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The Evolution of Cybersecurity

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Archives, Global Trade Daily, Software, Special Reports

The Evolution of Cybersecurity

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Last year we saw cybercriminals seizing a massive business opportunity.

Our rapid shift to working from home due to COVID-19, plus heightened financial, political, social, and emotional stressors presented a perfect storm:

-The consumer-grade routers and electronics we use at home are inherently less secure than the centrally managed commercial-grade devices at our offices. 

-Many home networks are already compromised. In April 2020, BitSight found that 45% of companies had malware originating from an employee’s home network.      

-Social engineering hacks like phishing, vishing, and smishing thrive when victims are preoccupied or fearful. 

Our organizations became very vulnerable very suddenly, and bad actors did not hesitate to cash in. In March alone scammers ramped up COVID-related phishing scams by 667%. Overall, the FBI’s Internet Cybercrime Complaint Center (IC3) saw a 400% increase in reported cyberattacks in 2020. 

While the events of last year presented a unique scenario for all of us, the swift and aggressive response from bad actors is indicative of a trend that will, unfortunately, persist: cybercriminals have organized themselves into a successful enterprise that continues to innovate and evolve for maximum profit.

And that profit is sizable: According to a March 2020 study by Atlas VPN, cybercriminals bring in over $1.5 trillion per year in revenue—more than Facebook, Walmart, Apple, Tesla, and Microsoft combined.

Why does it matter?

Our only option when it comes to mitigating (not eliminating) the risk of a breach is to match ever-evolving threats with an ever-evolving security strategy.

Cyber defenses cannot be “set and forget” anymore; while antivirus software, firewalls, and active monitoring tools are essential components of that defense, they are no substitute for human vigilance. 

Not only that, but our concept of vigilance must recognize the potential for highly sophisticated cyber breaches that span weeks or even months. Instead of snatching valuable data in discrete intrusions, cybercriminals are siphoning it off via prolonged, methodical interactions with victims. One popular scam works like this: 

-The bad actor identifies who in your organization processes payments.

-They gain access to that person’s email account, generally through a standard phishing email.

-They monitor the email account over a period of time to identify high-dollar vendors.

-They craft a spoofed domain and impersonate that vendor (think accounting@optima1networks.com).

-The target receives an unassuming email from the “vendor” with instructions to remit future payments to a new account (guess whose).

-The target continues paying the fraudster until you or your vendor realizes the mistake.

These targeted exploits cost US victims roughly $1.7 billion in 2019, up 33% from 2018. 

Attacks like this harm your business in two ways: 

-Directly: In addition to funds stolen by a hacker, you may incur ransom payments, downtime while your data is recovered, and steep labor costs for emergency IT support. In the case of ransomware attacks, average downtime is 19 days, and costs to remediate average $730,000 for those who don’t pay the ransom, and $1.45MM for those who do.

-Indirectly: Your reputation takes a hit when news of a breach gets out (every state government requires some form of disclosure). Cybersecurity audits are becoming a popular precursor to business engagements and memberships, and 38% of businesses report losing customers because of real or perceived gaps in their cybersecurity posture.

While there will never be a silver bullet when it comes to cybersecurity, it’s imperative we adapt both our defenses and our mindset to best protect ourselves in this new landscape.

Our recommendations

More cybercriminals are entering the space, and they are more organized, disciplined, and persistent than ever. This means that our cybersecurity strategies must rise to meet this new challenge, and that what we used to view as “advanced” measures must now become our baseline.

At minimum, we recommend you implement the following:

1. Advanced Endpoint Protection on all machines accessing corporate data. Centralized anti-malware only checks for known virus definitions. Add Next Generation protection that uses Artificial Intelligence to flag all “unusual” behavior, and either kill the process or alert a Security Operations Center (SOC) to intervene.

2. Two-Factor Authentication (2FA). Strong passwords are no longer sufficient. Turn on two-factor authentication for any accounts and systems that don’t already have it. Check regularly to make sure all accounts are covered.  2FA makes it much harder for unauthorized users to gain access to your system even if they obtain your password.

3. Backup and recovery for all cloud apps. Most popular applications (like Microsoft 365) have some backup built-in, but in a limited capacity. Do you have sufficient retention policies? Would you be able to restore files encrypted or lost to malware? Protect your Microsoft 365 email, SharePoint, Teams, OneDrive, and other online apps with a supplemental cloud backup service.

4. Firewall with Intrusion Detection. An up-to-date firewall is a start, but we recommend also employing Intrusion Detection to monitor network traffic for potentially malicious behavior.

5. Security Awareness Training. In addition to annual training, continually feed your employees security tips, and continually test with phishing simulations. It is essential that security remains top-of-mind year-round.

There are several security frameworks like NIST, ISO, and CMMC that can provide structure to your security efforts even if you aren’t subject to compliance regulations. These can feel overwhelming to tackle, but the items above will get you well on your way to fulfilling the core requirements.

Beyond this, it’s critical to embrace the mindset that a network is only as secure as its users are vigilant and adaptive. The sophistication and sheer volume of today’s cyber threats demand that:

-Cybersecurity expenditures get their own line item in your annual budget.

-Your cybersecurity posture needs annual review as new threats are emerging all the time. 

Most importantly, you need a resource who is qualified to assess your specific business needs and construct a solution that coordinates the technical and human components of your cyber defense.

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Heinan Landa is the Founder and CEO of Optimal Networks, Inc., a globally ranked IT services firm, the creator of Law Firm Anywhere, a virtual desktop solution that helps attorneys work seamlessly and securely from anywhere, and author of The Modern Law Firm: How to Thrive in an Era of Rapid Technological Change. After earning his B.S. and M.S. in Electrical Engineering and Computer Science from Johns Hopkins University, Heinan went on to receive his MBA from The Wharton School of Business. Featured in Legal Management, Legal Times, Chief Executive, Inc. Magazine, Forbes, CIO, and with regular appearances on ABC7, CBS9, and FOX5 TV, Heinan is a trusted leader in the legal, technology, and business spaces. For more, www.optimalnetworks.com, 240-499-7900, or hlanda@optimalnetworks.com.

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Archives, Banking, Global Trade Daily

SentiLink Shares What Businesses Should Know About Synthetic Fraud in Exclusive Q&A

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In the following Q&A, we learn all things synthetic fraud, from risk mitigation to what businesses can do now to effectively combat this new challenge for global businesses.

What is synthetic fraud and how does it differ from fraud?

Synthetic fraud is a type of fraud where a falsified or manipulated identity is used to open consumer and business financial services accounts. It’s very different from ID theft because there’s no victim that comes forward to claim their identity has been stolen. As a result, synthetic identities go undetected for years. So, not only does synthetic fraud cost banks and lenders billions of dollars a year in losses, but these identities facilitate all sorts of criminal activities.

How is Sentilink revealing the risks of synthetic fraud (Through a report, through research, through other means)?

SentiLink offers several solutions that credit unions prevent synthetic fraud.

Synthetic Scores: SentiLink’s Synthetic Scores product indicates the likelihood that an identity is synthetic. Synthetic Scores are made available to clients via API or a user-friendly Dashboard.

Manifest – Manifest is the identity data leveraged by the machine learning algorithm that generates SentiLink’s Synthetic Scores. This dataset includes information from the credit bureau, utility records, the death master file, as well as phone and email data.  SentiLink enriches this identity data and makes it available in the Manifest product via API and the Dashboard. Clients can incorporate Manifest in their proprietary models or utilize the data to investigate individual cases via the Dashboard.

eCBSV – For the first time ever, it’s possible to validate Social Security numbers with the Social Security Administration’s database of SSNs in real-time using eCBSV. With applicant consent, financial institutions can send their applicants’ names, dates of birth, and SSNs to SentiLink via API and receive a match or no-match response within milliseconds. This service enables lenders who have historically required SSA-89 forms, such as mortgage lenders, to shave days off the loan origination process.

Why is synthetic fraud more of a risk to credit unions rather than to other establishments? 

To be clear, synthetic fraud is a risk to all financial institutions. But, some credit unions may think that the membership requirements to join are a deterrent to synthetic fraud. But, we’ve seen that fraudsters are able to become members and get loans from credit unions.

What could credit unions be doing that would help them lessen the risk of synthetic fraud?

There are several things credit unions can do:

Education is the first step. The Federal Reserve wrote 3 white papers on synthetic fraud that are very informative.

Pay special attention to the Social Security number of applicants applying. If the SSN was issued in a state where the applicant doesn’t have address history, this is a potential red flag. If the SSN was issued in a year that’s different than the date of birth, this is a potential red flag. It doesn’t necessarily mean a synthetic identity is being used to apply, but these are scenarios that potentially warrant additional verification. Validating the SSN using an SSA-89 form or eCBSV is a smart approach.

Labeling losses according to the type of fraud is also important. Knowing whether a loss was due to ID theft, synthetic fraud, and other types of fraud will enable a credit union to measure losses due to each type of fraud and learn how to recognize similar identities when they apply.

What are the 7 synthetic identities and how does it work/identify?

Perhaps I should clarify the statement, “1 in 7 synthetic identities has a credit line from a credit union.” SentiLink has tagged over 100,000 synthetic identities. We have a subset of these identities where we can see what financial institutions gave these fake consumers a loan. Our analysis showed that 1 in 7 of these synthetic identities had a loan from a credit union. The point we were trying to make is that credit unions are at risk for synthetic fraud just like other banks, fintechs, and lenders.

What do you mean by “tradeline from a credit union with balances 2/5X higher?

We looked at the loan size that credit unions issued to these synthetic identities and compared them to the loan size that they gave to non-synthetic identities and found that the balances issued to synthetic identities were significantly higher. So, the credit unions lost a lot more money when issuing loans to synthetic identities. This is another reason why credit unions should work to identify synthetic identities before they become members, so they don’t experience these losses.

What are the risks to a credit union in regard to synthetic fraud?

The risks are losses and compliance. As mentioned above, synthetic identities cause significant losses to financial institutions. But, there is also the regulatory requirement to Know Your Customer. KYC solutions can’t detect synthetic identities, and as regulators become more aware of this issue, their expectations around what constitutes appropriate KYC measures is likely to change. If credit unions are issuing loans to synthetic identities, they aren’t conducting appropriate due diligence to know their customer. Their ability to comply with KYC requirements will suffer if they don’t address synthetic fraud.

What are the warning signs that credit unions should pay attention to?

Certainly, upticks in losses can be a sign of increased synthetic fraud. But, also things like the same address being used frequently to apply for loans can be a sign that a group of fraudsters is attacking a credit union.

What do you see as the future of credit unions in relation to this type of fraud?

Synthetic fraud is going to be an issue for credit unions for the foreseeable future. Unlike id theft where fraudsters steal an identity and have to quickly take out a loan, take the money and move on, synthetic identities can be used over and over again for a very long period of time. And, synthetic identities are easy to create so it’s something credit unions are going to have to learn about in order to detect and stop them from impacting their business.

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Sarah Hoisington is head of Marketing at SentiLink, a fraud protection tech firm helping financial institutions and government agencies.

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Archives, Commentary, Global Trade Daily

Is It You Or An ID Thief? How AI Uses Document Verification To Keep You Safe.

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It’s a moment most people have experienced.

You’re required to show your ID for something and you wait as the person studies both your face and the photo on the driver’s license, passport, or another document, making sure you’re not an impersonator trying to pull a fast one.

These days, artificial intelligence is playing a role similar to that security person, with software that allows validation of IDs remotely through digital document verification. This way you can do business through your smartphone, and someone on the other end can make sure you’re who you say you are and that a thief hasn’t stolen your identity.

And that’s especially important at a time when identity theft has been on the rise, says Stephen Hyduchak, CEO of Aver (www.goaver.com), an identity-verification service.

“Fraudsters are getting creative, but so is technology,” Hyduchak says. “It’s important to keep up because there are so many ways to create fake documents that allow someone to claim to be you and maybe even get away with it.”

Hyduchak says there are a few categories of document fraud:

Illegitimate documents. These documents are completely false. They have characteristics such as missing holograms or other current standards that are essential parts of a legitimate version of that document.

False documents. This is a document that belongs to one person, but that another person tries to use in an effort to authenticate himself.

Modified documents. This is when an original document is altered. Hyduchak says the alterations can be caught with software that detects whether fonts and text match the originals.

How do fraudsters even get the ID documents to start with? Hyduchak says it’s a matter of data security breaches – and often a combination of more than one breach. He gives this example. Just recently, the cryptocurrency exchange Binance, using a third-party Know-Your-Customer (KYC) provider, was the victim of a hack that leaked over 10,000 photographs of purported Binance KYC data. This breach affected up to 60,000 people.

“On Binance, users buy and sell cryptocurrency, something that is privacy-centric by its very nature, but still vulnerable,” Hyduchak says. “Coupling leaks like this with major data breaches like Equifax and Target, our personal information can be manipulated for the fraud with some basic photoshop work.”

A digital verification process is one way to head off any subterfuge, Hyduchak says. For example, his company has a program that works this way: The user captures a picture of their ID or passport using their smartphone. The user then takes a selfie to verify they are the same person pictured on the ID or passport. Facial recognition software compares the images through algorithms.

“As time goes on,” Hyduchak says, “I think you are going to see digital facial checks become the standard for ID verification, and that will eliminate most types of fraud.”

_____________________________________________________________

Stephen Hyduchak is the CEO of Aver (www.goaver.com), an identity-verification service. Hyduchak worked in corporate finance for companies such as PRA Health Sciences before finding the entrepreneur bug. He began working on media and design for small businesses, which led him to consulting projects in the blockchain space, and eventually to founding Aver.