(Prepared for Presentation at the 70th Conference of Commissioners of Police of Australasia and the Southwest Pacific Region, Canberra, 13 March 2000)
This paper provides an overview of computer-related crime. Nine varieties of crime are considered: theft of services; communications in furtherance of criminal conspiracies; information piracy; the dissemination of offensive materials (including extortion threats); electronic money laundering; electronic vandalism and terrorism; telemarketing fraud; illegal interception; and electronic funds transfer fraud.
Computer-related crime, like crime in general, may be explained by the conjunction of three factors, motivation, opportunity and the absence of capable guardianship. Motivations will vary depending on the nature of the crime in question, but may include, greed, lust, revenge, challenge or adventure. Opportunities are expanding dramatically with the rapid proliferation and penetration of digital technology. Significant challenges are posed by the transnational nature of much computer crime. The most appropriate strategies for the control of computer-related crime entails a mixture of law enforcement, technological and market-based solutions. Sigificant challenges arise from the transnational nature of much computer crime, and from the need for the law to keep abreast of developments in technology and their criminal exploitation.
Willie Sutton, a notorious American bank robber of a half century ago, was once asked why he persisted in robbing banks. “Because that’s where the money is,” he is said to have replied. The theory that crime follows opportunity has become established wisdom in criminology; opportunity reduction has become one of the fundamental principles of crime prevention.
But there is more to crime than opportunity. Crime requires a pool of motivated offenders, and a lack of what criminologists would refer to as “capable guardianship”; someone to mind the store, so to speak.
These basic principles of criminology apply to computer related crime no less than they do to bank robbery or to shop lifting. They will appear from time to time throughout the following discussion. Not all of these factors are amenable to control by governments alone. It follows, therefore, that a variety of institutions will be required to control computer related crime.
This paper discusses current and emerging forms of computer-related illegality. It reviews nine generic forms of illegality involving information systems as instruments or as targets of crime.
It will also discuss issues arising from the global reach of information systems. It is trite to describe the ways in which computers have, figuratively speaking, made the world a smaller place. The corresponding potential for trans-jurisdictional offending will pose formidable challenges to law enforcement. For some crimes, this will necessitate a search for alternative solutions.
The following pages will suggest that much computer-related illegality lies beyond the capacity of contemporary law enforcement and regulatory agencies alone to control, and that security in cyberspace will depend on the efforts of a wide range of institutions, as well as on a degree of self-help by potential victims of cyber-crime.
The ideal configuration may be expected to differ, depending upon the activity in question, but is likely to entail a mix of law enforcement, technological and market solutions. The paper will conclude with a discussion of the most suitable institutional configuration to address those forms of computer-related crime which have been identified.
Before we begin to review the various forms of criminality involving information systems as instruments and/or as targets, and the most appropriate means of controlling them, let us first look at the questions of motivation and of opportunity.
The motivations of those who would commit computer related crime are diverse, but hardly new. Computer criminals are driven by time-honoured motivations, the most obvious of which are greed, lust, power, revenge, adventure, and the desire to taste “forbidden fruit”. The ability to make an impact on large systems may, as an act of power, be gratifying in and of itself. The desire to inflict loss or damage on another may also spring from revenge, as when a disgruntled employee shuts down an employer’s computer system, or to ideology, as when one defaces the web page of an institution that one regards as abhorrent. Much activity on the electronic frontier entails an element of adventure, the exploration of the unknown. The very fact that some activities in cyberspace are likely to elicit official condemnation is sufficient to attract the defiant, the rebellious, or the irresistibly curious. Given the degree of technical competence required to commit many computer-related crimes, there is one other motivational dimension worth noting here. This, of course, is the intellectual challenge of mastering complex systems.
None of the above motivations is new. The element of novelty resides in the
unprecedented capacity of technology to facilitate acting on these motivations.
Recent and anticipated changes in technology arising from the convergence of communications and computing are truly breathtaking, and have already had a significant impact on many aspects of life. Banking, stock exchanges, air traffic control, telephones, electric power, and a wide range of institutions of health, welfare, and education are largely dependent on information technology and telecommunications for their operation. We are moving rapidly to the point where it is possible to assert that “everything depends on software” (Edwards 1995). The exponential growth of this technology, the increase in its capacity and accessibility, and the decrease in its cost, has brought about revolutionary changes in commerce, communications, entertainment, and also crime. Along with this greater capacity, however, comes greater vulnerability. Information technology has begun to provide criminal opportunities of which Willie Sutton would never have dreamed.
Statistics on computer use and connectivity are notoriously evanescent. They are out of date before they appear in print. Suffice it to say that the number of people with internet connections will continue to increase dramatically, as will the volume of electronic commerce in Australia, and around the world.
Not only does the increasing connectivity increase the number of prospective victims of computer related crime, it also increases the number of prospective offenders.
The variety of criminal activity which can be committed with or against information systems is surprisingly diverse. Some of these are not really new in substance; only the medium is new. Others represent new forms of illegality altogether.
The following generic forms of illegality involve information systems as instruments and/or as targets of crime. These are not mutually exclusive, nor is the following list necessarily exhaustive.
A. THEFT OF TELECOMMUNICATIONS SERVICES
The “phone phreakers” of three decades ago set a precedent for what has become a major criminal industry. By gaining access to an organisation’s telephone switchboard (PBX) individuals or criminal organisations can obtain access to dial-in/dial-out circuits and then make their own calls or sell call time to third parties (Gold 1999). Offenders may gain access to the switchboard by impersonating a technician, by fraudulently obtaining an employee’s access code, or by using software available on the internet. Some sophisticated offenders loop between PBX systems to evade detection. Additional forms of service theft include capturing “calling card” details and on-selling calls charged to the calling card account, and counterfeiting or illicit reprogramming of stored value telephone cards.
It has been suggested that as long ago as 1990, security failures at one major telecommunications carrier cost approximately £290 million, and that more recently, up to 5% of total industry turnover has been lost to fraud (Schieck 1995: 2-5; Newman 1998). Costs to individual subscribers can also be significant In one case, computer hackers in the United States illegally obtained access to Scotland Yard’s telephone network and made £620,000 worth of international calls for which Scotland Yard was responsible (Tendler and Nuttall 1996).
B. COMMUNICATIONS IN FURTHERANCE OF CRIMINAL CONSPIRACIES
Just as legitimate organisations in the private and public sectors rely upon information systems for communications and record keeping, so too are the activities of criminal organisations enhanced by technology.
There is evidence of telecommunications equipment being used to facilitate organised drug trafficking, gambling, prostitution, money laundering, child pornography and trade in weapons (in those jurisdictions where such activities are illegal). The use of encryption technology may place criminal communications beyond the reach of law enforcement.
The use of computer networks to produce and distribute child pornography has become the subject of increasing attention. Today, these materials can be imported across national borders at the speed of light (Grant, David and Grabosky 1997). The more overt manifestations of internet child pornography entail a modest degree of organisation, as required by the infrastructure of IRC and WWW, but the activity appears largely confined to individuals.
By contrast, some of the less publicly visible traffic in child pornography activity appears to entail a greater degree of organisation. Although knowledge is confined to that conduct which has been the target of successful police investigation, there appear to have been a number of networks which extend cross-nationally, use sophisticated technologies of concealment, and entail a significant degree of coordination.
Illustrative of such activity was the Wonderland Club, an international network with members in at least 14 nations ranging from Europe, to North America, to Australia. Access to the group was password protected, and content was encrypted. Police investigation of the activity, codenamed “Operation Cathedral” resulted in approximately 100 arrests around the world, and the seizure of over 100,000 images in September, 1998.
C. TELECOMMUNICATIONS PIRACY
Digital technology permits perfect reproduction and easy dissemination of print, graphics, sound, and multimedia combinations. The temptation to reproduce copyrighted material for personal use, for sale at a lower price, or indeed, for free distribution, has proven irresistable to many.
This has caused considerable concern to owners of copyrighted material. Each year, it has been estimated that losses of between US$15 and US$17 billion are sustained by industry by reason of copyright infringement (United States, Information Infrastructure Task Force 1995, 131).
The Software Publishers Association has estimated that $7.4 billion worth of software was lost to piracy in 1993 with $2 billion of that being stolen from the Internet (Meyer and Underwood 1994).
Ryan (1998) puts the cost of foreign piracy to American industry at more than $10 billion in 1996, including $1.8 billion in the film industry, $1.2 billion in music, $3.8 billion in business application software, and $690 million in book publishing.
According to the Straits Times (8/11/99) A copy of the most recent James Bond Film The World is Not Enough, was available free on the internet before its official release.
When creators of a work, in whatever medium, are unable to profit from their creations, there can be a chilling effect on creative effort generally, in addition to financial loss.
D. DISSEMINATION OF OFFENSIVE MATERIALS
Content considered by some to be objectionable exists in abundance in cyberspace. This includes, among much else, sexually explicit materials, racist propaganda, and instructions for the fabrication of incendiary and explosive devices. Telecommunications systems can also be used for harassing, threatening or intrusive communications, from the traditional obscene telephone call to its contemporary manifestation in “cyber-stalking”, in which persistent messages are sent to an unwilling recipient.
One man allegedly stole nude photographs of his former girlfriend and her new boyfriend and posted them on the Internet, along with her name, address and telephone number. The unfortunate couple, residents of Kenosha, Wisconsin, received phone calls and e-mails from strangers as far away as Denmark who said they had seen the photos on the Internet. Investigations also revealed that the suspect was maintaining records about the woman’s movements and compiling information about her family (Spice and Sink 1999).
In another case a rejected suitor posted invitations on the Internet under the name of a 28-year-old woman, the would-be object of his affections, that said that she had fantasies of rape and gang rape. He then communicated via email with men who replied to the solicitations and gave out personal information about the woman, including her address, phone number, details of her physical appearance and how to bypass her home security system. Strange men turned up at her home on six different occasions and she received many obscene phone calls. While the woman was not physically assaulted, she would not answer the phone, was afraid to leave her home, and lost her job (Miller 1999; Miller and Maharaj 1999).
One former university student in California used email to harass 5 female students in 1998. He bought information on the Internet about the women using a professor’s credit card and then sent 100 messages including death threats, graphic sexual descriptions and references to their daily activities. He apparently made the threats in response to perceived teasing about his appearance (Associated Press 1999a).
Computer networks may also be used in furtherance of extortion. The Sunday Times (London) reported in 1996 that over 40 financial institutions in Britain and the United States had been attacked electronically over the previous three years. In England, financial institutions were reported to have paid significant amounts to sophisticated computer criminals who threatened to wipe out computer systems. (The Sunday Times, June 2, 1996). The article cited four
incidents between 1993 and 1995 in which a total of 42.5 million Pounds Sterling were paid by senior executives of the organisations concerned, who were convinced of the extortionists' capacity to crash their computer systems (Denning 1999 233-4).
One case, which illustrates the transnational reach of extortionists, involved a number of German hackers who compromised the system of an Internet service provider in South Florida, disabling eight of the ISPs ten servers. The offenders obtained personal information and credit card details of 10,000 subscribers, and, communicating via electronic mail through one of the compromised accounts, demanded that US$30,000 be delivered to a mail drop in Germany. Co-operation between US and German authorities resulted in the arrest of the extortionists (Bauer 1998).
More recently, an extortionist in Eastern Europe obtained the credit card details of customers of a North American based on-line music retailer, and published some on the Internet when the retailer refused to comply with his demands (Markoff 2000).
E. ELECTRONIC MONEY LAUNDERING AND TAX EVASION
For some time now, electronic funds transfers have assisted in concealing and in moving the proceeds of crime. Emerging technologies will greatly assist in concealing the origin of ill-gotten gains. Legitimately derived income may also be more easily concealed from taxation authorities. Large financial institutions will no longer be the only ones with the ability to achieve electronic funds transfers transiting numerous jurisdictions at the speed of light. The development of informal banking institutions and parallel banking systems may permit central bank supervision to be bypassed, but can also facilitate the evasion of cash transaction reporting requirements in those nations which have them. Traditional underground banks, which have flourished in Asian countries for centuries, will enjoy even greater capacity through the use of telecommunications.
With the emergence and proliferation of various technologies of electronic commerce, one can easily envisage how traditional countermeasures against money laundering and tax evasion may soon be of limited value. I may soon be able to sell you a quantity of heroin, in return for an untraceable transfer of stored value to my “smart-card”, which I then download anonymously to my account in a financial institution situated in an overseas jurisdiction which protects the privacy of banking clients. I can discreetly draw upon these funds as and when I may require, downloading them back to my stored value card (Wahlert 1996).
F. ELECTRONIC VANDALISM, AND TERRORISM
As never before, western industrial society is dependent upon complex data processing and telecommunications systems. Damage to, or interference with, any of these systems can lead to catastrophic consequences. Whether motivated by curiosity or vindictiveness electronic intruders cause inconvenience at best, and have the potential for inflicting massive harm (Hundley and Anderson 1995, Schwartau 1994).
While this potential has yet to be realised, a number of individuals and protest groups have hacked the official web pages of various governmental and commercial organisations (Rathmell 1997). http://www.2600.com/hacked_pages/ (visited 4 January 2000). This may also operate in reverse: early in 1999 an organised hacking incident was apparently directed at a server which hosted the Internet domain for East Timor, which at the time was seeking its independence from Indonesia (Creed 1999).
Defence planners around the world are investing substantially in information warfare-- means of disrupting the information technology infrastructure of defence systems (Stix 1995). Attempts were made to disrupt the computer systems of the Sri Lankan Government (Associated Press 1998), and of the North Atlantic Treaty Organization during the 1999 bombing of Belgrade (BBC 1999).
G. SALES AND INVESTMENT FRAUD
As electronic commerce becomes more prevalent, the application of digital technology to fraudulent endeavours will be that much greater. The use of the telephone for fraudulent sales pitches, deceptive charitable solicitations, or bogus investment overtures is increasingly common. Cyberspace now abounds with a wide variety of investment opportunities, from traditional securities such as stocks and bonds, to more exotic opportunities such as coconut farming, the sale and leaseback of automatic teller machines, and worldwide telephone lotteries (Cella and Stark 1997 837-844). Indeed, the digital age has been accompanied by unprecedented opportunities for misinformation. Fraudsters now enjoy direct access to millions of prospective victims around the world, instantaneously and at minimal cost.
H. ILLEGAL INTERCEPTION OF TELECOMMUNICATIONS
Developments in telecommunications provide new opportunities for electronic eavesdropping. From activities as time-honoured as surveillance of an unfaithful spouse, to the newest forms of political and industrial espionage, telecommunications interception has increasing applications. Here again, technological developments create new vulnerabilities. The electromagnetic signals emitted by a computer may themselves be intercepted. Cables may act as broadcast antennas. Existing law does not prevent the remote monitoring of computer radiation.
It has been reported that the notorious American hacker Kevin Poulsen was able to gain access to law enforcement and national security wiretap data prior to his arrest in 1991 (Littman 1997).