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
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.
A lot of people are starting to ask about the security and privacy implications of the “Internet of Things”. Once there’s software in everything, what will go wrong? We’ve seen a botnet recruiting CCTV cameras, and a former Director of GCHQ recently told a parliamentary committee that it might be convenient if a suspect’s car could be infected with malware that would cause it to continually report its GPS position. (The new Investigatory Powers Bill will give the police and the spooks the power to hack any device they want.)
So here is the video of a talk I gave on The Internet of Bad Things to the Virus Bulletin conference. As the devices around us become smarter they will become less loyal, and it’s not just about malware (whether written by cops or by crooks). We can expect all sorts of novel business models, many of them exploitative, as well as some downright dishonesty: the recent Volkswagen scandal won’t be the last.
But dealing with pervasive malware in everything will demand new approaches. Our approach to the Internet of Bad Things includes our new Cambridge Cybercrime Centre, which will let us monitor bad things online at the kind of scale that will be required.
Each year we divide our masters of public policy students into teams and get them to write case studies of public policy failures. The winning team this year wrote a case study of the care.data fiasco. The UK government collected personal health information on tens of millions of people who had had hospital treatment in England and then sold it off to researchers, drug companies and even marketing firms, with only a token gesture of anonymisation. In practice patients were easy to identify. The resulting scandal stalled plans to centralise GP data as well, at least for a while.
Congratulations to Lizzie Presser, Maia Hruskova, Helen Rowbottom and Jesse Kancir, who tell the story of how mismanagement, conflicts and miscommunication led to a failure of patient privacy on an industrial scale, and discuss the lessons that might be learned. Their case study has just appeared today in Technology Science, a new open-access journal for people studying conflicts that arise between technology and society. LBT readers will recall several posts reporting the problem, but it’s great to have a proper, peer-reviewed case study that we can give to future generations of students. (Incidentally, the previous year’s winning case study was on a related topic, the failure of the NHS National Programme for IT.)
Yesterday the Financial Conduct Authority (the UK bank regulator) issued a report on Fair treatment for consumers who suffer unauthorised transactions. This is an issue in which we have an interest, as fraud victims regularly come to us after being turned away by their bank and by the financial ombudsman service. Yet the FCA have found that everything is hunky dory, and conclude “we do not believe that further thematic work is required at this stage”.
One of the things the FCA asked their consultants is whether there’s any evidence that claims are rejected on the sole basis that a pin was used. The consultants didn’t want to reply on existing work but instead surveyed a nationally representative sample of 948 people and found that 16% had a transaction dispute in the last year. These were 37% MOTO, 22% cancelled future dated payment, 15% ATM cash, 13% shop, 13% lump sum from bank account. Of customers who complained, 43% were offered their money back spontaneously; a further 41% asked; in the end a total of 68% got refunds after varying periods of time. In total 7% (15 victims) had claim declined, most because the bank said the transaction was “authorised” or following a”contract with merchant” and 2 for chip and pin (one of them an ATM transaction; the other admitted sharing their PIN). 12 of these 15 considered the result
unfair. These figures are entirely consistent with what we learn from the British Crime Survey and elsewhere; two million UK victims a year, and while most get their money back, many don’t; and a hard core of perhaps a few tens of thousands who end up feeling that their bank has screwed them.
The case studies profiled in the consultants’ paper were of glowing happy people who got their money back; the 12 sad losers were not profiled, and the consultants concluded that “Customers might be being denied refunds on the sole basis that Chip and PIN were used … we found little evidence of this” (p 49) and went on to remark helpfully that some customers admitted sharing their PINs and felt OK lying about this. The FCA happily paraphrases this as “We also did not find any evidence of firms holding customers liable for unauthorised transactions solely on the basis that the PIN was used to make the transaction” (main report, p 13, 3.25).
According to recent news reports, the former head of the FCA, Martin Wheatley, was sacked by George Osborne for being too harsh on the banks.
Today we unveil a major report on whether law enforcement and intelligence agencies should have exceptional access to cryptographic keys and to our computer and communications data generally. David Cameron has called for this, as have US law enforcement leaders such as FBI Director James Comey.
This policy repeats a mistake of the 1990s. The Clinton administration tried for years to seize control of civilian cryptography, first with the Clipper Chip, and then with various proposals for ‘key escrow’ or ‘trusted third party encryption’. Back then, a group of experts on cryptography and computer security got together to explain why this was a bad idea. We have now reconvened in response to the attempt by Cameron and Comey to resuscitate the old dead horse of the 1990s.
Our report, Keys Under Doormats: Mandating insecurity by requiring government access to all data and communications, is timed to set the stage for a Wednesday hearing of the Senate Judiciary Committee at which Mr Comey will present his proposals. The reply to Comey will come from Peter Swire, who was on the other side twenty years ago (he was a Clinton staffer) and has written a briefing on the first crypto war here. Peter was recently on President Obama’s NSA review group. He argues that the real way to fix the problems complained of is to fix the mutual legal assistance process – which is also my own view.
Our report is also highly relevant to the new ‘Snoopers’ Charter’ that Home Secretary Teresa May has promised to put before parliament this fall. Mrs May has made clear she wants access to everything.
However this is both wrong in principle, and unworkable in practice. Building back doors into all computer and communication systems is against most of the principles of security engineering, and it also against the principles of human rights. Our right to privacy, set out in section 8 of the European Convention on Human Rights, can only be overridden by mechanisms that meet three tests. First, they must be set out in law, with sufficient clarity for their effects to be foreseeable; second, they must be proportionate; third, they must be necessary in a democratic society. As our report makes clear, universal exceptional access will fail all these tests by a mile.
For more, see the New York Times.