Phishing : InformationWeek > Parry Aftab > The Privacy Lawyer: Which Kills E-Commerce Faster, The Cure Or The Disease? > January 26, 2004

InformationWeek > Parry Aftab > The Privacy Lawyer: Which Kills E-Commerce Faster, The Cure Or The Disease? > January 26, 2004

Identity theft is a big issue these days. According to a recent Federal Trade Commission survey, 10 million people in the United States were victims of some type of identity theft last year alone. But identity theft, when reported, is largely an offline issue. Family members, people within your workplace or household, credit-card thieves, and those who rifle through your garbage are the typical bad guys. According to the same survey, only about 3% of the identity fraud they identified occurred in connection with the Internet. Expect that to change, and quickly!

Phishing, the latest in the long line of Internet fraud schemes, tricks E-mail recipients into providing their private financial and password information to a site posing as a trusted site. And it's growing by the virtual second. Phishing has snared savvy techies and newbies alike. In fact, in my experience, experienced tech users are more likely to be ensnared than others, since we tend to be more comfortable sharing personal sensitive information online with a site we trust.

A phishing incident typically starts with an E-mail purportedly delivered from a site you trust with your financial information--your online bank, credit-card companies, mortgage companies, ISPs, and large E-commerce sites. (BestBuy, Citibank, EarthLink, PayPal, American Express, and eBay are the more popular spoofed companies, but any popular E-commerce business will do.)

The latest form of phishing starts with a crisis of some type to get your attention. The E-mail announces a security breach, or a problem with your account. The senders also give you a short deadline and try to frighten you enough to respond without thinking too carefully. Perhaps your account will be terminated if you don't respond quickly, or they threaten financial losses or a security breach, or that you won't be able to buy through that account anymore.

The phishing E-mail typically contain the logos of the site being spoofed, and often contain legitimate links to that site, with one or two exceptions. Those exceptions link you to a rogue site (or even a hacked section of the legitimate site) where you are asked to sign in (login and password) and in many cases to provide updated account information, Social Security numbers, names, addresses, and even mother's maiden name. Once that information is collected, the phishers sell it or use it themselves to empty your bank account, charge items to your existing credit cards or new credit cards applied for in your name, and even blackmail you. Thereafter, it becomes a typical identity-theft scheme and travels the normal distribution channels to criminals on and offline.

Old Ruse, New Name
While the current permutations of phishing are more sophisticated, I first encountered it in 1995 as an AOL subscriber. A tiny screen popped up "from AOL" telling me that my credit-card information had been lost and they needed it again, and giving me a link to provide it. Luckily, I didn't, and soon the AOL message that they will never ask you for password or credit-card information via E-mail was promulgated and continues to this day. Some people, though, are still caught in this password-spoof's net.

But much has changed since 1995. We're now far more accustomed to providing sensitive information online and to receiving E-mails from our banking institutions and E-commerce sites with embedded links. And the growth and adoption of E-commerce, especially for financial institutions, depends on our being able to trust those communications and the links that they provide.

Therein lies the rub. The financial institutions and E-commerce sites need us to become more comfortable with communicating sensitive information online. Yet, the more comfortable we become, the more likely we are to be caught by a phishing expedition. By creating consumer-friendly methods for their E-commerce customers, those same companies provide fertile grounds for the phishers who will abuse those same methods. And the phishers aren't just watching the E-commerce companies. They're also tracking the security tips provided by the FTC and consumer-safety groups. Within days of a new consumer safety tip being released, the phishers find a way to foil it.

So, what can we do to stem the tide of cybercrime and phishing fraud? Alarming customers may backfire with a consumer-base that's already distrusting of using the Internet for highly sensitive information. Yet, failing to inform customers means they're facing serious consequences, unarmed and unprepared. Avoiding Fraud
The large financial institutions have all been facing this issue. Luckily for its customers and other consumers online, Citibank has done more than face it. They've put the issue front and center on their Web page (with prominent placement of a link "about E-mail fraud" on their most valuable front-page real estate on www.citibank.com). They also have tips for Citibank customers and online banking and financial-services users (see sidebars) on how to avoid becoming a victim of phishing fraud.

A spokesman for Citibank told me that when they first learned of the phishing incident misusing their brand, they reached out to their customers to warn them. When they discovered that some of their customers had been tricked into providing their financial information, they counseled them, one-on-one, and helped them close accounts and notify the credit-reporting agencies. Luckily, the first reported cases of phishing involving the Citibank brand came in October 2003, on the tail of the beginning of its identity-theft campaign. The marketing and public-policy gurus were already conversant with the issues in connection with that campaign, so adding a special layer to their consumer-awareness message was easy.

We all recognize that phishing and the next schemes Internet con artists and cybercriminals cook up can't be fully avoided if we're looking to make the Internet easy for everyone to use. But having a financial institution that is willing to step up and help its customers avoid becoming victims of identity theft online and offline is the next-best answer to locking up all online access. I am and will make sure I continue to remain a Citibank customer. In the cybertrenches, we need all the help we can get. And those E-commerce financial institutions that are the biggest help will earn and keep our trust and loyalty, online and off.