Chapter
11-1
Chapter 11: Computer Crime, Fraud,
Ethics, and Privacy
Introduction
Computer Crime, Abuse, and Fraud
Three Examples of Computer Crimes
Preventing Computer Crime and Fraud
Ethical Issues, Privacy, and Identity Theft
Chapter
11-2
Computer Crime,
Abuse, and Fraud
High level of public interest
Data on incidents is limited
Sources of information
 Computer
Security Institute (CSI) annual survey
 KPMG surveys
 Association of Certified Fraud Examiners
(ACFE) survey
Chapter
11-3
Computer Crime,
Abuse, and Fraud
Computer Crime

Manipulation of a computer or computer data

Dishonestly obtain money, acquire property, or
something of value, or cause a loss
Computer Abuse

Unauthorized use of, or access to, a computer
 Against the wishes of the owner
Chapter
11-4
Computer Crime Examples
Chapter
11-5
Computer Crime,
Abuse, and Fraud
Fraudulent Financial Reporting

Intentional falsification of accounting records

Intend to mislead analysts, creditors, investors
Misappropriation of Assets

Misuse of company assets
 Committed by employees within an organization
Chapter
11-6
Asset Misappropriation
Examples
Chapter
11-7
Federal Legislation of
Computer Crimes
Computer Fraud and Abuse Act of 1986
(CFAA)
 Amended
in 1994 and 1996
Computer Fraud Definition
 An
illegal act
 Computer technology essential for perpetration,
investigation, or prosecution
Chapter
11-8
CFAA Fraudulent Acts
Unauthorized theft, use, access, modification,
copying, or destruction of software or data
Theft of money by altering computer records or
the theft of computer time
Intent to illegally obtain information or tangible
property through the use of computers
Chapter
11-9
CFAA Fraudulent Acts
Use, or the conspiracy to use, computer
resources to commit a felony
Theft, vandalism, destruction of computer
hardware
Trafficking in passwords or other login
information for accessing a computer
Extortion that uses a computer system as a
target
Chapter
11-10
Federal Legislation Affecting
the Use of Computers
Chapter
11-11
Federal Legislation Affecting
the Use of Computers
Chapter
11-12
State Legislation
Every state has a computer crime law
State law provisions
 Define
computer terms
 Define some acts as misdemeanors
 Declare other acts as felonies
Chapter
11-13
Computer-Crime Statistics
Limited availability of data


Private companies handle abuse internally
Most computer abuse is probably not discovered
Growth of computer crime



Exponential growth in use of computer resources
Continuing lax security
Availability of information about how to
perpetrate computer crimes
Chapter
11-14
Importance of Computer
Crime and Abuse to AISs
Impact on AISs

Favored target due to control of financial resources
 Prized target for disgruntled employees
 Responsible for designing, selecting, and implementing
controls that protect AISs
 Reliance on auditors to verify financial statement
Additional Items

Ability to mislead public if information is incomplete or
inaccurate
 Difficulty in detecting fraudulent activities
 Large amount of losses
Chapter
11-15
Compromising Valuable Information:
The TRW Credit Data Case
Summary
 Credit
rating company
 Altered company credit ratings for a fee
 Clients relied on inaccurate information
Analysis
diddling – proprietary data
 Fair Credit Reporting Act – protection of
consumer
 Data
Chapter
11-16
Wire Fraud and Computer Hacking:
Edwin Pena and Robert Moore
Summary
 Voice
over Internet Protocol (VoIP)
 Hacked into other provider’s network
 Billed those companies
Analysis
 Growth
of hacking
 Importance of education and prevention
 Utilize ethical hackers for instrusion testing
Chapter
11-17
Denial of Service:
The 2003 Internet Crash
Summary
 Slammer
worm
 Identified weakness in Microsoft SQL Server
2000 software
Analysis
 Denial



of Service (DOS) attacks
Computer Viruses
Computer Worms and Worm Programs
Boot-sector Viruses and Trojan Horse Programs
Chapter
11-18
Protecting Systems
Preventing Viruses

Firewalls
 Antivirus software
 Antivirus control procedures
Organizational Control Procedures

Discourage free exchange of computer disks or external
programs
 Require strong passwords to limit unauthorized access
 Use antivirus filters
Chapter
11-19
Common Types of Computer
Crime and Abuse
Chapter
11-20
Preventing Computer Crime
and Fraud
Enlist Top-Management Support
Increase Employee Awareness and Education
Assess Security Policies and Protect Passwords

Strong passwords
 Social engineering
 Lock-out systems
 Dialback systems
Chapter
11-21
10 Simple Steps to Safer PCs
Chapter
11-22
10 Simple Steps to Safer PCs
Chapter
11-23
Preventing Computer Crime
and Fraud
Implement Controls
Identify Computer Criminals



Nontechnical Backgrounds
Noncriminal Backgrounds
Education, Gender, and Age
Don’t Forget Physical Security
Employ Forensic Accountants
Chapter
11-24
Occupations of Computer
Abuse Offenders
Chapter
11-25
Fraud Losses and Education
Level of Perpetrator
Chapter
11-26
Recognizing Symptoms of
Employee Fraud
Accounting Irregularities
Internal Control Weaknesses
Unreasonable Anomalies
Lifestyle Changes
Behavioral Changes
Chapter
11-27
Study Break #4
Most computer criminals:
A.
B.
C.
D.
E.
Have nontechnical backgrounds
Have noncriminal backgrounds
Have little college education
Are young and bright
Have probably not been caught, so we don’t know much
about them
Chapter
11-28
Study Break #4 - Answer
Most computer criminals:
A.
B.
C.
D.
E.
Have nontechnical backgrounds
Have noncriminal backgrounds
Have little college education
Are young and bright
Have probably not been caught, so we don’t know much
about them
Chapter
11-29
Ethical Issues, Privacy, and
Identity Theft
Ethics

A set of moral principles or values
 Governs organizations and individuals
Ethical behavior

Making choices and judgments that are morally
proper
 Acting accordingly
Chapter
11-30
Ethical Issues, Privacy, and
Identity Theft
Ethical Issues and Professional Associations


Codes of Ethics/Professional Conduct
Certification programs and Ethics committees
Meeting the Ethical Challenges




Inform employees of importance of ethics
Ethics training
Lead by example
Utilize reward system
Chapter
11-31
Ethical Issues in Computer
Usage
Chapter
11-32
Ethical Issues, Privacy, and
Identity Theft
Company Policies with Respect to Privacy



Who owns the computer and data stored on it?
What purposes the computer may be used?
What uses are authorized or prohibited?
Identity Theft



Dumpster diving
Phishing
Smishing
Chapter
11-33
Identity Theft Methods
Chapter
11-34