The month of February provided another stark reminder that cyber criminals continue to be on the prowl in online dating communities.

According to a recent Toronto Sun article, “Money scammers target online daters,” Durham Regional Police received several reports—all during the weeks following Valentine’s day—from women claiming they had been scammed by men they met online. After several months of courtship and communications with these men, women then said they were asked to wire money overseas to help with work-related charity efforts. Some women were also conned into providing personal identification and financial details to the suspects and were debited “substantial amounts of money from their personal accounts.” Read the rest of this entry »

For some time now I’ve been writing about the importance of businesses working together to combat cyber crime. Echoing this sentiment is retired Air Force General Dale Meyerrose, who sat down this week with The New New Internet to discuss the importance of building partnerships, the challenges of building those alliances, and the question of who is ultimately responsible for protecting critical infrastructures in cyberspace.

In the article, “Cybersecurity Partnerships are Absolutely Critical, says Gen. Dale Meyerrose,” Meyerrose, now the VP for Cyberspace Solutions at Harris Corporation, expressed his concerns surrounding cybersecurity and the economic impact of cyber crime:

“The [issue] of most concern to me is cyber crime… elements of cyber crime, particularly economically for our country, have come to the point where we need to really be concerned. There have been estimates that we’ve lost over a trillion dollars a year to cyber crime in the last couple years. And it now exceeds all other crime in terms of the amount of money.” Read the rest of this entry »

The security strategy of “defense-in-depth” allows a system or an organization to prevent an attack by coordinating complementary defense techniques, taking advantage of the strengths of each one while relying on the combination to shore up weaknesses in the others.  The end result is a more complex and nuanced system that is resilient to a much greater number of attacks.

In a similar vein, we can see that any single device recognition strategy on the Web is going to run into some serious limitations, mostly related to the quality and the variety of the data that can be collected from a browser.  There are a number of sources of data that we can use to construct a view of a device on the Web, but most of them can be manipulated, and all of them have problems with uniqueness.  How to build a system that is resilient to so much data uncertainty?  Yeah, I know you’re already a step ahead of me – we design in depth. Read the rest of this entry »

The Merchant Risk Council, which brings U.S. businesses together to help combat online fraud and abuse, is taking its experience abroad. The Seattle-based association announced that in April it will launch MRC Europe to help European merchants improve their e-payments strategies and share best practices for managing online payment risk.  The inaugural event will take place April 21 and 22 in Brussels, Belgium at the NH Hotel du Grand Sablon.

Executive Director, Tom Donlea, said expanding the merchant-led program is a natural extension for the MRC because both the U.S. and Europe share common problems associated with online payment fraud.

“U.S. and European online merchants face many of the same fraud issues, security risks and payment challenges—there are nuances that MRC Europe will adapt to best serve European merchants.”

As a longtime member of the MRC, we’ve seen first-hand the contributions made by the association towards fighting online fraud and abuse. The group’s success is fueled by its members who have all committed to working together—by sharing information and experience, and establishing best practices—in order to reduce the security and payment risks that all online merchants around the globe must face.

True collaboration between businesses, for the purpose of combating online fraud, is what iovation has always advocated. Especially as we continue to see increasing device crossover in our own database, we see the clear value of a network of companies sharing resources, tools and experiences. This becomes increasingly important if businesses want to stay ahead of cyber criminals who are already internationally organized and only continue to strengthen their networks and skills. The truth is that nobody can do it alone. To combat online fraud successfully, it takes the efforts of groups like the Merchant Risk Council to bring together global businesses, industry experts, law enforcement and others to make the Internet a safe place to do business. The launch of MRC Europe, in my opinion, is another step in the right direction.

Identity fraud, and the number of its victims, continues to rise each year.

According to a recent article,  “Number of identity fraud victims jumps,” a Javelin Strategy & Research survey found that the total number of ID fraud victims in the U.S. rose to last years to 11.1 million—a 12% increase over the year before. The study also found that 2009 losses due to ID fraud totaled  $54 billion (in comparison  $48 billion in 2008).

But why, with so many anti-fraud management solutions and techniques available, does ID fraud continue to climb year-over-year? According to James Van Dyke, president and founder of Javelin, the continual evolution of technology is one of three main factors contributing to the increase of Identity fraud. Van Dyke sees online crime continuing to escalate, due to: Read the rest of this entry »

It’s been said that the best offense is a good defense. But how do you defend against something that’s always changing? That’s an important question for IT security professionals who know that it’s only a matter of time before cyber criminals find ways to take advantage of the inherent weaknesses in even the best technologies.

The harsh reality is that today’s cyber criminals are so tech savvy and innovative that staying one step ahead of them isn’t always possible. That’s why, when it comes to network security, a good defense should be made up of several different layers. That way, even if a hacker is able to exploit vulnerability in one layer of the system, he may be stopped or slowed down by another. This strategy, known as defense in depth, essentially allows organizations to protect the integrity of their systems by slowing hackers down and buying security professionals the time they need to respond to a security breach once it has occurred. This mitigates the damage that malicious hackers can do, even if they are able to make it past initial barriers. Read the rest of this entry »

A recent survey revealed that the overall perception of online fraud continues to be a growing concern for both online merchants and consumers. The result, not surprisingly, is a lack of consumer confidence and, therefore, the loss of profits for online businesses. An article, “Online retailers see fraud as a major threat,” summarizes the findings of Cybersource’s 2010 UK Online Fraud Report, and includes some eye-opening statistics about how fraud – and the perception of fraud – directly impacts the shopping habits of online consumers and the fraud policies of Internet businesses.

From the point of view of retailers, the survey found:

• 57% of merchants see online fraud as the greatest threat to their business
• Merchants expect to lose an average of 1.8% of their income to online fraud
• Merchants reject 4.6% of online orders due to suspicion of fraud

When it came to consumer attitudes about fraud, the study found:

• 71% of all consumers had concerns about online fraud
• 50% of people still don’t shop online in the UK (representing a large untapped market)
• 78% said they would never use their mobile phone to make purchases Read the rest of this entry »

Love may be blind, but blind love on the Internet can cost you more than heartbreak – it can cost you your life savings.

Each year, thousands of individuals put their trust in other people that they meet online. Even when a relationship never moves out of the virtual realm, a deep emotional connection (or the illusion of one) can develop surprisingly fast. Unfortunately, this can set unsuspecting victims up for a rude awakening when an online romance results in emotional abuse, financial fraud, or both. In an attempt to educate people about this unfortunate possibility, the Office of Fair Trading (OFT) is promoting “Scams Awareness” month and warning lonely hearts of the dangers of Internet dating scams this Valentine’s Day. Read the rest of this entry »

A recent fraud study conducted by Javelin Strategy & Research and LexisNexis confirmed what we already knew: identity fraud is on the rise, and so are the losses that online merchants face. What we learned from the report, however, is that the impact on retailers is much worse than originally thought.

Based on the study results released by LexisNexis, U.S. retailers incurred losses of $191 billion in 2008 due to identity theft, stolen merchandise and fees associated with chargebacks. Even more alarming is the fact that, between the three primary groups surveyed—merchants, financial institutions and consumers—the cost of fraud to retailers is almost 10 times greater than the losses absorbed by financial institutions and 20 times greater than the losses suffered by individual consumers. Read the rest of this entry »

After a three-year investigation by the FBI and the UK’s Serious Organized Crime Agency (SOCA), British authorities announced they have arrested the sophisticated network of cyber criminals behind DarkMarket, one of the world’s top criminal websites. The site, which operated out of an unassuming London Internet café, was an international cyber supermarket for stolen credit card and bank account information that officials say has cost the banking industry tens of millions of dollars. Read the rest of this entry »

How much money has the world lost to e-crime so far? … A trillion dollars. That’s the estimated annual cost of e-crime worldwide, according to a recent article, “National online-fraud helpline to launch in April.” Despite the staggering losses attributed to online crime, victims of such crimes—both individuals and businesses—have not had a simple option for reporting them. Hopefully this is about to improve, with the UK’s new Action Fraud helpline, one of the first attempts at streamlining a call-in process for victims to report online crime.

I commend the National Fraud Reporting Centre (NFRC) for getting the hotline going. The helpline will allow individuals and small businesses to report cyber crime to a central agency, simplifying what would otherwise be a confusing process involving potentially several different government ag encies. A similar effort in the U.S., the Internet Crime Complain Center (IC3), currently allows individuals to file complaints of internet fraud through its website. Read the rest of this entry »

Velocity-based rules have long been used by merchants to help identify potentially fraudulent online behavior. Typically, velocity-based rules function by looking at commonalities in personal information, across accounts and transactions. For example, a warning may be set off if multiple accounts, or multiple orders, all have different names but the same shipping address. Another example might be if multiple accounts were all set up using the same password.

Unfortunately, these kinds of velocity checks are of limited value against more sophisticated fraudsters who have the information, the technology, and the general savvy to set up multiple accounts that all, on paper, look completely different—different names, different credit card numbers, different shipping addresses, different IP addresses. Read the rest of this entry »

We’re going into 2010 with a lot to be excited about, including the announcement of our new VP of Technology, Scott Waddell.  Scott joined iovation in April 2008 as our Director of Research, a role to which he has brought amazing insight and innovation.  I love his ability to keep sight of a strategic vision while being pragmatic about getting there.  Starting this month, he’s taking over the helm of our entire technology organization and we’re confident he will continue our positive momentum into the new year and beyond.

To provide a bit of an introduction, Scott has nearly two decades of technology experience with an emphasis on security.  Before joining iovation, he spent a number of years at Cisco, serving in a variety across engineering, network security and research. Prior to that, Scott co-founded WheelGroup, a network security company that was later acquired by Cisco.  He also served as a charter member of the Air Force Information Warfare Center, pioneering tools and techniques for automated vulnerability assessment and incident response. Read the rest of this entry »

Well it’s been a good year for our blog. We’ve tried to address a number of topics all relevant to helping businesses fight online fraud. As the year wraps up, I thought it would be a good time to summarize some of the themes from the year and highlight some of our posts. While we touched on a number of topics, a few main themes remained consistent:

Device reputation is an important component of best practice fraud management – 2009 was a difficult year for business, but one trend that emerged was an increased visibility into how valuable device fingerprinting and reputation solutions can be as part of any sophisticated fraud prevention architecture. Some of our articles on this topic:

• The First Five Benefits You Will See From Device Reputation
• Not All IP Addresses are Created Equally
• Device Fingerprinting Techniques – Several Choices

Online retailers are under attack – Online retailers continue to find themselves under attack and we touched on this topic a number of times this year. Here are some of the highlights: Read the rest of this entry »

Yesterday, President Obama took an important step toward putting cyber security front and center by appointing Howard Schmidt as cyber security coordinator. Not only will this significantly aide in advancing the current administration’s cyber security initiatives—it’s also a critical step forward in the private sector’s fight against cyber crime.

Given the impact that cyber crime has on our economy, online businesses especially have a lot riding on the success of these government initiatives. A recent report from LexisNexis estimates that U.S. businesses lose $191 billion annually from computer related crimes. This is why Mr. Schmidt’s combined experience in both government and the private sector will hopefully be an important asset, allowing him to simultaneously understand the issues currently facing businesses and be able to cut through the red tape on Capitol Hill to make real change happen. Read the rest of this entry »