Tuesday, July 15, 2008

Are Stolen Credit Card Details Getting Cheaper?

What is shaping the prices of stolen credit card details? The investments the cybercriminals or real life scammers ( through credit card cloning or ATM skimming) put into the process of obtaining the details, or can we even talk about investments being made where an experienced scammer has just purchased 1GB of raw credit cards data from a novice botnet master who isn't really aware of the actual value of his "botnet output"?

Depends on which economic theory you believe in, or whether or not you'll take the "bottom-up approach" or the "top-down" one. And since I'm not aware of the existence of "the invisible hand of the underground market" and centralized power to increase the supply or decrease it to boost prices for the stolen credit card details, also indicating the existence of underground cartels putting everyone in a "price taker" position.

The basics of demand and supply for anything underground will always apply unless of course, The more they want, the cheaper it gets, the less they want, the higher the price on per credit card basis gets, since the investment on behalf of the malicious party that originally stolen them is virtually the same, and he can theoretically break-even in every single case since the credit card details were obtained efficiently. It's up to the seller to follow or entirely ignore economic behavior, and do what they feel like doing with this good which must on the other hand reach its market liquidity as soon as possible, else it becomes obsolete. The current market model can be further explained as a good example of competitive equilibrium :

"Competitive market equilibrium is the traditional concept of economic equilibrium, appropriate for the analysis of commodity markets with flexible prices and many traders, and serving as the benchmark of efficiency in economic analysis. It relies crucially on the assumption of a competitive environment where each trader decides upon a quantity that is so small compared to the total quantity traded in the market that their individual transactions have no influence on the prices."

This can be easily explained in a single sentence - it's a mess and every participant is doing whatever they want to, so generalizing on the prices charged for stolen credit card numbers would be unrealistic, since it's the price a single seller with no real impact on the "average" market price for the same good. As for the average market price itself, it would be hard to measure it depending on the quality of the sample you want to rely on, since this is a type of market where sellers don't have to report price changes in their goods for the purpose of statistical research.

A recently released report by Finjan, with whom I've been on the same page of several high profile incidents so far, touches this very same topic :

"Prices charged by cybercriminals selling hacked bank and credit card details have fallen sharply as the volume of data on offer has soared, forcing them to look elsewhere to boost profit margins, a new report says. Researchers for Finjan, a Web security firm, said the high volumes traded had led to bank and credit card information becoming "commoditized" - account details with PIN codes that once fetched $100 or more each might now go for $10 or $20. In its latest quarterly survey of Web trends, the California-based company said cybercrime had evolved into "a major shadow economy ruled by business rules and logic that closely mimics the legitimate business world."

Excluding the presence of price discrimination for a while, as well as open topic offers in the lines of "how much for X amount of Y?" answered as "how much are you willing to pay?", it's all a matter of the seller in a particular situation.

Furthermore, in real-life market there's always the scarcity problem, however, in the underground market there's no shortage of resources despite the ever growing wants of the buyers. Generalizing even more, take for instance the butterfly effect of a price change in petrol, and result of which is inevitable increase of prices in every single aspect of your life, but in the underground market mostly due to the malicious economies of scale achieved, a price increase in renting a botnet would have no effect in the prices charged for the stolen credit card details obtained through the infected hosts. How come? Basically, the price and resources for malware infection are prone to decrease, if we take a malware infected host as a static foundation for the basis of any upcoming cybercrime activities using it.

Perhaps the most disturbing part is that the market for stolen credit card details is so mature, and its entry barriers so low these days, that the confidential data that cannot be efficiently obtained through real-life means like credit card cloning or ATM skimming on a large scale, is now purchased online for the purpose of abusing it in real-life by embedding the valid information into plastic cards.