Ramblings & ephemera

Bruce Schneier on phishing

From Bruce Schneier’s “Phishing“:

Phishing, for those of you who have been away from the Internet for the past few years, is when an attacker sends you an e-mail falsely claiming to be a legitimate business in order to trick you into giving away your account info — passwords, mostly. When this is done by hacking DNS, it’s called pharming. …

In general, two Internet trends affect all forms of identity theft. The widespread availability of personal information has made it easier for a thief to get his hands on it. At the same time, the rise of electronic authentication and online transactions — you don’t have to walk into a bank, or even use a bank card, in order to withdraw money now — has made that personal information much more valuable. …

The newest variant, called “spear phishing,” involves individually targeted and personalized e-mail messages that are even harder to detect. …

It’s not that financial institutions suffer no losses. Because of something called Regulation E, they already pay most of the direct costs of identity theft. But the costs in time, stress, and hassle are entirely borne by the victims. And in one in four cases, the victims have not been able to completely restore their good name.

In economics, this is known as an externality: It’s an effect of a business decision that is not borne by the person or organization making the decision. Financial institutions have no incentive to reduce those costs of identity theft because they don’t bear them. …

If there’s one general precept of security policy that is universally true, it is that security works best when the entity that is in the best position to mitigate the risk is responsible for that risk.

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