A recent Cabinet Office report estimates that identity theft costs the U.K. economy more than £1.3 billion per year. This figure seems conservative next to a U.S. Federal Trade Commission (FTC) survey showing that 9.9 million U.S. residents fell victim to identity theft in 2002 and a prediction from IT analysts The Aberdeen Group, that the global cost of identity theft will be $221 billion by the end of 2003, growing to $2 trillion by the end of 2005. Discrepancies in these figures are largely attributable to different definitions of identity theft, but one thing is certain: Identity theft has already developed into a major global criminal industry.
As perpetrators’ abilities grow, the sophistication and scale of the frauds and identity thefts are also increasing. The recent spate of so-called “phishing attacks” on U.K. banks and their online customers have opened peoples’ eyes to the increasing dangers of corporate identity theft(1). In those cases, the banks’ identities were usurped with “spoofed” emails that use HyperText Markup Language (HTML) to re-create the corporate identity and forge the sender’s address to look as if the message emanated from its own domain. The emails direct customers to bogus websites with URLs similar to official sites, where they are then encouraged to “re-register” their personal and financial information—enabling the perpetrators to collect vital data that can be used for fraud.
The tangible financial cost of these attacks is significant, with a Gartner Research survey of U.S. banks putting the average value of a fraudulent transaction at $6,795. Over time, however, the intangible costs of lost customer trust and damage to a business’s brand is likely far greater. With many people still sceptical of the security of online financial transactions, fragile confidence in an online business can be destroyed by the latest tactics of identity thieves. Identity theft is by no means an online-only phenomenon, however. The irony is that with the right technology in place, the online world offers one of the most secure environments for any financial transaction.
The efficiency of email and online communications, which makes them so attractive for legitimate e-business, makes them equally as attractive to spammers and cyber criminals. The victims who respond to phishing emails may be equally likely to respond to a fraudulent telephone call or letter. For cyber criminals, email offers the least-expensive way to bombard the target group and isolate those individuals who can be fooled.
If businesses wish to preserve the efficiency and value of email communications with customers, they need to look at ways to secure these communications channels from criminals attracted to the financial potential of the online world. The answer must lie in the use of secure messaging: using encryption and digital signatures to protect information and prove the authenticity of the message as well as the sender.
Secure messaging has traditionally posed a problem in a corporate environment for two main reasons: firstly, the complexity of maintaining the infrastructure of “keys,” which serve similar roles to unique identification credentials, and secondly, the complexity of explaining and using the solutions. The simple fact is that traditional secure messaging is complex—and therefore costly—to administer and maintain, difficult to explain to non-technical users, and tedious for these individuals to use.
For internal messaging, companies typically have authority over employees, though rarely over external business partners, and can try to enforce the use of secure messaging. The cost of training end users in secure-messaging techniques and supporting them, often means that such solutions are not fully deployed but reserved for only so-called critical users. Even where security solutions are in place, many users forget or do not bother to use the solution when time constraints or business needs conflict with security policy.
Businesses using secure messaging to protect customer communications often discover that all these problems and their related costs grow exponentially. The corpus of keys changes faster and is far more complex to administer. Unlike employees, customers may have fewer concerns about asking a firm’s IT staff to retrieve or reset a forgotten password, placing a greater burden on support staff. Training large groups of customers to use traditional secure messaging—to recognise digital signatures, decrypt messages, and sign and encrypt their own responses—is also impractical.
What is needed is a secure-messaging solution that requires no action by the end-user. Such a solution would shift the burden of encryption, decryption, and signing and verifying messages—as well as finding and remembering the necessary keys—to an automated system that works invisibly at the network level. For automated secure messaging to be truly effective and used widely, however, it must be based on open standards and must offer some way to set up and maintain secure connections with recipients who do not have secure messaging in place and/or cannot be trained to use a secure-messaging solution.
Solutions must not only be invisible to senders, once recipients have authenticated themselves, the solution must also automate verification and decryption as well as securing and signing any response. To answer this need, systems have now been developed that operate transparently on the network layer and use small-footprint proxies on the recipient end. These systems can provide automated, two-way message security and authentication with no need for user training at either end.
With such systems in place, email and online communications can be transformed from a prime target for cyber criminals into a safe means of communicating with customers and partners while significantly reducing the potential of identity theft.
(1) The U.S. Federal Trade Commission defines “phishing” as follows: “Phishing, also called “carding,’ is a high-tech scam that uses spam to deceive consumers into disclosing their credit card numbers, bank account information, Social Security numbers, passwords, and other sensitive information.” ftc.gov/bcp/conline/pubs/alerts/phishingalrt.htm
PGP Corporation is exhibiting on Stand 680 at Infosecurity Europe 2004 which is Europe’s number one IT Security Exhibition. Now in its 9th year, the show features Europe’s most comprehensive FREE education programme, and over 200 exhibitors at the Grand Hall at Olympia from 27th to the 29th April 2004.