probably infer from the story, it also is not perfect.

    -Why the cheap price for high-limit cards? Because actually using them is much riskier than stealing them. Either you need your ill-gotten gains shipped somewhere, or you need to show up somewhere in-person. Or you go for fairly small stuff. In any case, it's a lot more risky than the number theft, and if you steal numbers, you probably sell a batch at a time. With the risk goes the reward, so to speak.

    -Phishing, we're working on that too. All the major issuers have places on their websites where you can report phishing activities. Do so, whenever you see it. And the major issuers are also all conducting informational campaigns, trying to teach people what a legitimate communication looks like.

    Overall, though, massive card number theft is unusual. Most people lose their information by losing their wallet, being careless with their info (like with phishing), or by a family member/friend up to no good.
    • I don't know exactly where you are in the chain, but the impression from a merchants point of view is that no one gives a rat's arse about (cardholder not present) fraud except the merchant. We cover 100% of the losses, we even get charged a handling fee on chargebacks!

      I'm not really disagreeing that the merchant should be resposible for most, or even all, of carholder not present losses. I'm just irritated by the complete lack of interest from card issuers, merchant service providers and the police.
    • I took what you were saying seriously right up to that comment "Banks are actually very serious about stopping fraud."

      Nonsense! Given the amount of credit card and phishing schemes which the banks could shut down trivially and protect their customers, and the general ease of stopping most wholesale credit card fraud houses by applying existing law, they're not interested in fraud per se. They're interested in reducing their own fiscal bleeding from fraud: that means a very different set of priorities, such
  • There's honor among thieves....
  • It's an easy cop out to say that credit cards only (or in the majority of cases) get compromised by "illigitimate" use. In the eyes of the consumer who falls for it, there's nothing illigitimate about a phishing e-mail, or a pharming site. There's nothing illigitimate about handing a waiter your credit card, even if it ends up being skimmed. The position taken here is "if it weren't for these pesky criminals, there'd be no crime, so it's not our fault we've come up with a system of fraudprevention that can
  • Just because these people are spending other people's money, doesn't mean they aren't nice enough with their own kind. It would never work any other way. For a subculture to work, it must have its own rules.

    Anyway, the only people who lose money are idiots who fall for age-old scams. Phishing? Don't make me laugh. For crying out loud, when you open a bank account, they tell you that they will never ask you for personal details online. How long does it take to ring your bank and ask them whether an e
    • BOA is using a pictograph means to reduce pishing.

      But then your bladder might exshplode.

    • Re:Will the real site please stand up. (Score:4, Insightful)

      by patio11 (857072) on Sunday May 14 2006, @03:48AM (#15328675)
      Yeah, I use Bank of America, and their SafeKey thing, well, points for effort guys. I barely understood what was going on and I knew, going into the signup, what the whole purpose was. Basically, it works like this: you're told to pick a picture from a random set of them. When you sign into the bank, signon takes two steps if its from a computer that hasn't used your account recently: first, you put in your userID and state. Then you are taken to a *second* page, which shows the photo you picked and asks for your password. The idea is the photo is another secret known only to you and the bank, so if you go to The Bank of America Website [phishermen.ru] you'll see that the photo was not the one you picked, and so you'll realize "Wow, phiser! No thanks"

      Here's the problem: the whole rationale behind the process goes WAY over the head of the average user. I watch my non-technical sister signing up for this thing. You might as well have written the interface in Chinese (oh, bad example, she reads that fine -- Swahili, then). And I had to spend 15 minutes looking through pages of randomly generated photos (they're all clipart of iconic things -- a bowl of fruit, a watch, etc) until I found one that I'd remember after two months without seeing it. For my mother (the archetypical phishing victim, knows nothing about technology and forwards every "If you send this to 15 people Bill Gates will cure cancer!" email she gets), I think this whole process would be hopeless.

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