Analysis: Phishing arrests highlight massive problem

The massive phishing scam broken up by federal authorities this week is only a hint at what many say is an insidious and growing problem on the Internet.

Federal authorities on Wednesday indicted 53 people in the U.S on various charges related to a phishing scheme that victimized thousands of customers of two major U.S. banks. Authorities in Egypt arrested another 47 people there on the same charges.

The bust, dubbed "Operation Phish Phry," was described by the FBI as the largest ever cyber-crime investigation and they held it up as a shining example of international cooperation in the realm of cybersecurity.

But as important and impressive as it was, the arrests barely scratch the surface of the phishing problem , according to several who have been tracking the issue for years.

"It certainly is important," said Dave Jevans, chairman of the Anti-Phishing Working Group (APWG), whose members include Walmart, Microsoft, Yahoo, eBay and dozens of others. "Getting 100 people indicted all at one time is definitely a real success for law enforcement. It sends a message to criminals that they are not immune and that they can be tracked down and jailed, even if they are not in the U.S."

But the arrests are not going to "materially impact" the problem, Jevans said. After a small dip last year, phishing activity has picked up again and is rapidly climbing back to record levels in terms of unique phishing sites and targets.

In June, the number of unique phishing Websites detected by the APWG stood at 49,084 -- the highest level since a record 55,643 phishing Web sites were spied in April 2007. "The problem continues to grow and get worse," said Jevans, who estimates that as many as four billion phishing e-mails are sent across the Internet daily.

Ominously, it is not just consumers that falli victim; corporations and government organizations are often the subject of highly targeted "spear phishing" campaigns designed to shake loose financial and other sensitive information.

Phishing is a form of social engineering in which attackers send e-mails made to look like legitimate correspondence from reputable institutions and even trusted individuals from within an organization. Victims are directed to Web sites that look authentic, but are actually fakes. Once there, they are asked to enter information that can later be used to break into accounts or to commit identity theft.

In the case of the phishing ring broken up this week, for instance, attackers systematically transferred thousands of dollars from accounts they gained access to with legitimate usernames and passwords.

What makes phishing so hard to deal with is that attacks can be launched from anywhere in the world by people with little to no technical skills. Tracking down the source of an attack can involve communicating with numerous ISPs in different countries, different time zones and using different languages, said Alexander Southwell, a former cyber-crime prosecutor and attorney with Gibson Dunn & Crutcher. Most also operate under different laws and have no obligation to respond to a request for information from U.S. authorities, Southwell said.

Many phishers use what are known as fast-flux networks to make tracking them down even harder, Jevans added. A fast-flux network allows an attacker to move a counterfeit Web site to new servers in rapid succession. The rogue sites themselves are torn down, sometimes in a matter of hours, often before they are even noticed. And more than 70% of the time, the servers hosting a phishing Web site have themselves been compromised and belong to legitimate companies, Jevans said.

The APWG and others are working with organizations such as ICANN to see whether processes can be developed that allow domain registrars to quickly remove rogue domain names from the Internet. But that is an effort that could take years to materialize.

Chet Wisniewski, senior security advisor at security vendor Sophos, said that while there is a heightened awareness about phishing scams, many people continue to fall victim because of the increasingly sophisticated tactics used.

Tools are available that allow attackers to develop remarkably authentic-looking sites that can fool even the most aware users, he said. And many phishing attacks these days don't even use e-mails to trick users into parting with their credentials. Malware programs such as the QHost Trojan horse are capable of stealing account names and passwords directly from an online session, and can even redirect the browser to a fake Web site -- all without the user's knowledge or participation, he said.

Other techniques to get usernames and passwords involve the use of phone mail, instant messaging and even pop-up screens right in the middle of a banking session.

Contributing to the problem is the continuing failure by many U.S. banks to implement two-factor authentication for controlling access to customer accounts, Wisniewski said. Stronger authentication measures, such as requiring users to enter a one-time token generated password, in addition to their usernames and password would make it all but impossible for attackers to break in using just a customer's login credentials, he said.

"It can be done from the convenience of anybody's home, from [an] Internet cafe from abroad and at all hours," Southwell said. "It can be done to maximum effect by taking advantage of technology to send out millions of e-mails and getting just a few to respond."

"...It is easy to do and hard to get caught," he said.

Copyright © 2009 IDG Communications, Inc.

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