The Economy of Online Crime

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."

pharming?

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?

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...

Is there a source that...

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.

Phising getting more and more "important"

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?

Re:Phising getting more and more "important"

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.

Re:Phising getting more and more "important"

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.

Phishing

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 ?!

The Problem Is The Credit Card

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).

Re:The Problem Is The Credit Card

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.

Re:The Problem Is The Credit Card

We are in Australia, not the USA

The banks really don't seem to care...

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...

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

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.

Rumpelstiltskin

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

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.

Must...not....

"Don't visit any of these sites. Tapping into them could lead to unpleasant consequences. I only looked at them via the safety of RSA's computers."

...ah dammit..

Honesty and reputation?

Honesty my ass. They're all just being extra careful not to get caught.

Why so cheap?

>$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?

"The Economy of Online Crime"

Now to the stock market. The all ordinaries are up 15 cents, NASDAQ is running smoothly up 10 cents and the incredibly illegal bit torrent file sharing ring has mysteriously and suddenly dissappeared from the market.

In other news the US government has been superceded by the RIAA in a grant of 'emergency powers'. Among the proposed changes is a rename of the US to the 'United Empire' and the purging of all online music stores. CDs have also reportedly tufwappled in cost.

Amazing complexity

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.

Re:Amazing complexity

Now that's customer service worthy of a credit card company!

Carelessness feeds the black market

Also, the black market is fed by such bloody morons as Wells Fargo, who messed up the lives of tens of thousands of poor people employed at HP, IBM and other places where they read Slashdot, by losing personal data not just once but twice [theregister.com].

Such careless imbeciles would really need to lose their contracts at the very least. Why don't IBM, HP and others laugh WF out of the room when their contract comes up for renewal? They are not just WF's customers, they are also employers of the people who got messed up.

Of course, my solution would involve finding out who is the moron at WF that let his goons store unencrypted financial details of customers' employees on Windows laptop. Armed with his name, I'd then mug him, steal his wallet, use his driver license to obtain his personal info, and plaster all these details over the Internet, preferably on the #Cardz IRC channel. See how he likes it.

People who store SSNs and CC numbers on Windows machines need a good whipping. If the machine is a laptop, whip them then brand their forehead with "DOH". There is cheap or free encryption available, what's the excuse of these cretins?

The real victims of cc fraud: merchants

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....

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.

a connection?

typical phishing email:

• Dear Customer:
  In order to maintain security of your records, you will need to validate your information or your account may be suspended. Please click the link below and follow the on screen prompts.

typical gw. bush:

• In order to maintain national security, you will need to give the nsa any information it asks for. If you do not cooperate, you may be sent to GTMO.

Hmm. I wonder if the same percentage of americans that think nsa wiretapping makes us more secure - also fall for phishing emails.

Well, whatya know...

There's honor among thieves....

Easy cop out

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 be beat by a 3 year old". That's not an acceptable position.

Of course they are honest with one another .....

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-mail is genuine or not? And if you've already had several e-mails apparently from banks with whom you do not even have an account {and therefore obviously fake} why should you expect that one apparently from a bank with whom you do have an account?

Restaurant card fraud? That one has been going as long as credit cards. Even long before the Internet existed -- it began in the days of imprinting machines. Now, of course, thanks to Chip and PIN, you don't even need to let the card out of your sight to get ripped off. Oh, Chip and PIN machines are reckoned to be secure; but how the hell do you know that thing you put your card in and pressed a few buttons was a real Chip and PIN machine and not a fake one? For all you know they cloned your card and grabbed your PIN, and will use the clone card and PIN in a real C+P machine a few minutes down the line, within the margin of error of most people's watches and memories. Solution, pay by cheque. Not cash, because if they see you have cash then they will expect a tip.

As for backup tapes going missing, well, there isn't a lot anyone can do about that -- besides asking, before they open a bank account, how effective the bank's procedures are and what losses they have swallowed on customers' behalf. Little things like never transporting data by the same means as the decryption key make a lot of difference.

Summary: Never make the mistake of assuming anything is secure.

Ideas

I wish that when you encountered a phishing site that you could go to a credit card company's anti-fraud site and be issued a card number and verification information that would appear to be legit (and would even be verifiable) but would in actuality be a trojan that would sound fraud alarms if it was attempted to be used.

The way that I see it, these cards would be very low limit cards so that when a verification was done on them they would pass through but when something of actual value would go through, they would trigger an over the limit message and would also set off a fraud alarm at the credit card company.

Because the phishers would have no way of knowing the difference between a "valid" card and a "trojan" card, information on the cards attempted use could be collected at the front end and at the back end. This would allow investigators to have two opportunities to trap the scumbags and would also help to create a map of the way things are being worked. With any luck at all they can use the low-level players that they catch to extract information from and go after the bigger fish in the middle. You could look at it like you are phishing the phishers!

The pressure that this would exert should send the crooks looking for other less risky targets.

-

The next idea is more logistical: I've recieved calls from Visa fraud prevention on a few occasions when I have made unusual purchases. I really appreciate this service and know that it is expensive for them to do. I'd think that if they automated this a bit that they could do more of it at a lower cost. Using IVR they could call a representitive sample of customers and just verify routine purchases that have been made at higher risk places (like on-line and businesses that have experienced fraud).

-

They could also have a system that could co-authorize specific kinds of purchases, especially online purchases or purchases that you make that you have shipped to different addresses. I would not feel inconvenienced by the extra step if I knew that I was helping to prevent fraud.

The way that I envision it is that you would be informed by the merchant that you must okay the purchase by calling a toll free number and entering a code from the order verification from your home phone or cel phone that is on record at the credit card company.

-

Crime costs all of us. We pay for it because retailers have to build in additional costs to cover their losses that result from theft (including fraud and shoplifting). These costs drive up our costs. These losses even affect our paychecks. If a retailer can't raise the costs to cover his losses, then he may have to shave off a little somewhere else. The most logical place for that is his biggest expense which is most likely labor. If he has suffered losses, he may not be able to give you as big a raise as he otherwise may or maybe he will have to cut back on his benefit package. It pays if we all do a little bit extra to prevent losses. If you encounter fraud, don't ignore it, report it.

so what?

What did you expect?

"Yarrr!"-ing pirates?

Re:Will the real site please stand up.

BOA is using a pictograph means to reduce pishing.

But then your bladder might exshplode.

Re:Will the real site please stand up.

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.