There are many companies that choose to ignore the risks associated with computer crime and, even worse, ignore the wonderful defensive tools that are available. Lisa mentioned Pseudo-One, but they are only one example. I spent the remainder of our dinner conversation blasting the policies of Pseudo-One. After all, it was precisely to set such companies straight that I had chosen to take such an aggressive (and illegal) approach to EFT research.
Founded in 1994, Pseudo-One Incorporated provides a general shopping service over the Internet. The company is moving forward at full-steam with very little consideration for security. I have seen numerous posts on Usenet where the founders of the fledgling company make reckless comments about security, not to mention quotes in the print media that clearly express the company position. These comments point out that security is not equivalent to encryption, which is true enough. Security is a broader issue than encryption alone. Security includes encryption, but it also includes integrity, access control, policy, usage guidelines, and numerous other issues. This does not mean that security can be completely dismissed as a requirement for Electronic Commerce. Yet, strangely, this is what Pseudo-One executives seem to believe is a logical consequence of the limited scope of encryption. The non-sequiter leaves no room for rebuttal.
Many people don't understand cryptology and wrongly assume that it can only be used to exchange secret messages and therefore is limited to spying. They incorrectly believe that if secrecy is not critical to their application then they have no use for cryptography.
On the Internet, when no special precautions are taken, it is quite easy for an impersonator to go undetected. IP-spoofing is not hard and several techniques are widely known. The Internet protocol, IPv4, has no support for authentication. Every packet contains the IP address of the source, but there is absolutely nothing to prevent a hacker from changing that address.
The Internet is uncontrolled and entirely insecure. Pseudo-One spokes-people readily admit this and even distribute information to advance this claim. Pseudo-One seems to have adopted the position that because the Internet is so prone to dishonest behavior, there is little point in trying to stem the tide. But to take this attitude is to completely overlook the power of the tools readily available today. Recent advances in cryptology have put the cryptographers at a clear advantage over the cryptanalysts. The cryptographer, acting in a defensive posture to protect information, has stronger algorithms available to him than the cryptanalyst, acting in an offensive posture attempting to crack those algorithms. There are several algorithms that are publicly known for which there are no known attacks that come close to cracking the algorithms. Moreover, these algorithms come in various forms and are extremely easy to implement, allowing one to achieve various design requirements. They can be used to protect data from eavesdropping, to protect data from tampering, to exchange keys, to produce digital signatures, to produce digital finger-prints, etc. To ignore these useful tools and instead rely upon a policy of ``hang on and pray for the best'' is to do a disservice to one's customers.
Part of the reason that Pseudo-One has been as successful as they have is that they guarantee financial protection to their customers. If there is any breach in security (not a very big ``if'' by the way), then Pseudo-One will bear the cost. To limit their own risk, Pseudo-One buys insurance. In the target-rich environment of the Internet, this is a reasonable business strategy. With so many targets for hackers to choose from, what are the odds of Pseudo-One being singled out?
Well, the odds are frightening when one considers that 20% of Internet sites had security breaches in the past year, and 30% of those were after firewalls were installed.
The fatalistic acceptance of a dangerous situation, taking comfort in the safety of numbers, is the same approach taken by the rabbit Cowslips and his followers in the story Watership Down. Hazel, Bigwig, Fiver, and the other rabbits of Watership Down had the sense to leave Cowslips' warren and seek a better existence. The lathargic and defeatist path taken by Cowslips was foreign to the thinking of the more enterprising and pioneering spirit of Hazel's rabbits. One hopes that Pseudo-One has as much trouble attracting new followers as Cowslips did. Why? Mainly because the ``hang on and pray'' approach has inherent inefficiencies. These inefficiencies lead to greater costs which ultimately must be born by both consumers and merchants. And there is no need for it. Instead of paying a middle-man to redistribute costs evenly over the entire market whenever there is an attack, why not simply prevent such attacks in the first place? Too expensive? Nope, less expensive; there is now a tight upper bound on the damages --- not only a bound on the damages for any one individual, but also a limit on the damages for the entire industry.
The ``hang on and pray'' attitude works well for lawyers and insurance agents, but what about consumers? If one company on the Internet is hit with a major loss due to a hacker, that particular company loses and the other companies all breath a sigh of relief, but as a group, consumers lose any time any company is hit.
In press releases, Pseudo-One does a nice job of pointing out the vulnererabilities to commerce over the Internet:
Because the problem seems insurmountable, the company has thrown in the towel and opted for the inefficient solution. Better to have an inefficient solution than to completely forgo electronic commerce. Yet, anybody that has studied modern cryptology knows that privacy, integrity, authenticity, and accountability are all properties that can be achieved, provided one is careful and makes proper use of the science of cryptology.
There is no need to rely upon an e-mail call-back feature, which has very little value, and claim that this is sufficient, all the while complaining that the Internet is a hostile environment that cannot be trusted with sensitive information in any form. To state that any information that is too sensitive to appear in the clear on the Internet is also too sensitive to appear in encrypted form, is to completely ignore hundreds of years of science in cryptology, and to ignore the past couple of decades in particular. In the years following the second World War, advances in cryptology have paralleled advances in complexity theory. As mathematicians and computer scientists have learned to better qualify and measure the complexity of mathematical problems and algorithms, they have been able to apply this to cryptology so that today we can qualify, in a meaningful and precise way, the difficulty in cracking a given encryption algorithm. Thus, when we refer to ``strong'' cryptography, we have a formal definition behind the phrase. Therefore, given an encryption scheme, complete with key lengths and a message protocol, it is quite reasonable to make qualitative and even quantitative statements about the level of confidence in the scheme.
Certainly there are examples of data that is too sensitive to be sent in the clear over the Internet and yet can be exchanged with confidence in a well-studied and well-understood cryptographic system. The emerging credit-card payment system is an example. Nobody would place their credit-card number in the clear on the net (unless they are quite naive) yet there is reason to believe that the Secure Electronic Transactions (SET) protocol will do an adequate job of protecting such information.
Provided I have ample opportunity to study the encryption program, and know that others more knowledgeable than I have also studied it, and provided I am confident that the system has safeguards from viruses and poor management policies, I would trust modern cryptographic methods with my (small) fortune. Because SET, IPv6, and other Internet security protocols are open to public inspection, I have good reason to trust them. This is why I become frustrated when companies like Pseudo-One turn their backs to these protocols, and furthermore, preach to the general public that the problem is unsolvable. This last stance is fraudulent. I explained to Lisa that this, more than anything else, is what drove me to take it upon myself to study electronic commerce and the protocols that support it: my goal is to demonstrate the feasibility of strong security on the Internet. If corporate America is unwilling to pay for strong security, however economical it may be, then I will work from the ``outside'', learning about electronic commerce through passive eavesdropping. Mostly passive anyway; I was forced to agree when Lisa reminded me that I had copied and re-inserted messages into the transaction stream between two banks.
I did my best to control my emotions as I continued to vent my feelings. It is not just Psuedo-one that spurns modern cryptographic solutions. Most corporations, large and small, while claiming to be concerned, take the same stance. The position adopted by by these companies is naive and ignorant at best; callous and disrespectful at worst.
Telephone companies are an excellant example. Every year millions of dollars are spent monitoring cell-phone usage patterns in an effort to recognize a cloned phone. When there is a sudden change in the calling pattern, the cell-phone company discontinues the service on that phone. The customer is forced to bring his or her phone into a service center to have the phone reprogrammed for a different phone number. Then the customer must notify all his or her friends and business associates that the number has changed. Then, if the phone actually was cloned, when the phone bill arrives it is usually for some astronomical amount. The customer is typically asked to pay the bill until the matter can be ``sorted out'', at which point a credit is issued.
Wouldn't it be better if the phone companies would simply prevent the cloning in the first place? It would cost less money to implement a strong security protocol than it costs to develop and maintain the current ``solution.'' There are costs associated with developing and maintaining the call-monitoring software, reprogramming phones suspected of cloning, managing the reimbursements for cloned phones, and handling all the customer questions over outragious bills for cloned phones. The situation is made worse by the ease with which the phones can be cloned. The result is that a typical customer must go through this nonsense several times (before he or she gets fed up and discontinues the service).
As consumers we deserve better. There is no excuse for a company actively involved in Electronic Commerce or telecomunications not to employ affordable technology to remove barriers to efficient markets and deliver the level of security consumers expect. To misrepresent the situation and inform customers that greater security cannot be achieved is simply wrong.
There was a time when the US automobile company claimed that greater safety could not be delivered in reasonably priced automobiles. We now know this is not true. We also see the fallacy in the argument that, because an automobile cannot be made so that a head-on collision into a brick wall at 85 mph is survivable, there is little point in building in any safety features. We recognize that while consumers must accept some risk, this is no reason to completely do away with all safety. An 85 mph collision might be fatal, but a 35 mph collision shouldn't be. Similarly, while it is true that some data may be too sensitive to be put on the Internet in any form, certainly there is some data that, while too sensitive to be put on the net in the clear, is not too sensitive to transmit in encrypted form.
Pseudo-One is right to recognize that absolute security is not possible, but as consumers we deserve those protections that can be delivered at reasonable cost. Happily, ample security is achievable at very low cost.