We recently reported that the Commissioner of the Met, Sir Bernard Hogan-Howe, said that banks should not refund fraud victims as this would just make people careless with their passwords and antivirus. The banks’ desire to blame fraud victims if they can, to avoid refunding them, is rational enough, but for a police chief to support them was disgraceful. Thirty years ago, a chief constable might have said that rape victims had themselves to blame for wearing nice clothes; if he were to say that nowadays, he’d be sacked. Hogan-Howe’s view of bank fraud is just as uninformed, and just as offensive to victims.
Our spooky friends at Cheltenham have joined the party. The Register reports a story in the Financial Times (behind a paywall) which says GCHQ believes that “companies must do more to try and encourage their customers to improve their cyber security standards. Customers using outdated software – sometimes riddled with vulnerabilities that hackers can exploit – are a weak link in the UK’s cyber defences.” There is no mention of the banks’ own outdated technology, or of GCHQ’s role in keeping consumer software vulnerable.
The elegant scribblers at the Financial Times are under the impression that “At present, banks routinely cover the cost of fraud, regardless of blame.” So they clearly are not regular readers of Light Blue Touchpaper.
The spooks are slightly more cautious; according to the FT, GCHQ “has told the private sector it will not take responsibility for regulatory failings”. I’m sure the banks will heave a big sigh of relief that their cosy relationship with the police, the ombudsman and the FCA will not be disturbed.
We will have to change our security-economics teaching material so we don’t just talk about the case where “Alice guards a system and Bob pays the costs of failure”, but also this new case where “Alice guards a system, and bribes the government to compel Bob to pay the costs of failure.” Now we know how Hogan-Howe is paid off; the banks pay for his Dedicated Card and Payment Crime Unit. But how are they paying off GCHQ, and what else are they getting as part of the deal?
A manuscript authored by myself and Richard Clayton has recently been published as an advance access paper in the criminology journal Deviant Behavior.
This research uses criminological theories to study those who operate ‘booter services’: websites that illegally offer denial of service attacks for a fee. We interviewed those operating the sites, and found that booter services provide ‘easy money’ for the young males that run them. The operators claim they provide legitimate services for network testing, despite acknowledging that their services are used to attack other targets. Booter services are advertised through the online communities where the skills are learned and definitions favorable toward offending are shared. Some financial services proactively frustrate the provision of booter services, by closing the accounts used for receiving payments.
For those accessing the paper from universities, you may find the paper here. The ‘accepted manuscript’, which is the final version of the paper before it has been typeset, can be accessed here.
Commissioner Hogan-Howe of the Met said on Thursday that the banks should not refund fraud victims because it “rewards” them for being lax about internet security. This was too much to pass up, so I wrote a letter to the editor of the Times, which has just been published. As the Times is behind a paywall, here is the text.
Sir, Sir Bernard Hogan-Howe argues that banks should not refund online fraud victims as this would make people careless with their passwords and anti-virus software (p1, March 24, and letters Mar 25 & 26). This is called secondary victimisation. Thirty years ago, a chief constable might have said that rape victims had themselves to blame for wearing nice clothes; if he were to say that nowadays, he’d be sacked. Hogan-Howe’s view of bank fraud is just as uninformed, and just as offensive to victims.
About 5 percent of computers running Windows are infected with malware, and common bank fraud malware such as Zeus lets the fraudster redirect transactions. You think you’re paying £150 to your electricity bill, while the malware is actually sending £9000 to Russia. The average person is helpless against this; everything seems normal, and antivirus products usually only detect it afterwards.
Much of the blame lies with the banks, who let the users of potentially infected computers make large payments instantly, rather than after a day or two, as used to be the case. They take this risk because regulators let them dump much of the cost of the resulting fraud on customers.
The elephant in the room is that the Met has been claiming for years that property crime is falling, when in fact it’s just going online like everything else. We’re now starting to get better crime figures; it’s time we got better policing, and better bank regulation too.
Ross Anderson FRS FREng
Professor of Security Engineering
University of Cambridge
I will be trying to liveblog Financial Cryptography 2016, which is the twentieth anniversary of the conference. The opening keynote was by David Chaum, who invented digital cash over thirty years ago. From then until the first FC people believed that cryptography could enable commerce and also protect privacy; since then pessimism has slowly set in, and sometimes it seems that although we’re still fighting tactical battles, we’ve lost the war. Since Snowden people have little faith in online privacy, and now we see Tim Cook in a position to decide which seventy phones to open. Is there a way to fight back against a global adversary whose policy is “full take”, and where traffic data can be taken with no legal restraint whatsoever? That is now the threat model for designers of anonymity systems. He argues that in addition to a large anonymity set, a future social media system will need a fixed set of servers in order to keep end-to-end latency within what chat users expect. As with DNS we should have servers operated by (say ten) different principals; unlike in that case we don’t want to have most of the independent parties financed by the US government. The root servers could be implemented as unattended seismic observatories, as reported by Simmons in the arms control context; such devices are fairly easy to tamper-proof.
The crypto problem is how to do multi-jurisdiction message processing that protects not just content but also metadata. Systems like Tor cost latency, while multi-party computation costs a lot of cycles. His new design, PrivaTegrity, takes low-latency crypto building blocks then layers on top of them transaction protocols with large anonymity sets. The key component is c-Mix, whose spec up as an eprint here. There’s a precomputation using homomorphic encryption to set up paths and keys; in real-time operations each participating phone has a shared secret with each mix server so things can run at chat speed. A PrivaTegrity message is four c-Mix batches that use the same permutation. Message models supported include not just chat but publishing short anonymous messages, providing an untraceable return address so people can contact you anonymously, group chat, and limiting sybils by preventing more than one pseudonym being used. (There are enduring pseudonyms with valuable credentials.) It can handle large payloads using private information retrieval, and also do pseudonymous digital transactions with a latency of two seconds rather than the hour or so that bitcoin takes. The anonymous payment system has the property that the payer has proof of what he paid to whom, while the recipient has no proof of who paid him; that’s exactly what corrupt officials, money launderers and the like don’t want, but exactly what we do want from the viewpoint of consumer protection. He sees PrivaTegrity as the foundation of a “polyculture” of secure computing from multiple vendors that could be outside the control of governments once more. In questions, Adi Shamir questioned whether such an ecosystem was consistent with the reality of pervasive software vulnerabilities, regardless of the strength of the cryptography.
I will try to liveblog later sessions as followups to this post.
There have been no arrests or charges for cybercrime events in the UK for almost two months. I do not believe that this apparent lack of law enforcement action is the result of any recent reduction in cybercrime. Instead, I predict that a multitude of coordinated arrests is being planned, to take place nationally over a short period of time.
My observations arise from the Cambridge Computer Crime Database (CCCD), which I have been maintaining for some time now. The database contains over 400 entries dating back to January 2010, detailing arrests, charges, and prosecutions for computer crime in the UK.
Since the beginning of 2016, there have been no arrests or charges for incidents that fit within the scope of the CCCD that I have picked up using various public source data collection methods. The last arrest was in mid-December, when a male was arrested on suspicion of offences under sections 1 and 2 of the Computer Misuse Act. Press coverage of this arrest linked it to the VTech data breach.
A coordinated ‘cyber crime strike week’ took place in early March 2015. In just one week, 57 suspects were arrested for a range of offences, including denial of service attacks, cyber-enabled fraud, network intrusion and data theft, and malware development.
Coordinated law enforcement action to address particular crime problems is not uncommon. A large number of arrests is ‘newsworthy’, capturing national headlines and sending the message that law enforcement take these matters seriously and wrongdoers will be caught. What is less clear is whether one week of news coverage would have a greater effect than 52 weeks of more sustained levels of arrest.
Furthermore, many of the outcomes of the 2015 arrests are unknown (possibly indicating no further action has been taken), or pending. This indicates that large numbers of simultaneous arrests may place pressure on the rest of the criminal justice system, particularly for offences with complex evidentiary requirements.
This morning at 0930 the Joint Committee on the IP Bill is launching its report. As one of the witnesses who appeared before it, I got an embargoed copy yesterday.
The report s deeply disappointing; even that of the Intelligence and Security Committee (whom we tended to dismiss as government catspaws) is more vigorous. The MPs and peers on the Joint Committee have given the spooks all they wanted, while recommending tweaks and polishes here and there to some of the more obvious hooks and sharp edges.
The committee supports comms data retention, despite acknowledging that multiple courts have found this contrary to EU and human-rights law, and the fact that there are cases in the pipeline. It supports extending retention from big telcos offering a public service to private operators and even coffee shops. It support greatly extending comms data to ICRs; although it does call for more clarity on the definition, it give the Home Office lots of wriggle room by saying that a clear definition is hard if you want to catch all the things that bad people might do in the future. (Presumably a coffee shop served with an ICR order will have no choice but to install a government-approved black box. or just pipe everything to Cheltenham.) It welcomes the government decision to build and operate a request filter – essentially the comms database for which the Home Office has been trying to get parliamentary approval since the days of Jacqui Smith (and which Snowden told us they just built anyway). It comes up with the rather startling justification that this will help privacy as the police may have access to less stuff (though of course the spooks, including our 5eyes partners and others, will have more). It wants end-to-end encrypted stuff to be made available unless it’s “not practicable to do so”, which presumably means that the Home Secretary can order Apple to add her public key quietly to your keyring to get at your Facetime video chats. That has been a key goal of the FBI in Crypto War 2; a Home Office witness openly acknowledged it.
The comparison with the USA is stark. There, all three branches of government realised they’d gone too far after Snowden. President Obama set up the NSA review group, and implemented most of its recommendations by executive order; the judiciary made changes to the procedures of the FISA Court; and Congress failed to renew the data retention provisions in the Patriot Act (aided by the judiciary). Yet here in Britain the response is just to take Henry VIII powers to legalise all the illegal things that GCHQ had been up to, and hope that the European courts won’t strike the law down yet again.
People concerned for freedom and privacy will just have to hope the contrary. The net effect of the minor amendments proposed by the joint committee will be to make it even harder to get any meaningful amendments as the Bill makes its way through Parliament, and we’ll end up having to rely on the European courts to trim it back.
For more, see Scrambling for Safety, a conference we held last month in London on the bill and whose video is now online, and last week’s Cambridge symposium for a more detailed analysis.
I’m in a symposium at Churchill College on the Investigatory Powers Bill. It’s organised by John Naughton and I’ll be speaking later on equipment interference, a topic on which I wrote an expert report for the recent IP Tribunal case brought by Privacy International. Meanwhile I’ll try to liveblog the event in followups to this post.
Today I’m at the tenth Scrambling for Safety which is being held at Kings College London. Sorry, all the tickets are sold out, but there is a video feed available from the Open Rights Group website.
This afternoon at 4.30 I have been invited to give evidence in Parliament to the Joint Select Committee on the Investigatory Powers Bill.
This follows evidence I gave on the technical aspects of the bill to the Science and Technology Committee on November 10th; see video and documents. Of particular interest may be comments by my Cambridge colleague Richard Clayton; an analysis by my UCL colleague George Danezis; the ORG wiki; and finally the text of the bill itself.
While the USA has reacted to the Snowden revelations by restraining the NSA in various ways, the UK reaction appears to be the opposite. Do we really want to follow countries like China, Russia and Kazakhstan, and take the risk that we’ll tip countries like Brazil and India into following our lead? If the Internet fragments into national islands, that will not only do grave harm to the world economy, but make life a lot harder for GCHQ too.
We know more and more about the financial cost of cybercrime, but there has been very little work on its emotional cost. David Modic and I decided to investigate. We wanted to empirically test whether there are emotional repercussions to becoming a victim of fraud (Yes, there are). We wanted to compare emotional and financial impact across different categories of fraud and establish a ranking list (And we did). An interesting, although not surprising, finding was that in every tested category the victim’s perception of emotional impact outweighed the reported financial loss.
A victim may think that they will still be able to recover their money, if not their pride. That really depends on what type of fraud they facilitated. If it is auction fraud, then their chances of recovery are comparatively higher than in bank fraud – we found that 26% of our sample would attempt to recover funds lost in a fraudulent auction and approximately half of them were reimbursed (look at this presentation). There is considerable evidence that banks are not very likely to believe someone claiming to be a victim of, say, identity theft and by extension bank fraud. Thus, when someone ends up out of pocket, they will likely also go through a process of secondary victimisation where they will be told they broke some small-print rule like having the same pin for two of their bank cards or not using the bank’s approved anti-virus software, and are thus not eligible for any refund and it is all their own fault, really.
You can find the article here or here. (It was published in IEEE Security & Privacy.)
This paper complements and extends our earlier work on the costs of cybercrime, where we show that the broader economic costs to society of cybercrime – such as loss of confidence in online shopping and banking – also greatly exceed the amounts that cybercriminals actually manage to steal.