04-1 E-commerce Security slides

e-commerce
business. technology. society.

eighth edition

Kenneth C. Laudon
Carol Guercio Traver

Copyright © 2012 Pearson Education

Chapter 4
E-commerce Security and
Payment Systems

Copyright © 2012 Pearson Education

1

Cyberwar: Mutually Assured Destruction (MAD)
Class Discussion

What is the difference between hacking and
cyberwar?
Cyberwar is much more serious treat to infrastructure of entire nation
Why has cyberwar become more potentially
devastating in the past decade?
Because highly developed nations has relied more on the Internet
for business, government, and industrial and utility controls
What percentage of computers have been
compromised by stealth malware programs?
10%
Will a political solution to MAD 2.0 be effective
enough?
Probably not
Copyright © 2012 Pearson Education Slide 4-3

Computer-generated Simulation of a DDoS Attack


2

Learning Objectives
Understand the scope of e-commerce crime and security
problems
Describe the key dimensions of e-commerce security
Understand the tension between security and other values
Identify the key security threats in the e-commerce
environment
Describe how technology helps protect the security of
messages sent over the Internet
Identify the tools used to establish secure Internet
communications channels and protect networks, servers, and
clients
Appreciate the importance of policies, procedures, and laws in
creating security



3

The E-commerce Security Environment
Overall size and losses of cybercrime
unclear
Reporting issues
2011 CSI survey: 46% of respondent
firms detected breach in last year
Underground economy marketplace:
Stolen information stored on underground
economy servers


Types of
Attacks
Against
Computer
Systems
(Cybercrime)

Figure 4.1, Page 246
SOURCE: Based on data from
Computer Security Institute,
2011

4


What Is Good E-commerce Security?
To achieve highest degree of security
New technologies
Organizational policies and procedures
Industry standards and government laws
Other factors
Time value of money
Cost of security vs. potential loss
Security often breaks at weakest link


5

The E-commerce Security Environment


Dimensions of E-commerce Security
Integrity: ability to ensure that information being displayed
on a Web site or transmitted/received over the Internet has
not been altered in any way by an unauthorized party
Nonrepudiation: ability to ensure that e-commerce
participants do not deny (repudiate) online actions
Authenticity: ability to identify the identity of a person or
entity with whom you are dealing on the Internet
Confidentiality: ability to ensure that messages and data are
available only to those authorized to view them
Privacy: ability to control use of information a customer
provides about himself or herself to merchant
Availability: ability to ensure that an e-commerce site
continues to function as intended

6

Table 4.3, Page 250

The Tension Between Security and
Other Values
Security vs. Ease of use:
The more security measures added, the more
difficult a site is to use, and the slower it becomes
Too much security can harm profitability, while not
enough security can put you out of business
Public safety and criminal uses of the
Internet
Use of technology by criminals to plan crimes or
threaten nation-state
The Internet is both anonymous and pervasive, an
ideal communication tool for criminal and terrorist
groups

7

Security Threats in the
E-commerce Environment
Three key points of vulnerability in
e-commerce environment:
1. Client
2. Server
3. Communications pipeline (Internet
communications channels)

A Typical E-commerce Transaction


8

Vulnerable Points in an E-commerce Transaction


Most Common Security Threats in the
E-commerce Environment
Malicious code
Viruses
Worms
Trojan horses
Bots, botnets
Unwanted programs
Browser parasites
Adware
Spyware


9

Malicious Code
Viruses:
Replicate and spread to other files; most deliver
“payload” (destructive or benign)
Macro viruses, file-infecting viruses, script viruses
Worms:
Designed to spread from computer to computer
Can replicate without being executed by a user or
program like virus
Trojan horse:
Appears benign, but does something other than expected
Bots:
Covertly installed on computer; respond to external
commands sent by attacker to create a network of
compromised computers for sending spam, generating a
DDoS attack, and stealing info from computers


10


Unwanted Programs
Installed without user’s informed
consent
Browser parasites
Can monitor and change settings of a user’s browser

Adware
Calls for unwanted pop-up ads

Spyware
Can be used to obtain information, such as a user’s
keystrokes, e-mail, IMs, etc.


11

Most Common Security Threats (cont.)
Social engineering
Phishing
Deceptive online attempt to obtain confidential
information
E-mail scams
Spoofing legitimate Web sites
Use of information to commit fraudulent acts (access
checking accounts), steal identity


Phishing Mail Example


12


Hacking
Hackers: Individual who intends to gain unauthorized
access to computer systems
Crackers: Hacker with criminal intent
Types of hackers:
White hats – hired by corporate to find weaknesses in the firm’s
computer system
Black hats – hackers with intention of causing harm
Grey hats – hackers breaking in and revealing system flaws
without disrupting site or attempting to profit from their finds.
Cybervandalism:
Intentionally disrupting, defacing, destroying Web site
Data breach
When organizations lose control over corporate
information to outsiders

13

Credit Card Fraud
Fear of stolen credit card information deters online
purchases
US’s federal law limits liability of individuals to $50
for a stolen credit card
Hackers target credit card files and other customer
information files on merchant servers; use stolen
data to establish credit under false identity
Online companies at higher risk than offline due to
difficulty of guarenteeing true identity of customers
“E-Sign” law giving digital signatures same authority
as hand-written ones applies only to large
corporations, but not to B2C e-commerce

Spoofing (Pharming) and Spam (Junk) Web Sites
Spoofing (Pharming)
Misrepresenting oneself by using fake e-mail addresses or
masquerading as someone else
Spoofing a Web site is called “pharming,” redirecting a Web
link to another IP address different from the real one
Threatens integrity (steal business from true site, or alter
orders and send to true site), and authenticity (difficult to
distinguish between true and fake Web address)
Carried out by hacking local DNS servers
Spam (Junk) Web sites
Collection of advertisements for other sites, some of which
containing malicious code
Appears on search results, hiding their identities by using
domain names similar to legitimate ones, and redirecting
traffic to spammer domains, e.g., topsearch10.com

14

DoS and DDoS Attacks
Denial of service (DoS) attack
Hackers flood Web site with useless traffic to
inundate and overwhelm network

Use of bot networks built from hundreds of
compromised workstations

Distributed denial of service (DDoS) attack
Hackers use multiple computers to attack target
network from numerous launch points
Microsoft and Yahoo have experienced such attacks


Denial of Service
Ping Flooding
Attacker sends a flood of pings to the intended
victim
The ping packets will saturate the victim’s
bandwidth
Internet

Attacking System(s)

SOURCE: PETER SHIPLEY Victim System

15

Denial of Service
SMURF ATTACK
Uses a ping packet with two extra twist
Attacker chooses an unwitting victim
Spoofs the source address
Sends request to network in broadcast mode
ICMP = Internet Control
Message Protocol
INTERNET
1 SYN
PERPETRATOR
VICTIM

10,000 SYN/ACKs -- VICTIM IS DEAD
INNOCENT
REFLECTOR SITES

BANDWIDTH MULTIPLICATION:
A T1 (1.54 Mbps) can easily
yield 100 MBbps of attack

ICMP echo (spoofed source address of victim)
sent to IP broadcast address
ICMP echo reply
Copyright © 2012 Pearson Education SOURCE: 4-33
Slide CISCO

DDoS Attack Illustrated
Hacker
1 Hacker scans Unsecured Computers
Internet for
unsecured systems
that can be
compromised

Internet

Scanning
Program


16

Hacker
Zombies

2 Hacker secretly
installs zombie
agent programs, Internet
turning unsecured
computers into
zombies


Hacker
Zombies
Master
Server

3 Hacker selects Internet
a Master Server to
send commands to
the zombies


17

Hacker
Zombies
Master
Server

4 Using client Internet
program, hacker sends
commands to Master
Server to launch zombie Targeted
attack against a System
targeted system

Hacker
Zombies
Master
Server

5 Master Server Internet
sends signal to
zombies to launch
attack on targeted Targeted
system System


18

Hacker
Zombies
Master
Server

6 Targeted system is
overwhelmed by bogus
requests that shut it Internet
down for legitimate
users
Targeted
Request Denied System

User

Sniffing
Eavesdropping program that monitors information traveling
over a network
Insider jobs: Single largest financial threat
Poorly designed server and client software
Due to increase in complexity and size of OS, application
software, and browsers
Social network security
Social engineering attacks tempting visitors to FB pages to
click on “bad-behavior” links
Mobile platform threats
Same risks as any Internet device
Malware, botnets, vishing/smishing [discuss on textbook]

19

Technology Solutions
Protecting Internet communications
Encryption
Securing channels of communication
SSL, S-HTTP, VPNs
Protecting networks
Firewalls
Protecting servers and clients


Tools Available to
Achieve Site
Security


20

Encryption
Encryption
Transforms plain text data into cipher text readable only by
sender and receiver
Purpose: Secures stored information and information
transmission
Provides 4 of 6 key dimensions of e-commerce security:
Message integrity – assurance that message hasn’t been
altered
Nonrepudiation – prevents user from denying sending
the message
Authentication – verification of identity of person
(computer) sending the msg
Confidentiality – assurance that msg. was not read by
others

Symmetric Key Encryption
Also known as secret key encryption
Sender and receiver use same digital key to encrypt and
decrypt message
Requires different set of keys for each transaction
Strength of encryption
Length of binary key used to encrypt data
Advanced Encryption Standard (AES)
Most widely used symmetric key encryption
Uses 128-, 192-, and 256-bit encryption keys
Other standards use keys with up to 2,048 bits


21

Symmetric Encryption and Decryption

© 2004 D. A. Menascé. AllPearson Education
Copyright © 2012 Rights Reserved. Slide 4-46

Public Key Encryption
Solves symmetric key encryption problem of having to
exchange secret key
Uses two mathematically related digital keys
Public key (widely disseminated)
Private key (kept secret by owner)

Both keys used to encrypt and decrypt message
Once key used to encrypt message, same key cannot be
used to decrypt message
E.g., Sender uses recipient’s public key to encrypt
message; recipient uses private key to decrypt it

22

Public Key Encryption and Decryption


Public Key Cryptography: A Simple Case


23

Public Key Encryption using Digital
Signatures and Hash Digests
Public key encryption provides confidentiality, but not
authentication, integrity, and non-repudiation
Hash function:
Mathematical algorithm that produces fixed-length number called
message or hash digest
Hash digest of message sent to recipient along with
message to verify integrity
Hash digest and message encrypted with recipient’s
public key
Entire cipher text then encrypted with sender’s private
key—creating digital signature—for authenticity, non-
repudiation

Message Digest

Message
Message Digest 101…1010
Function Small
Large (e.g., 128 bits)


24

Message Digest

A Digest A
Message
Digest
Function
B Digest B

If A =B => Digest A = Digest B

Message Digest

Message
? Digest Digest A
Function

Extremely hard to get A from Digest A!

25

Public Key Cryptography with Digital Signatures


Digital Envelopes
Address weaknesses of:
Public key encryption
Computationally slow, decreased transmission speed, increased
processing time
Symmetric key encryption
Computationally faster, but less secure due to insecure
transmission lines
Uses more efficient symmetric key encryption to
encrypt document
Uses public key encryption to encrypt symmetric
key and send the encrypted key (digital
envelope) and encrypted document to the
recipient

26

Creating a Digital Envelope


Digital Certificates and
Public Key Infrastructure (PKI)
Still missing a way to verify identity of Web sites
By using digital document issued by a trusted third
party called certificate authority (CA)
Digital certificate includes:
Name of subject/company
Subject’s public key
Digital certificate serial number
Expiration date, issuance date
Digital signature of CA
Public Key Infrastructure (PKI):
CAs and digital certificate procedures that are accepted by all
parties
Pretty Good Privacy (PGP) – a widely used e-mail public key
encryption software [go to pgpi.org to download it]

27

Digital Certificates and Certification Authorities


Limits to Encryption Solutions
PKI mainly protect messages in transit
Doesn’t protect storage of private key
PKI not effective against insiders, employees
Protection of private keys by individuals may be
haphazard
No guarantee that verifying computer of
merchant is secure
CAs are unregulated, self-selecting
organizations

28

Securing Channels of Communication
Secure Sockets Layer (SSL):
Establishes a secure, negotiated client-server session in
which URL of requested document, along with contents,
is encrypted
Designed to establish a secure connection between two
computers
Virtual Private Network (VPN):
Allows remote users to securely access internal
network via the Internet, using Point-to-Point
Tunneling Protocol (PPTP)


Secure Negotiated Sessions Using SSL


29

Protecting Networks
Firewall
Hardware or software that filters packets (prevents
some packets from entering the network) by using
security policy
Two main methods:
Packet filters – looks inside data packets to decide
whether they are destined for a prohibited port or
originate from a prohibited IP address
Application gateways – filters communications based on
the application being requested, rather than the source or
destination of the message
Application gateways provide greater security than
packet filters, but can compromise system
performance

Protecting Networks
Proxy servers (proxies)
Software servers that handle all
communications originating from or being sent
to the Internet
Initially for limiting access of internal clients to
external Internet servers
Can be used to restrict access to certain types of
sites, such as porno, auction, or stock-trading
sites, or to cache frequently-accessed Web
pages to reduce download times

30

Firewalls and Proxy Servers


Protecting Servers and Clients
Operating system security
enhancements
Upgrades, patches

Anti-virus software:
Easiest and least expensive way to prevent
threats to system integrity
Requires daily updates


31

Management Policies, Business
Procedures, and Public Laws
U.S. firms and organizations spend 14%
of IT budget on security hardware,
software, services ($35 billion in 2010)
Managing risk includes
Technology a foundation of security
Effective management policies also required
Public laws and active enforcement


A Security Plan: Management Policies
Risk assessment: assessment of risks and points
of vulnerability
Develop security policy: set of statements
prioritizing information risks, identifying
acceptable risk targets, and identifying
mechanisms for achieving targets
Develop implementation plan
Create security organization
Administers access controls
Authentication procedures, including biometrics
Authorization policies, authorization management systems
Perform security audit: review of security
practices and procedures

32

Developing an E-commerce Security Plan


The Role of Laws and Public Policy
Laws that give authorities tools for identifying,
tracing, prosecuting cybercriminals:
National Information Infrastructure Protection Act of 1996
USA Patriot Act
Homeland Security Act
Private and private-public cooperation
CERT Coordination Center
US-CERT
Government policies and controls on encryption
software
OECD guidelines

33



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04-1 E-commerce Security slides

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