Feeds

Money mules are REAL victims of phishing, says Microsoft iconoclast

WHEN will someone think of the stolen cash handlers?

SANS - Survey on application security programs

Microsoft has somewhat controversially claimed that money mules are the ultimate victims of phishing emails, rather than the consumers or banks that cyber-crooks target in online banking scams.

Mules act as middlemen who receive funds from compromised bank accounts before sending the bulk of the cash overseas to the organisers of scams, who are often based in eastern Europe and unable to receive funds from compromised accounts directly.

Researchers at Microsoft argue it's these mules - recipients of just a small commission for each fraudulent transfer - who are the real victim of account-takeover scams, not banks or innocent punters.

Whether they are witting or unwitting1 accomplices to cybercrime, money mules are far more likely to be arrested, and when the dust settles, they'll be out of pocket as banks reverse fraudulent transactions.

"Money mules are not merely unwitting accomplices, they are the true victims in credential theft fraud," Cormac Herley and Dinei Florencio of Microsoft Research argue in a paper entitled Is Everything We Know About Password-Stealing Wrong? (abstract below) in the latest issue of IEEE Security and Privacy magazine.

Federal Reserve Regulation E guarantees that US consumers are made whole when their bank passwords are stolen. The implications lead us to several interesting conclusions.

First, emptying accounts is extremely hard: transferring money in a way that is irreversible can generally only be done in a way that cannot later be repudiated. Since password-enabled transfers can always be repudiated this explains the importance of mules, who accept bad transfers and initiate good ones.

This suggests that it is the mule accounts rather than those of victims that are pillaged.

We argue that passwords are not the bottle-neck, and are but one, and by no means the most important, ingredient in the cyber-crime value chain. We show that, in spite of appearances, password-stealing is a bad business proposition.

The argument rests the premise that US consumers are indemnified from losses against their online banking accounts.

Mules fall within the reach of Western police forces - and banks are getting more efficient at detecting and reversing fraudulent transactions, a process that plunges mules' accounts heavily into the red just after they have wired funds to fraudsters.

"The thief is really stealing from the mule, not the compromised account, though that fact does not become clear until the dust settles," the researchers write.

The major problem with this argument is that the victims of phishing fraud are often small business owners. And, in the US at least, bosses are liable for losses on corporate accounts caused by cyber-fraud. Unlike consumers they don't get refunded by banks. So a virus infection on a PC used to do the corporate accounts can mean hundreds of thousands of dollars siphoned out of a business.

Former Washington Post staffer turned security blogger Brian Krebs has chronicled dozens of cases of small businesses left bankrupt in just these circumstances, as can be seen in a archive of relevant stories on his site here.

Herley has become noted in security circles by questioning many aspects of conventional wisdom about information security. For example, he has probed the validity of cybercrime surveys and lambasted many aspects of current thinking on password best practices. This time however his provocative thinking seems to have strayed a little wide of the mark.

As well as painting mules as the ultimate victims of phishing scams, Herley and Florencio suggest that developing better back-end fraud detection or interfering with money mule recruitment is the best way to stamp out banking fraud. That's certainly part of the picture but the researchers go on to describe the focus of banking authentication systems as misplaced, wrongly in El Reg's view. ®

Bootnote

1Money mules range from cynically abused Down Syndrome individuals and innocents taken in by fraudulent work-at-home schemes (of the type chronicled by BobBear here) to willing accomplices, such as the Russian nationals involved in a ZeuS-powered cybercrime ring that was busted by the Feds two years ago. Three of the suspects in the latter case were Russian citizens who came to the US on student visas before allegedly using multiple forged passports to open bank accounts that received funds from compromised accounts.

High performance access to file storage

More from The Register

next story
Parent gabfest Mumsnet hit by SSL bug: My heart bleeds, grins hacker
Natter-board tells middle-class Britain to purée its passwords
Obama allows NSA to exploit 0-days: report
If the spooks say they need it, they get it
Mounties always get their man: Heartbleed 'hacker', 19, CUFFED
Canadian teen accused of raiding tax computers using OpenSSL bug
Samsung Galaxy S5 fingerprint scanner hacked in just 4 DAYS
Sammy's newbie cooked slower than iPhone, also costs more to build
Snowden-inspired crypto-email service Lavaboom launches
German service pays tribute to Lavabit
One year on: diplomatic fail as Chinese APT gangs get back to work
Mandiant says past 12 months shows Beijing won't call off its hackers
Call of Duty 'fragged using OpenSSL's Heartbleed exploit'
So it begins ... or maybe not, says one analyst
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.