New research: The underground market fueling for-profit abuse

Posted by Kurt Thomas and Elie Bursztein, Google Anti-Fraud and Abuse Research

Recently, we teamed up with top researchers exploring innovative anti-abuse strategies to build a holistic understanding of for-profit abuse. The full report, which you can read here, was presented in June at the Workshop on the Economics of Information Security 2015.

Over the last decade, Internet crime has matured into an underground economy where a large number of globally distributed criminals trade in data, knowledge, and services specifically geared towards defrauding users and businesses. Within this black market, criminals buy and sell compromised machines, scam hosting, exploit kits, and wholesale access to pilfered user records including usernames and passwords, credit card numbers, and other sensitive personal data. The availability of such specialized resources has transformed for-profit abuse into a cooperative effort among criminals each satisfying a cog in a supply chain.
Profiting from abuse: a bird's eye view

Here’s an example of the underground value chain required to make money from spamming knock-off luxury products:

In aggregate, the problem may appear intractable to stop. However, if we view this scenario in an economic light, then increasing the cost of fake accounts, phone numbers, or compromised websites cuts into the profitability of abuse. In the end, abuse propped up by cost-ineffective resources will crumble.

Collaborating to better understand the underground

Given the complex underbelly of abuse, we pulled together experts from industry and academia to build a systematic understanding of how criminals operate. Our previous example represents just one configuration of a value chain. In our example, revenue originates solely from victims buying counterfeit products. Criminals could adapt this strategy to scam users into paying for fake anti-virus, defraud advertisers via clickbots, or liquidate a victim’s banking assets. Regardless of the composition, we argue there is always a profit center through which victims transfer new capital into the underground. These schemes form a spectrum between selling products to unwitting victims to outright theft. A medley of alternatives such as dating scams, call-center scams, premium SMS fraud, DDoS extortion, or even stealing and re-selling gaming assets all fall within this spectrum and ultimately derive a payout from victims outside the underground.

These profit centers are in turn propped up by an ecosystem of support infrastructure that can be configured arbitrarily by criminals per their requirements. This infrastructure includes compromised hosts, human labor, networking and hosting, and accounts and engagement—all available for a fee. For example, 1,000 Google accounts cost on the order of $170, compared to CAPTCHAs which cost $1 per thousand. These costs reflect socio-economic factors as well as the impact of technical, legal, and law enforcement interventions on the availability of resources.
Redefining the abuse arms race
Client and server-side security has dominated industry’s response to digital abuse over the last decade. The spectrum of solutions—automated software updates, personal anti-virus, network packet scanners, firewalls, spam filters, password managers, and two-factor authentication to name a few—all attempt to reduce the attack surface that criminals can penetrate.

While these safeguards have significantly improved user security, they create an arms race: criminals adapt or find the subset of systems that remain vulnerable and resume operation. To overcome this reactive defense cycle, we are improving our approach to abuse fighting to also strike at the support infrastructure, financial centers, and actors that incentivize abuse. By exploring the value chain required to bulk register accounts, we were able to make Google accounts 30–40% more expensive on the black market.

Success stories from our academic partners include disrupting payment processing for illegal pharmacies and counterfeit software outlets advertised by spam, cutting off access to fake accounts that pollute online services, and disabling the command and control infrastructure of botnets.