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Contrary to popular belief, phishers make little or no money, according to a study by two Microsoft researchers.

Cormac Herley and Dinei Florencio dispute the conventional wisdom that phishing represents an easy way to make money by analysing the crime in economic terms. They argue that, since each phishing fraudster seeks to maximise returns, "over-grazing" is inevitable. More are tempted into the criminal activity by the promise of easy returns, which may be illusory. Worse still, the more phishing attacks happen the more likely it is that prospective marks will get wise.

"Phishing appears to be a low-skill low-reward business. The enormous amount of phishing activity is evidence of its failure to deliver riches rather than its success. Repetition of easy money stories without scrutiny makes things worse by ensuring a steady supply of new entrants," the researchers argue.

"Far from being an easy money proposition we claim that phishing is a low-skill, low-reward business, where the average phisher makes about as much as if he did something legal with his time."

<

p>They question surveys on phishing losses, pointing out that the "phishing rate in most surveys is significantly smaller than the margin of error", and that dollar losses might be overestimated by taking the average (mean) losses over a very small number of reporting victims. Better results might be obtained by looking at the median loss, they argue.

The researchers defend their thesis against potential criticisms that their economic model is wrong and anecdotal evidence that there's a lot of money to be made in phishing before sticking out their necks and making their own estimate of phishing losses.

Based on other studies, they reckon that 0.37 per cent of web users hand over their identity credentials in response to phishing frauds. Not all those - perhaps less than half - suffer financial fraud as a result, because attempts at fraud might be blocked or detected, phishing servers might be seized before credentials are used or online accounts may simply have no funds to loot, among other reasons.

Assuming all those that do lose out suffer median losses gives an estimated loss of $61m a year in the US - 50 times lower than that suggested by other studies.

The Microsoft study does not look in detail at how money is divided up. It's probable that those orchestrating a large number of scams are making a great deal, even as small time fraudsters and phishing mules are making little or nothing. Based on estimates of 113,000 unique phishers in other studies the researchers take a leap of faith and suggest the average phisher earns hundreds rather than thousands of dollars.

The economic analysis of cybercrime activity by Herley and Florencio contributes to the debate, but we think they may be on rocky ground by coming at an estimate from this angle. Tracing financial losses by following the money is surely a better route to the truth.

Their study, A Profitless Endeavour - Phishing as a Tragedy of the Commons, compares to a study of the economics of spam more generally, published by a team from two Californian Universities. After subverting part of the control mechanism of the Storm botnet to divert traffic to dummy domains the academic found that response rates to pharmaceutical spam were as little at one in 12 million, far lower than previously estimated. ®

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