Source: http://news.feedzilla.com/en_us/stories/politics/top-stories/237340348?client_source=feed&format=rss
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Saturday, July 7, 2012
Court Ruling Could Be Boon to Cyberheist Victims - Krebs on Security
A decision handed down by a federal appeals court this week may make it easier for small businesses owners victimized by cyberheists to successfully recover stolen funds by suing their bank.
The appeals court in Boston called the bank?s security systems ?commercially unreasonable,? reversing a lower court ruling that Ocean Bank?s reliance on passwords and secret questions was in line with guidance set out by federal banking regulators. A copy of the decision is here (PDF).
Charisse Castagnoli, a bank fraud expert and independent security consultant, said the decision could open the door lawsuits from small businesses that have been similarly victimized with the help of outdated security procedures at their banks.
?What this opinion offers is a strong basis for victims to challenge the security implementations of their banks regardless of whether they agreed that the implementation was ?commercially reasonable? at a single point in time in a ?shrink wrap? type contract,? Castagnoli said.
THE CASE
In September 2009, Sanford, Maine based Patco Construction Co. filed suit against Ocean Bank, a division of Bridgeport, Conn. based People?s United Bank. Pacto used online banking primarily to make weekly payroll payments. Patco said that in May 2009, cyber thieves used the ZeuS trojan to steal its online banking credentials, and then heisted $588,000 in batches of fraudulent automated clearing house (ACH) transfers over a period of seven days.
In the weeks following the heist, Ocean Bank managed to block or claw back $243,406 of the fraudulent transfers, leaving Patco with a net loss of $345,445. Because the available funds in Patco?s account were less than the total fraudulent withdrawals, the bank drew $223,237 on Patco?s line of credit to cover the transfers. Patco ended up paying interest on that amount to avoid defaulting on its loans.
Patco sued to recover its losses, arguing in part that Ocean Bank failed to live up to multifactor authentication requirements set forth by the Federal Financial Institutions Examination Council (FFIEC).
THE TECHNOLOGY
Ocean Bank relied on service provider Jack Henry to process bank-to-bank transfers, and it selected an authentication process that required customers to log in with a company ID, user ID and password. Customers also were asked to provide answers to three ?challenge questions? that would be asked if the system scored a transaction as ?high risk.?
The Jack Henry product came with a risk scoring system developed by RSA?s Cyota, which rates the riskiness of transactions by using several factors, such as the location of a user?s Internet address, when and how often the user logs in, and how the customer navigates the site. Challenge questions were prompted when the risk score for a transaction exceeded 750 on a scale of zero to 1,000 (RSA considers transactions generating risk scores in excess of 750 to be high-risk). Ocean bank also kept track of customer ?device IDs,? an amalgamation of attributes from the customer?s PC that could be used to create a unique fingerprint for that machine.
Until 2008, Ocean Bank set its dollar amount threshold ? transfer amounts that would automatically require the answer to a challenge questions regardless of the Cyota fraud score ? at $100,000. But in July 2008, the bank lowered that threshold to $1. The bank told the court that it did so to enhance security following ACH fraud at the bank that targeted low-dollar amount transactions. After the change, customers were forced to answer a challenge question whenever they used the bank?s system.
THE RULING
In its 43-page decision, the appeals court took a dim view of Ocean Bank?s decision to lower its fraud threshold to $1.
?In our view, Ocean Bank did substantially increase the risk of fraud by asking for security answers for every $1 transaction, particularly for customers like Patco which had frequent, regular and high dollar transfers,? the court observed. ?Then, when it had warning that such fraud was likely occurring in a given transaction, Ocean Bank neither monitored that transaction nor provided notice to customers before allowing the transaction to be completed. Because it had the capacity to do all of those things, yet failed to do so, we cannot conclude that its security system was commercially reasonable.?
The court emphasized that it was these collective failures taken as a whole ?? rather than any one single failure ?? which rendered the bank?s security system commercially unreasonable.
A spokesperson for People?s United Bank declined to comment for this story. Mark Patterson, Patco?s president, said he was pleased with the decision.
?I hope we can give some assistance to those [companies] that are suing their banks, and I hope this makes it so that it works in their favor,? he said.
What does this mean in practical terms for banks, customers and lawmakers?? Castagnoli said the decision seemed to emphasize that banks cannot take blanket security approaches, but instead need to consider the customer?s individual risk.
?That I think is helpful?and should put banks on notice that they need to be more vigilant,? Castagnoli said. ?At the same time, you can?t be a sloppy or naive customer, as the court is clearly looking for the customer to behave with some understanding of what the bank is doing with their money.?
Castagnoli said the appeals court also left open what the victim?s obligations and responsibilities are in the event that the bank?s security measures fail. For example, a court might declare reasonable the requirement commercial customers check their bank balance every day, and thus find Patco partially liable.
?I?d say this is a pretty big wakeup call to all parties to be more careful, and hopefully we will see more education from banks to their users on the part of computer security and online banking risk,? she said.
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Tags: ACH, automated clearinghouse, Charisse Castagnoli, Cyota, Federal Financial Institutions Examination Council, ffiec, Jack Henry, Mark Patterson, Ocean Bank, Patco Construction, Peoples United Bank, RSA, U.S. Federal Court of Appeals for the First Circuit, ZeuS Trojan
Source: http://krebsonsecurity.com/2012/07/court-ruling-could-be-boon-to-cyberheist-victims/
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Iran adds France, Germany to culprits list
[ [ [['Connery is an experienced stuntman', 2]], 'http://yhoo.it/KeQd0p', '[Slideshow: See photos taken on the way down]', ' ', '630', ' ', ' ', ], [ [['Connery is an experienced stuntman', 7]], ' http://yhoo.it/KpUoHO', '[Slideshow: Death-defying daredevils]', ' ', '630', ' ', ' ', ], [ [['know that we have confidence in', 3]], 'http://yhoo.it/LqYjAX ', '[Related: The Secret Service guide to Cartagena]', ' ', '630', ' ', ' ', ], [ [['We picked up this other dog and', 5]], 'http://yhoo.it/JUSxvi', '[Related: 8 common dog fears, how to calm them]', ' ', '630', ' ', ' ', ], [ [['accused of running a fake hepatitis B', 5]], 'http://bit.ly/JnoJYN', '[Related: Did WH share raid details with filmmakers?]', ' ', '630', ' ', ' ', ], [ [['accused of running a fake hepatitis B', 3]], 'http://bit.ly/KoKiqJ', '[Factbox: AQAP, al-Qaeda in Yemen]', ' ', '630', ' ', ' ', ], [ [['have my contacts on or glasses', 3]], 'http://abcn.ws/KTE5AZ', '[Related: Should the murder charge be dropped?]', ' ', '630', ' ', ' ', ], [ [['have made this nation great as Sarah Palin', 5]], 'http://yhoo.it/JD7nlD', '[Related: Bristol Palin reality show debuts June 19]', ' ', '630', ' ', ' ', ], [ [['have made this nation great as Sarah Palin', 1]], 'http://bit.ly/JRPFRO', '[Related: McCain adviser who vetted Palin weighs in on VP race]', ' ', '630', ' ', ' ', ], [ [['A JetBlue flight from New York to Las Vegas', 3]], 'http://yhoo.it/GV9zpj', '[Related: View photos of the JetBlue plane in Amarillo]', ' ', '630', ' ', ' ', ], [ [['the 28-year-old neighborhood watchman who shot and killed', 15]], 'http://news.yahoo.com/photos/white-house-stays-out-of-teen-s-killing-slideshow/', 'Click image to see more photos', 'http://l.yimg.com/cv/ip/ap/default/120411/martinzimmermen.jpg', '630', ' ', 'AP', ], [ [['He was in shock and still strapped to his seat', 6]], 'http://news.yahoo.com/photos/navy-jet-crashes-in-virginia-slideshow/', 'Click image to see more photos', 'http://l.yimg.com/cv/ip/ap/default/120406/jet_ap.jpg', '630', ' ', 'AP', ], [ [['xxxxxxxxxxxx', 11]], 'http://news.yahoo.com/photos/russian-grannies-win-bid-to-sing-at-eurovision-1331223625-slideshow/', 'Click image to see more photos', 'http://l.yimg.com/a/p/us/news/editorial/1/56/156d92f2760dcd3e75bcd649a8b85fcf.jpeg', '500', ' ', 'AP', ] ]
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Source: http://news.yahoo.com/iran-adds-france-germany-culprits-list-104249837.html
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Video: The Jobs Clock is Ticking...
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Source: http://video.msnbc.msn.com/cnbc/48101365/
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Sunday, July 1, 2012
Egypt's new leader vows support for Palestinians
In this image made from Egyptian State Television, Egyptian President Mohammed Morsi makes remarks after he was sworn in at the Supreme Consitutional Court in Cairo, Egypt, Saturday, June 30, 2012. Islamist Mohammed Morsi has been sworn in before Egypt's highest court as the country's first freely elected president, succeeding Hosni Mubarak who was ousted 16 months ago. (AP Photo/Egyptian State TV)
In this image made from Egyptian State Television, Egyptian President Mohammed Morsi makes remarks after he was sworn in at the Supreme Consitutional Court in Cairo, Egypt, Saturday, June 30, 2012. Islamist Mohammed Morsi has been sworn in before Egypt's highest court as the country's first freely elected president, succeeding Hosni Mubarak who was ousted 16 months ago. (AP Photo/Egyptian State TV)
In this image made from Egyptian State Television, judges from Egypt's Supreme constitutional court applaud Mohammed Morsi, center, after he was sworn in as President in Cairo, Egypt, Saturday, June 30, 2012. Islamist Mohammed Morsi has been sworn in before Egypt's highest court as the country's first freely elected president, succeeding Hosni Mubarak who was ousted 16 months ago.(AP Photo/Egyptian State TV)
Egypt's President-elect Mohammed Morsi talks to his supporters at Tahrir Square, the focal point of Egyptian uprising, in Cairo, Egypt, Friday, June 29, 2012. In front of tens of thousands of cheering supporters, Egypt's first Islamist and civilian president-elect vowed Saturday that nobody can take away his authority and symbolically read an oath of office on the eve of his official inauguration. (AP Photo/Amr Nabil)
Egyptians wave to Egypt's President-elect, Mohammed Morsi, upon his arrival to give a speech at Tahrir Square in Cairo, Egypt, Friday, June 29, 2012. In front of tens of thousands of cheering supporters, Egypt's first Islamist and civilian president-elect vowed that nobody can take away his authority and symbolically read an oath of office on the eve of his official inauguration. (AP Photo/Khalil Hamra)
Egypt's President-elect Mohammed Morsi waves to supporters before giving a speech at Tahrir Square in Cairo, Egypt, Friday, June 29, 2012. In front of tens of thousands of cheering supporters, Egypt's first Islamist and civilian president-elect vowed that nobody can take away his authority and symbolically read an oath of office on the eve of his official inauguration. (AP Photo/Khalil Hamra)
CAIRO (AP) ? Egypt's newly elected president has sent an implicit message of reassurance to Israel in his first major address after taking office, but he also pledged support for the "legitimate rights" of the Palestinians.
Islamist Mohammed Morsi said Saturday that his administration will continue to honor its international treaties ? a thinly veiled reference to the Egyptian-Israeli peace treaty.
Relations between the two neighbors have become particularly tense since last year's overthrow of Morsi's predecessor, Hosni Mubarak, who had forged close ties with the Jewish state during his 29-year rule.
Morsi was sworn in Saturday as Egypt's first freely elected president and the Arab world's first Islamist head of state.
The rise to power of Egyptian Islamists has been a source of alarm among many Israelis.
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Analysis: Jumping off the fiscal cliff
WASHINGTON (Reuters) - Members of Congress from both parties are increasingly mulling the unthinkable: going home in December without acting to avoid the $4 trillion in tax hikes and deep spending cuts known as the fiscal cliff.
Neither Democrats nor Republicans claim this is their preferred option, as it could rattle global financial markets badly and anger their constituents.
But as they circle each other in an ever-more partisan atmosphere they see little prospect for a settlement acceptable to both parties in the lame duck session of Congress after the November 6 election.
That is when they confront the wave of fiscal cliff decisions including how to handle expiration of temporary tax cuts that originated during the presidency of George W. Bush, $1.2 trillion in automatic spending cuts and the need to raise the debt ceiling again.
Some members and partisan strategists are concluding that they might be better off doing nothing.
They would come back in January with a new Congress relatively flush with cash - at least on paper - from the impact of the tax hikes; hit reset and start over to structure a new series of tax cuts. Call them the "Obama tax cuts" or "Romney tax cuts," depending on the victor in the November election.
The risk of shaking the markets is always there. But they could mitigate that by telegraphing to voters and Wall Street in advance that they definitely intend to write some new tax cuts into law. It could take a couple months, or maybe even all of 2013 and beyond, but they promise they will do it and they promise they will make the tax cuts retroactive to January 1, 2013.
"My preference would not be to accept a lesser solution than you could get in February and March just to say that you got it done before the end of the year," Senator Roy Blunt, a member of Republican leadership and congressional liaison to Republican presidential nominee Mitt Romney, told the 2012 Washington Reuters Summit last week.
Representative Chris Van Hollen of Maryland, a member of the Democratic leadership in the House of Representatives, said that if Republicans continue to demand a tax plan with breaks for the wealthy, Democrats should "take the question to the American people" in January by allowing historically low rates from the Bush years to expire.
"If they refuse, if the Republican position remains as it is today - which is, they are going to insist on holding tax relief for 99 percent of the American people hostage - I think we should just take that debate into next year," Van Hollen said.
A liberal Democratic think tank, the Center on Budget and Policy Priorities, has since argued that the cliff is more of a slope, and that any negative impact would be gradual. That may leave lawmakers some wiggle room.
Romney last month floated the idea of Congress leaving town and waiting until he arrives in late January to act, which initially brought gasps, in part because the Congressional Budget Office has said stepping off the "cliff" could push the U.S. economy into a recession in the first half of 2013.
"The prospects are substantial that the Bush tax cuts expire for at least a period of time," said a senior Senate Democratic aide. "This is not to say that folks plan that to happen, but a lot of folks will block other paths," the aide added.
The idea - while embryonic - is gaining traction. Peter Orszag, former head of the Obama administration's Office of Management and Budget, touted it as a strategy for a re-elected Obama in a widely discussed article in the summer issue of the journal "Democracy."
Obama would "escape the intractable debate" over the Bush tax cut extensions and come back in early 2013 with legislation that reduces taxes "disproportionately for middle- and low-income families," making it hard for Republicans to vote against them.
The reasoning goes like this.
Politicians are scared to death of raising taxes. But they wouldn't have to if they just let the Bush tax cuts expire. They don't have to lift a finger. They just let them die, as scheduled, on December 31.
Then, flush with cash, they take some of the $3.7 trillion, which they would then have on the budget books from the expired Bush tax cuts, and they announce to voters that they're going to give it back to them in the form of brand new tax cuts.
They take another chunk of the $3.7 trillion and devote it to deficit-reduction - maybe - and as they rewrite the tax code to include rate reductions for corporations and others, they also end some tax goodies, possibly getting more money for the Treasury.
Even though taxes for some might rise in the end, that bit of unpleasantness gets tucked into a tax-cut bill in a way that eases everyone's jitters. Politicians can brag about giving Americans new tax cuts. There's some new deficit-reduction - maybe and that might be a big maybe - as a result of Congress letting Treasury keep some of the Bush-era tax cuts that have died.
The approach reflects deep pessimism for an agreement to avoid the fiscal cliff other than some temporary fix, which, as Orszag noted, would only set the stage for more uncertainty and partisan struggle.
Political disagreements between Democrats and Republicans over whether the rich should continue to enjoy the benefits of the Bush tax cuts are at the center of the dispute that could end in deadlock on December 31.
But with just over a month between the election and the end of the year, not including holidays, the losing party will be sore and not apt to compromise.
Contributing to the ill will could be a court fight stemming from demands by the Republican-controlled House for documents about the Operation Fast and Furious gun-running scandal to Mexico that the administration refuses to provide. And, last week's Supreme Court decision to uphold the healthcare law also revived bitterness.
POSSIBLE SHORT-TERM DEAL
Among the other scenarios is a short-term extension of all the tax cuts, possibly attached to a trigger to force action on the deficit and tax reform. Many lawmakers are weary of that approach, though, since it failed so miserably last November in efforts to come up with a thoughtful $1.2 trillion in savings over 10 years to avoid the blunt axe of automatic spending cuts.
In a pre-election show vote, the Republican-controlled House of Representatives will pass a version of this in July, knowing it will hit a roadblock in the Democratic-controlled Senate.
During a nearly identical debate in 2010, Obama conceded to Republican demands to extend all the Bush-era cuts. In exchange, he got jobless benefits renewed and a payroll tax cut.
Back then, vulnerable Democratic senators fretted openly about the impact of raising taxes in a fledgling recovery. Some of these same senators are teetering again, with 20 Senate Democrats facing re-election in 2014.
"The problem with Obama's position on the Bush tax cuts is he doesn't even have majority support in the Senate on this," said Ethan Siegal, an investor adviser.
Democrats want to let low tax rates for the wealthiest expire - defined by some as those earning more than $250,000, while others favor the $1 million threshold.
Republicans want to extend the rates for all income groups.
DEBT CEILING WILD CARD
In any of these scenarios, everything is dependent on the outcome of the election.
If Obama wins, "I think somebody is going to pay 39.6 percent" in taxes, said Greg Valliere, an analyst for institutional investors.
Under the Democrats' proposal, the top tax rate for high earners would rise from 35 percent to 39.6 percent.
One wild card is the need to raise the limit on the Treasury Department's borrowing authority, known as the "debt ceiling." Republicans caused a stir last year when a group of Tea Party- allied conservatives advocated blocking any increase in Washington's borrowing authority without accompanying adequate budget cuts - even if that meant a historic U.S. default and government shutdown.
A deal eventually prevailed, but the deadlock was a factor in Standard and Poor's August downgrade of the U.S. credit rating for the first time in history.
House Democratic Leader Nancy Pelosi told the 2012 Reuters Washington Summit last week that Obama should avoid a rerun of that fight with Republicans by using his executive authority to raise the limit. It was an argument that some Obama confidants, including former President Bill Clinton, had unsuccessfully urged Obama to employ last year.
"I myself would not empower them (Republicans) to hurt the full faith and credit of the United States of America," Pelosi told Reuters.
(Reporting by Kim Dixon, Rachelle Younglai, Donna Smith, Richard Cowan, Thomas Ferraro and David Lawder. Editing by Fred Barbash and Jackie Frank)
Source: http://news.yahoo.com/analysis-jumping-off-fiscal-cliff-050800745--business.html
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