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Why Cybercrime Is Such Easy Money

By Rick Ackerman Posted on August 24, 2012, 12:01 am EDT Last Updated August 24, 2012, 3:57 am EDT

Web-based crime is spinning out-of-control, presumably because it’s so hard to get caught and so easy to tap into an unlimited supply of rubes.  Here’s a test to determine whether you may be a rube yourself. Would you follow the instruction if this message popped up on your cell phone:  “Click here to claim your $1000 gift coupon”?  That’s what we thought. Of course you wouldn’t.  Only a retiree with a brand-new smart phone would be that stupid.  But suppose the sender had identified itself as Best Buy, and that you’d made a purchase at a Best Buy store just 15 minutes earlier? This is where the gullible and the feeble-minded get culled from the pack.  A quick thank-you note from a store where you’ve just made a purchase (and which has stored your phone number) hardly seems implausible, right?  But how about the $1000 prize? We took a pass, perhaps because we’ve never hit the lottery for more than $6.  Our first thought about the offer was that the outcome would probably be no different if, instead of following the link, we were to mail our wallet, credit cards, house key and Social Security number to some Russian hacker.

Instead, we called a Best Buy store to ask whether they knew anything about this message. They did, but not much. Surprisingly, they rejected the idea that the scammer knew about our minutes-earlier purchase because they had somehow tapped into Best Buy’s server and were stealing point-of-sale information. Although this scam has actually been done before, big-time, Best Buy said the message we’d just received was merely a coincidence. We’d never gotten any similar messages before, but Best Buy was unpersuaded that it had been more than happenstance. They suggested we call corporate customer service, and we did.  It took about ten minutes to overcome a voice-menu fusillade, but we finally reached a recorded message that said Best Buy was in no way associated with text messages claiming to offer gift cards, prizes, coupons and such.  The recording went on to suggest contacting our cell-phone provider to block such messages, but guess what:  T-Mobile phones turn out not to have this capability. The company is “working on it.”

Call the FBI?

Small wonder that computer-based crime is epidemic.  If you doubt it, try to find a legitimate apartment listing on Craig’s List.  All those great apartments, but no one to take your deposit in person! But Craig’s List is just seat-of-the-pants stuff, with no frills, let alone customer service.  Best Buy and T-Mobile, on the other hand, are Fortune 500 companies that one might think have an interest in policing scams perpetrated in their name or on their networks. Apparently, they’d rather not be bothered. So whom do you call?  The FBI?  The local police department?  Better Business Bureau?  As far as we can determine, there is no one who cares enough to do anything about it.  Sounds like golden days ahead for the growing legion of journeymen specializing in identity theft.

Incidentally, there’s an actual place in Russia where cyberthieves flourish like a digitally armed Hole-in-the-Wall Gang.  Geographically, their safe haven lies in the Siberian outback, in a place where only a mudhole had existed just a few years ago. These days, mixed drinks are $30 at the local watering hole, and there are more Mercedes-Benzes and Lambos than you could count in a week on Rodeo Drive. The hackers who have made this town so prosperous seem likely to thrive as long as the huge sums they steal are reckoned by the likes of Verizon and T-Mobile as another cost of doing business. This encourages the sort of corruption that can only feed on itself, metastasizing until some politician, smelling opportunity, proposes to “do something about it.”  Politicians being politicians, not only will the effort fail, we will all be the worse for it.

***

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  • nhtuyenspk September 11, 2012, 12:24 am

    Its a shame that people in other countries can steal credit cards from US citizens and get away with it. Why? Because if they steal under $5000 it will cost more then that for FBI or CIA to dispatch to another country just to track them down. And do you think officials are going to go through international efforts to track down $500 or so for you? This is why global cyber crime is so popular.

  • Jill August 26, 2012, 4:16 am

    Congrats, Gary. You predicted an August high when many others were expecting lows, and we had the high, or maybe it’s even going higher. Anyway, whatever market prediction system you have developed, it seems to be working.

    Rick, you have also been predicting that the Dow is heading to 14K, with your hidden pivot method.

    So good on both of you.

    • Rick Ackerman August 26, 2012, 5:12 pm

      14k indeed, Jill — but with one foot planted on the fire escape. See my commentary for Monday, out later today.

  • gary leibowitz August 25, 2012, 4:32 am

    AAPL just won its case against Samsung. One billion in damages. A drop for AAPL, but it does send a message about patent infringement. The stock showing little movement. I can’t see it falling much unless ther whole market starts tanking. I wonder if people will stop fighting the tape on this one. It absolutely has a sharp defined linear move with no breaks yet. Considering its already impressive long term move it defies the bears. Betting on a stock that hasn’t shown a break in trend can be costly.

    Uncle Ben put another carrot out there with his statement on the Fed’s ability to continue to stimulate this economy.

    Election coming. That usually favors the bull. In fact we are long overdue for either a break down or break up.
    I might place a straddle bet soon since volatility should pick up soon.

    Have a good weekend.

    • Rick Ackerman August 26, 2012, 5:10 pm

      Send a message!? Have you any clue about the nature of the patents Apple has successfully defended? Apparently not. For starters, Apple has locked up rounded edges for its screen icons, and tapping on one’s screen to enlarge documents. They’ve also legally secured for all eternity the bounce-back feature when users scroll beyond the edge of a page.

      It is absurd for the court to have legally roped off these niggling enhancements — things that a fifth grader could have innovated. If the same jurors had sat on an idea-infringement case brought by a team of RKO gunslingers, Citizen Kane would have been the last film ever made.

  • Rick Ackerman August 23, 2012, 9:03 pm

    Thanks for the heads-up, Michael. I was aware that retailers can message you when you walk by a store, but I hadn’t connected this capability to my Best Buy experience. Now all we need is an app that bounces back the message so that it fries the sender’s transmitter.

  • Michael Davis August 23, 2012, 6:46 pm

    Rick-
    I doubt that the message you received had anything to do with your purchase at Best Buy, or their servers being hacked. If your cell phone was Bluetooth enabled at the time (like 80% of all cell phones), it sounds like someone in the Best Buy parking lot was “Bluecasting” and got your cellphone address as soon as you came within 1,000 yards of their long-range Bluetooth transmitter/receiver. Normally, these devices are used for “Proximity Advertising” by retailers. When anyone with a Bluetooth enabled device comes within range, the receiver obtains the device address and sends a message, usually in the form of an advertisement or coupon. It works really well for a small retailer in a large shopping center to advertise to anyone who happens to be in the parking lot with a Bluetooth enabled device. Obviously, they can be used for nefarious purposes as well. And here is what is really scary: the transmitter/receiver with software can be had for only $300.

    • Benjamin August 23, 2012, 9:28 pm

      Michael, Rick…

      Interesting possibility, that. If that is what happened, then Best Buy — the store and the headquarters, when called and asked — was engaging in some plausible deniability.

  • C.C. August 23, 2012, 5:30 pm

    ‘Gullible’ and ‘Stupid’…?

    Words should be chosen carefully, no matter what the context. By some of the definitions above, many of your aged relatives are ‘Gullible’ and ‘Stupid’.

    In reality however, they’re not. In fact, their remaining years exist in a place that many of us will never know – Trust. From a time when it meant something, and you could. Many do not realize that when trust is broken, it is not simply a matter of legality, it is piece of one’s soul – or, the pieces of a nation’s soul, that are lost.

    It is what fills the void of broken trust that should bring pause.

    • Robert August 23, 2012, 6:54 pm

      CC- that is a fantastic post.

  • ken horn August 23, 2012, 5:20 pm

    I agree with many of the points y’all have articulated. But, here’s the bottom line. Gov’t is not only useless, but downright harmful. If you look back at the housing bubble/derivative fiasco, it didn’t happen because we didn’t have enough regs, it will ALWAYS happen because Wash. & Wall St. are tied into each other & the regulators are looking the other way. (ex, Madoff, Corzine, Goldman, Barclays, Libor). Dodd-Frank is a completely useless, very expensive regime that smothers any attempt to do business. No, the answer is smaller gov’t, common sense regs & caveat emptor for all of us. If something doesn’t smell right, walk away.

    • gary leibowitz August 23, 2012, 5:45 pm

      This would not have happened if Glass-Steagall was law. Absolutely, positively not have happened. In fact the ex-CEO of Citi wants to reenact this law. Never going to happen. Shame.

      The same argument are made that tax laws should be fair, coming from the people that receive the most benefit and are the top tier profiteers of this system. How can anyone argue they are speaking out other than for fairness. Nothing to gain by telling this government the system is way too slanted to the rich and powerful.

      But hey, what do I know. I never did get an answer to my question on corporate earnings. Most here think they are pure manipulated numbers, but when I asked how, they come back to the bank’s revised rules to fake thier real losses. Most segments of the economy are not banks.

      Like the salivated expectation that AAPL is some how levitating over a clif ready for the big plunge. I see a stock that has been very profitable and has been rewarded with a steep rise in its price, along with its profits. Is it still on a clear linear move up? You bet. Can it break that trend? You bet. Assuming it already has or will soon make the odds of being right less than 50 percent. I don’t like those odds.

    • mario cavolo August 24, 2012, 4:52 am

      Amen Gary….the Glass Steagall saga opened Pndora’s box and they knew exactly what it meant; the opportunity to serve their own greed; spoils for the rich.

      I see more and more the problem side of the wealthy ruling class, socialism and central planning regimes in their impact on govt and society; the less fair the system becomes the more that “being productive to earn money” goes down the ethics ladder replaced by simply wanting to acquire money by any means you can think of, including gaming the system, favoritism, payoffs, favoring family,friends, etc.

      They’ve gamed the system for themselves, contributing to the society is at the bottom of their priority list. On the surface they say just enough to appease the sheep and get votes but in the end George Carlin was absolutely right, “…they don’t give a f*&^k about you!” In China and most of Asia, prostitution is an integral part of the society, occasionally the govt “cracks down” to appease the western governments and throw the media a bone but underneath, it continues and they have no intention of changing it. Same story with Wall street and Washington in bed together. Its like a big bad joke they’ve pulled on the American people,a scam in fact far worse than an email scam.

      Despite it all, there are sectors of industry and people with money out there, spending it, doing business. Some sectors suffer, others are prospering. I just read the NYT article about China’s inventory glut of stuff.

      But I didn’t ever read any article by the msm about UBM’s 100,000sqm largest baby/maternity show in the history of the world with record breaking attendance of 80,000, or the largest ever MobileAsiaExpo both which took place recenly at the Shanghai Intnl exhibition center next door to my office here.

      All I’m saying is for a person to allow themselves to see both sides of the real world; yes the govt and banking problem is real, yes global growth is slowing, mostly at the mfg level, and yes corporate earnings are reasonable and real, and yes reasonable consumption and productivity and spending exists up the value chain…expansion/inflation…I still say that’s where we’re going….

      Cheers, Mario

    • gary leibowitz August 24, 2012, 9:35 pm

      Mario,

      Republicans talking about returning to a gold standard, and India’s plunge in purchase of gold could set the stage for a big drop in the metal. Glad I don’t play this market.

      Any thoughts?

    • mario cavolo August 25, 2012, 12:38 pm

      Hi Gary, I remain on the expansion/inflation bandwagon, and so it is fairly reasonble to assume gold/silver will continue to rise in asset value.

      I might suggest that India’s situation of declinng gold purchases as the price has gone higher will be more than offset by the growth in gold accumulation by other entities across the globe, including Chinese consumers, and there’s alllllot of them. As it was clearly explained to me earlier today by a long time chinese friend; chinese consumers don’t have many investment choices and they are sitting on a lot of cash…they can’t buy unlimited # of homes, they are afraid to invest in the stock market, but for the past 3 years or so through the nifty bank accounts online here, they can easily buy/sell paper gold/silver instantly as a hedge against inflation, which is an ongoing theme here simply because the society is expanding, ergo inflation and more and more consumers here will buy paper gold and physical. The govt and banks make it easily available however there is not a big, American style public TV marketing push to encourage people to buy.

      Cheers, Mario

  • mario cavolo August 23, 2012, 12:13 pm

    Happy to chime on this nightmare. I notice lately that the scam offers are getting more and more sophisticated to fool us. I’m getting scam copies of just about everything I exist in on the web. Now I’m getting fake linkedin invites, bank customer accts, IRS notices, DHL shipping notices, check sent back notices, security confirmations, twitter scams.

    As Steve noted, in China the scammers extend broadly and deeply into fake products, which in themselves a huge problem with low IPR ethics. My wife wants to be imported baby formula brand such as Friso from Holland, there are sellers on taobao.com but then there is almost no way to know if the product is fake or not, scammers do the same thing with wines, olive oils and many other consumable, easy to bottle and make label copies with local wine in the bottles. Finally, in nutrition supplements I think it is absolutely the worst offending sector….imagine a bottle of aloe vera pills for $40!! because they are a “new Western” type nutrition product, made and packaged in China with fake labels, there is a huge multi-story wholesale supplement center here in Shanghai, you simply can’t tell what’s garbage, or fake or not…

    Cheers, Mario

  • Benjamin August 23, 2012, 11:35 am

    They don’t even need you to respond to a bogus email offer. My father was recently ripped off of $30, which apparently was spent on itunes. As far as he could tell, his info was stolen from a recent transaction he had made with a legit online store. Fortunately, that info was in no way linked to his bank account. It was just the remainder on a prepaid card.

    Speaking of which, that, imv, is the best available protection. Use cash to load ’em up, and only with as much you figure you’re going to need. If someone does hack the info, you won’t be out much (or any, depending). As for email scams…

    The way I look at it, if Best Buy wants to gift me with $1,000, they can do so while I’m right there at the counter. Not like that would require some great technological advancement to acheive. Like in the olden days, where the one millionth customer would win a FREE OVEN MIT! or something.

    But is it mostly gullible old people who respond to those bogus offers? Funny you should use that example, Rick. Just the other day, the following story was brought up in a conversation I was having. Warning: May cause hysterical laughter!

    http://www.orlandosentinel.com/fl-winikoff-guilty-plea-20111011,0,2163709.story

    Not mentioned in that particular story are the ages of the two gullible women. They were in their 30s at the time. So I guess Barnum sort of had it wrong… Sometimes, there’s twins born every minute!

  • John Jay August 23, 2012, 5:35 am

    Those online type criminals are as bold as a herd of elephants. I have received phishing attempts that are pretending to come from the FBI itself. I forwarded the scam e mail to the real FBI, I am sure they are inundated by similar e mails everyday from concerned citizens.
    My spam filter usually catches 30 or 40 bogus e mails a day. If you send out millions of bogus e mails the rubes screen themselves I guess. Anyone that actually responds is a gazelle limping past hungry lions while the rest of the herd has already rocketed away.
    Plenty of ways to get rich quick if you have no conscience.
    And there is never a shortage of those types in this sorry world.

    • Rusty August 23, 2012, 5:50 am

      http://www.networkworld.com/news/2012/082112-obama-and-romney-election-apps-261806.html

      Heck yeah, some of them even got starched white collars. If you read provided link notice how facebook can be plugged into. If you have an exciting facebook they have the world, plus your friends.

      Very informative piece, Rick.

    • steve August 23, 2012, 6:19 am

      sure its easy to figure out an email is a scam. but how are you supposed to know if the insides of that new laptop you bought have been changed? As the masses get wiser to the scams, the scammers adapt. Everyone has had one of those emails from the Nigerian Prince. I have found that the new age scammers are more like ambush predators. They wait for the unsuspecting prey to come to them.

  • steve August 23, 2012, 3:38 am

    Living in China I have been scammed a few times. Anything electronic off taobao is a favourite. The insides are usually gutted and replaced with crap. Taobao instructs you to go to the local police bureau. I have also run into scams that involve multiple countries/websites (taobao/ebay). This way the scam can spread the blame with neither website wanting to take responsibility. I was also recently scammed on Paypal (in China). I thought I had all the bases covered, but it seems the scammer knew of some little rule involving the shipping address. End result $200 gone. There are people who do this as a profession. Even knowing the rules and laws still puts the buyer/user at a huge disadvantage

  • mava August 23, 2012, 3:35 am

    I know you’d likely to argue, but didn’t feel as bad when the “Mercedes Benzes and Lambos” where all parked near or on the Wall Street, did it? I know, it felt great. It’s good to be on top of the world, and for whatever the reason.

    What is the actual crime these folks commit? Offering interesting choices to stupid and greedy? They didn’t break into anything that wasn’t already made available by someone else, out of pure greed. Not that I despise greed. No. I am just saying that there are always consequences.

    Yet, there will be those who will insist that the Russians commit fraud. Here, it is fraud to promise something and not to deliver on the promise, they say.

    I say, that this is just how the world works. 99% of everything is a fraud. Your Social Security is a fraud, is it not? Your bailout is a fraud. Your home mortgage deduction is fraud.

    But let’s go back to the sweet good times when it felt good on the Wall Street.

    Did it bother anyone that those nice luxury cars were the result of US reneging on our promises to pay gold in exchange for the notes were were paying in exchange for the Mercedes-Benzes?

    We send Germans (for instance), a mobile text message, that read: “Send your MBZ here to receive FRN, to exchange them for GOLD anytime you want”. Stupid Germans. They did! They didn’t think twice! How lame.

    Then, Nixon said “Aha, suckers!”, and that is how we kept everything. And we told those who were pissed off: “Molon Labe!” (Come and take it(if you dare)).

    But, that felt great. Because it was us living large. Now it is some youngsters in Siberia. They have no right to pull the same scams we pulled. Of course. They are the lower race. What is allowed to us, is prohibited of them, right?

    • Benjamin August 23, 2012, 4:35 pm

      “What is the actual crime these folks commit?”

      Fraud and theft. As for so much of the rest of your post… Garbage. Same context, but said another way…

      It’s the 18th century. You’re captain of a sea-going vessel. On the horizon, another ship shows a legit flag (or perhaps a distress signal). You close with that vessel, only to find out it’s a pirate ship. You’re looted, but not taken prisoner or left aboard a sinking ship. But that serves the captain right, for being a sucker. And if anyone complains about the pirate problem, well, they’re just being hypocritical racists. Lovely reasoning there, mav.

      Anyway, combating these scum –wherever in the world they are– won’t require any great feat of technology. Hire a team of white-hat hackers and have them hack the info of the pirates. Have them use that info to answer any and all email offers sent to their dept/office. Sit back and watch the scum feed off each other for a little while. In no time flat, those (amateur) email scams will just dry up. Badda-bing, badda-boom!

      Erstwhile, the _real_ professional pirates can be dealt with by one or two methods. As I already mentioned in my first post, prepaid cards limit or eliminate the amounts lost. Once the account is hacked, simply cancel the card and get a new one (also, only load them with cash at retailers who perform that service). Second, people can (and should) demand a ressurection/retention of the old methods — i.e. checks, money order, COD– as an option against 21st century crime.

    • Robert August 23, 2012, 6:11 pm

      Sorry Benjamin… too simplistic in your thinking.

      Computer hacking is rapidly evolving into the CIA of the 21st century- ie: there is no such thing as “White hat” hackers.

      Anyone who employs the tactic of criminals, is likewise criminal in their own minds.

      Waterboarding is torture, regardless of whether it is “us good guys” who are “only using the tactic to extract information from the bad guys”

      See the allegory?

      Here’s where things get real:

      Preventing a computer or network from being hacked is never 100% possible. The best minds in the business only look to fabricate extremely tight, statistically fractal windows that require 10,000 times as much CPU power to extrapolate as they do to generate.

      But, as Rick’s article so clearly elucidates, the human mind is relatively easy to extract information from (far easier than many high end secure data systems)

      Tug on someone’s greed string (or hit them during a moment of lacking diligence and attention), and people will GIVE you the information you need to gain access to their private data.

    • Benjamin August 23, 2012, 8:46 pm

      “Sorry Benjamin… too simplistic in your thinking. Computer hacking is rapidly evolving into the CIA of the 21st century- ie: there is no such thing as “White hat” hackers. Anyone who employs the tactic of criminals, is likewise criminal in their own minds. Waterboarding is torture, regardless of whether it is “us good guys” who are “only using the tactic to extract information from the bad guys. See the allegory?”

      That doesn’t mean there aren’t any, never again can be any, never again will be any, or… that allegory and the real world can’t work both ways.

      So if a group of experts were hired to obtain info about the sender of a scam email or a transaction theif, for the purpose of using that info against the criminal… They would be no better than the CIA? They would be the equivalent of water-boarders? Then I guess private detectives are criminals. I guess the Navy was never anything better than the pirates and/or foreign invaders that it was created to combat.

      But even if the hired hackers went bad, at the very least, the hiring company(s) and authorities could know things about them. Backgrounds, last known residence(s), their faces… Not quite like the world of invisibility and espionage you’ve envisioned. And even if it were a government function, rather than a private one… well, first, any federal involvement should only extend from evidence provided from the State(s) criminal investigators, at the request of the State(s) (in those cases where pursuit of justice extends beyond State powers), and not from the federal government conducting its own investiagtions from its currently usurped powers.

      That’s one suggestion I made, albeit in a nutshell. Hopefully it’s sufficiently cracked open now. Argue what anyone will, but there is no doubt that 21st century crimes are going to require 21st century methods to combat. And while people can (and should, imo) resume using the dying, snail-mail methods and new things like reloadable cards, the fact is, digital transactions can’t be entirely dealt away with. Something has to be in place in order to allow people to pursue justice. Imperfect? Well, so is everything else. The point isn’t to be perfect, but rather available and practiced, so that society doesn’t encourage itself to ever-growing criminality.

      “Tug on someone’s greed string (or hit them during a moment of lacking diligence and attention), and people will GIVE you the information you need to gain access to their private data.”

      Oh, come on… So what if they do give the information? The cashier at Walmart isn’t allowed to clean out your debit/credit account, simply because you gave them that information. They aren’t allowed to skim as much cash from the register as they want, simply because their employer is greedy/gullible enough to trust them with the register.

      If those are not defensible activities, then why on earth should these amateurish email scams be?

    • mava August 25, 2012, 8:05 pm

      Uhm.. Benjamin, my point was that all of us weren’t to unhappy while we were the main beneficiaries of a fraud. It is only when someone else benefits, we start calling it a fraud. I’ve given an example.

      So, while it is all great to be calling for a team of white hat hackers, what we really are – we are the same fraudsters, but we only want others to suffer.

      Taking your example, we are riding a pirate ship ourselves, and are happy when the other ship we intersect with is left burning. It is only we ours burns, we cry pirate.


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