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Facebook's lab rats

It's long been said that if you're getting something for free online, then you're not the customer, you're the product. It's a reference to the one-sided bargain for personal information that powers so many social businesses - the way that "infomopolies" as I call them exploit the knowledge they accumulate about us.

Now it's been revealed that we're even lower than product: we're lab rats.

Facebook data scientist Adam Kramer, with collaborators from UCSF and Cornell, this week reported on a study in which they tested how Facebook users respond psychologically to alternatively positive and negative posts. Their experimental technique is at once ingenious and shocking. They took the real life posts of nearly 700,000 Facebook members, and manipulated them, turning them slightly up- or down-beat. And then Kramer at al measured the emotional tone in how people reading those posts reacted in their own feeds. See Experimental evidence of massive-scale emotional contagion through social networks, Adam Kramer,Jamie Guillory & Jeffrey Hancock, in Proceedings of the National Academy of Sciences, v111.24, 17 June 2014.

The resulting scandal has been well-reported by many, including Kashmir Hill in Forbes, whose blog post nicely covers how the affair has unfolded, and includes a response by Adam Kramer himself.

Plenty has been written already about the dodgy (or non-existent) ethics approval, and the entirely contemptible claim that users gave "informed consent" to have their data "used" for research in this way. I want to draw attention here to Adam Kramer's unvarnished description of their motives. His response to the furore (provided by Hill in her blog) is, as she puts it, tone deaf. Kramer makes no attempt whatsover at a serious scientific justification for this experiment:

  • "The reason we did this research is because we care about the emotional impact of Facebook and the people that use our product ... [We] were concerned that exposure to friends’ negativity might lead people to avoid visiting Facebook.

That is, this large scale psychological experiment was simply for product development.

Some apologists have, I hear, countered that social network feeds are manipulated all the time, notably by advertisers, to produce emotional responses.

Now that's interesting, because for their A-B experiment, Kramer and his colleagues took great pains to make sure the subjects were unaware of the manipulation. After all, the results would be meaningless if people knew what they were reading had been emotionally fiddled with.

In contrast, the ad industry has always insisted that today's digital consumers are super savvy, and they know the difference between advertising and real-life. Advertising is therefore styled as just a bit of harmless fun. But this line is I think further exposed by the Facebook Experiment as self-serving mythology, crafted by people who are increasingly expert at covertly manipulating perceptions, and who now have the data, collected dishonestly, to prove it.

Posted in Culture, Internet, Social Media, Social Networking

Hotel database security

International hotels are a fantastic target for identity thieves. Hotel databases don't just hold credit card numbers and billing addresses (which are held for weeks in advance of a stay and for weeks afterwards to cover incidentals), but for many customers the hotel also has their home address, mobile phone number, driver licence number, airline memberships and arrival flight details. And even passport number is routinely collected by hotels in Asia. It's a complete cornucopia for criminals.

And the most dangerous, most difficult to control threat vector in the hotel industry won't be war-driving or SQL injection attacks or any of the other high tech hacking tools used by organised crime. It will be the inside job. Thousands of itinerant hotel workers in every corner of the world have the opportunity to access office systems after hours, and simply download the contents of central databases to a thumb drive.

The vulnerability of hotel databases to identity thieves has clear implications for national security. I trust that counter terrorism agencies are working on this problem? These databases reveal the forward travel plans for thousands of VIPs worldwide.

We should expect that organised criminals and terrorist organisations are tapped into hotel databases as we speak, and are mining them systematically.

Posted in Fraud, Security

Webinar: Big Privacy

I'm presenting a Constellation Research webinar next week on my latest research into "Big Privacy" (June 18th in the US / June 19th in Australia). I hope you can join us.

Register here.

We live in an age where billionaires are self-made on the back of the most intangible of assets – the information they have amassed about us. That information used to be volunteered in forms and questionnaires and contracts but increasingly personal information is being observed and inferred.

The modern world is awash with data. It’s a new and infinitely re-usable raw material. Most of the raw data about us is an invisible by-product of our mundane digital lives, left behind by the gigabyte by ordinary people who do not perceive it let alone understand it.

Many Big Data and digital businesses proceed on the basis that all this raw data is up for grabs. There is a particular widespread assumption that data in the "public domain" is free-for-all, and if you’re clever enough to grab it, then you’re entitled to extract whatever you can from it.

In the webinar, I'll try to show how some of these assumptions are naive. The public is increasingly alarmed about Big Data and averse to unbridled data mining. Excessive data mining isn't just subjectively 'creepy'; it can be objectively unlawful in many parts of the world. Conventional data protection laws turn out to be surprisingly powerful in in the face of Big Data. Data miners ignore international privacy laws at their peril!

Today there are all sorts of initiatives trying to forge a new technology-privacy synthesis. They go by names like "Privacy Engineering" and "Privacy by Design". These are well meaning efforts but they can be a bit stilted. They typically overlook the strengths of conventional privacy law, and they can miss an opportunity to engage the engineering mind.

It’s not politically correct but I believe we must admit that privacy is full of contradictions and competing interests. We need to be more mature about privacy. Just as there is no such thing as perfect security, there can never be perfect privacy either. And is where the professional engineering mindset should be brought in, to help deal with conflicting requirements.

If we’re serious about Privacy by Design and Privacy Engineering then we need to acknowledge the tensions. That’s some of the thinking behind Constellation's new Big Privacy compact. To balance privacy and Big Data, we need to hold a conversation with users that respects the stresses and strains, and involves them in working through the new privacy deal.

The webinar will cover these highlights of the Big Privacy pact:

    • Respect and Restraint
    • Super transparency
    • And a fair deal for Personal Information.

Have a disruptive technology implementation story? Get recognised for your leadership. Apply for the 2014 SuperNova Awards for leaders in disruptive technology.

Posted in Social Media, Privacy, Constellation Research, Biometrics, Big Data

Watson the Doctor is no laughing matter

For the past year, oncologists at the Memorial Sloan Kettering Cancer Centre in New York have been training IBM’s Watson – the artificial intelligence tour-de-force that beat allcomers on Jeopardy – to help personalise cancer care. The Centre explains that "combining [their] expertise with the analytical speed of IBM Watson, the tool has the potential to transform how doctors provide individualized cancer treatment plans and to help improve patient outcomes". Others are speculating already that Watson could "soon be the best doctor in the world".

I have no doubt that when Watson and things like it are available online to doctors worldwide, we will see overall improvements in healthcare outcomes, especially in parts of the world now under-serviced by medical specialists [having said that, the value of diagnosing cancer in poor developing nations is questionable if they cannot go on to treat it]. As with Google's self-driving car, we will probably get significant gains eventually, averaged across the population, from replacing humans with machines. Yet some of the foibles of computing are not well known and I think they will lead to surprises.

For all the wondrous gains made in Artificial Intelligence, where Watson now is the state-of-the art, A.I. remains algorithmic, and for that, it has inherent limitations that don't get enough attention. Computer scientists and mathematicians have know for generations that some surprisingly straightforward problems have no algorithmic solution. That is, some tasks cannot be accomplished by any universal step-by-step codified procedure. Examples include the Halting Problem and the Travelling Salesperson Problem. If these simple challenges have no algorithm, we need be more sober in our expectations of computerised intelligence.

A key limitation of any programmed algorithm is that it must make its decisions using a fixed set of inputs that are known and fully characterised (by the programmer) at design time. If you spring an unexpected input on any computer, it can fail, and yet that's what life is all about -- surprises. No mathematician seriously claims that what humans do is somehow magic; most believe we are computers made of meat. Nevertheless, when paradoxes like the Halting Problem abound, we can be sure that computing and cognition are not what they seem. We should hope these conundrums are better understood before putting too much faith in computers doing deep human work.

And yet, predictably, futurists are jumping ahead to imagine "Watson apps" in which patients access the supercomputer for themselves. Even if there were reliable algorithms for doctoring, I reckon the "Watson app" is a giant step, because of the complex way the patient's conditions are assessed and data is gathered for the diagnosis. That is, the taking of the medical history.

In these days of billion dollar investments in electronic health records (EHRs), we tend to think that medical decisions are all about the data. When politicians announce EHR programs they often boast that patients won't have to go through the rigmarole of giving their history over and over again to multiple doctors as they move through an episode of care. This is actually a serious misunderstanding of the importance in clinical decision-making of the interaction between medico and patient when the history is taken. It's subtle. The things a patient chooses to tell, the things they seem to be hiding, and the questions that make them anxious, all guide an experienced medico when taking a history, and provide extra cues (metadata if you will) about the patient’s condition.

Now, Watson may well have the ability to navigate this complexity and conduct a very sophisticated Q&A. It will certainly have a vastly bigger and more reliable memory of cases than any doctor, and with that it can steer a dynamic patient questionnaire. But will Watson be good enough to be made available direct to patients through an app, with no expert human mediation? Or will a host of new input errors result from patients typing their answers into a smart phone or speaking into a microphone, without any face-to-face subtlety (let alone human warmth)? It was true of mainframes and it’s just as true of the best A.I.: Bulldust in, bulldust out.

Finally, Watson's existing linguistic limitations are not to be underestimated. It is surely not trivial that Watson struggles with puns and humour. Futurist Mark Pesce when discussing Watson remarked in passing that scientists don’t understand the "quirks of language and intelligence" that create humour. The question of what makes us laugh does in fact occupy some of the finest minds in cognitive and social science. So we are a long way from being able to mechanise humour. And this matters because for the foreseeable future, it puts a great deal of social intercourse beyond AI's reach.

In between the extremes of laugh-out-loud comedy and a doctor’s dry written notes lies a spectrum of expressive subtleties, like a blush, an uncomfortable laugh, shame, and the humiliation that goes with some patients’ lived experience of illness. Watson may understand the English language, but does it understand people?

Watson can answer questions, but good doctors ask a lot of questions too. When will this amazing computer be able to hold the sort of two-way conversation that we would call a decent "bedside manner"?

Have a disruptive technology implementation story? Get recognised for your leadership. Apply for the 2014 SuperNova Awards for leaders in disruptive technology.

Posted in Software engineering, Science, Language, e-health, Culture, Big Data

Three billion was a Snap

The latest Snowden revelations include the NSA's special programs for extracting photos and identifying from the Internet. Amongst other things the NSA uses their vast information resources to correlate location cues in photos -- buildings, streets and so on -- with satellite data, to work out where people are. They even search especially for passport photos, because these are better fodder for facial recognition algorithms. The audacity of these government surveillance activities continues to surprise us, and their secrecy is abhorrent.

Yet an ever greater scale of private sector surveillance has been going on for years in social media. With great pride, Facebook recently revealed its R&D in facial recognition. They showcased the brazenly named "DeepFace" biometric algorithm, which is claimed to be 97% accurate in recognising faces from regular images. Facebook has made a swaggering big investment in biometrics.

Data mining needs raw material, there's lots of it out there, and Facebook has been supremely clever at attracting it. It's been suggested that 20% of all photos now taken end up in Facebook. Even three years ago, Facebook held 10,000 times as many photographs as the Library of Congress:

Largest photo libraries
[Picture courtesy of the now retired 1000memories.com blog]

And Facebook will spend big buying other photo lodes. Last year they tried to buy Snapchat for the spectacular sum of three billion dollars. The figure had pundits reeling. How could a start-up company with 30 people be worth so much? All the usual dot com comparisons were made; the offer seemed a flight of fancy.

But no, the offer was a rational consideration for the precious raw material that lies buried in photo data.

Snapchat generates at least 100 million new images every day. Three billion dollars was, pardon me, a snap. I figure that at a ballpark internal rate of return of 10%, a $3B investment is equivalent to $300M p.a. so even if the Snapchat volume stopped growing, Facebook would have been paying one cent for every new snap, in perpetuity.

These days, we have learned from Snowden and the NSA that communications metadata is just as valuable as the content of our emails and phone calls. So remember that it's the same with photos. Each digital photo comes from a device that embeds within the image metadata usually including the time and place of when the picture was taken. And of course each Instagram or Snapchat is a social post, sent by an account holder with a history and rich context in which the image yields intimate real time information about what they're doing, when and where.

The hallmark of the Snapchat service is transience: all those snaps are supposed to flit from one screen to another before vaporising. Now of course that idea is contestable; enthusiasts worked out pretty quickly how to retrieve snaps from old memory. And in any case, transience is a red herring, perhaps a deliberate distraction, because the metadata matters more, and Snapchat admits in its Privacy Policy that it pretty well keeps the lot:

  • When you access or use our Services, we automatically collect information about you, including:
  • Usage Information: When you send or receive messages via our Services, we collect information about these messages, including the time, date, sender and recipient of the Snap. We also collect information about the number of messages sent and received between you and your friends and which friends you exchange messages with most frequently.
  • Log Information: We log information about your use of our websites, including your browser type and language, access times, pages viewed, your IP address and the website you visited before navigating to our websites.
  • Device Information: We may collect information about the computer or device you use to access our Services, including the hardware model, operating system and version, MAC address, unique device identifier, phone number, International Mobile Equipment Identity ("IMEI") and mobile network information. In addition, the Services may access your device's native phone book and image storage applications, with your consent, to facilitate your use of certain features of the Services.
  • Location Information: With your consent, we may collect information about the location of your device to facilitate your use of certain features of our Services, determine the speed at which your device is traveling, add location-based filters to your Snaps (such as local weather), and for any other purpose described in this privacy policy.

Snapchat goes on to declare it may use any of this information to "personalize and improve the Services and provide advertisements, content or features that match user profiles or interests" and it reserves the right to share any information with "vendors, consultants and other service providers who need access to such information to carry out work on our behalf".

So back to the data mining: nothing stops Snapchat -- or a new parent company -- running biometric facial recognition over the snaps as they pass through the servers, to extract additional "profile" information. And there's an extra kicker that makes Snapchats extra valuable for biometric data miners. The vast majority of Snapchats are selfies. So if you extract a biometric template from a snap, you already know who it belongs to, without anyone having to tag it. Snapchat would provide a hundred million auto-calibrations every day for facial recognition algorithms! On Facebook, the privacy aware turn off photo tagging, but with Snapchats, self identification is inherent to the experience and is unlikely to be ever be disabled.

NSA has all your selfies

As I've discussed before, the morbid thrill of Snowden's spying revelations has tended to overshadow his sober observations that when surveillance by the state is probably inevitable, we need to be discussing accountability.

While we're all ventilating about the NSA, it's time we also attended to private sector spying and properly debated the restraints that may be appropriate on corporate exploitation of social data.

Personally I'm much more worried that an infomopoly has all my selfies.

Have a disruptive technology implementation story? Get recognised for your leadership. Apply for the 2014 SuperNova Awards for leaders in disruptive technology.

Posted in Social Networking, Social Media, Privacy, Biometrics, Big Data

Digital Sheep and Digital Goats

My Constellation Research colleague Alan Lepofsky as been working on new ways to characterise users in cyberspace. Frustrated with the oversimplified cliche of the "Digital Millennials", Alan has developed a fresh framework for categorizing users according to their comfort with technology and their actual knowledge of it. See his new research report "Segmenting Audiences by Digital Proficiency".

This sort of schema could help frame the answers to some vital open questions. In today's maelstrom of idealism and hyperbole, we're struggling to predict how things are going to turn out, and to build appropriate policies and management structures. We are still guessing how the digital revolution is really going to change the human condition? We're not yet rigorously measuring the sorts of true changes, if any, that the digital transformation is causing.

We hold such disparate views about cyberspace right now. When the Internet does good – for example through empowering marginalized kids at schools, fueling new entrepreneurship, or connecting disadvantaged communities – it is described as a power for good, a true "paradigm shift". But when it does bad – as when kids are bullied online or when phishing scams hook inexperienced users – then the Internet is said to be just another communications medium. Such inconsistent attitudes are with us principally because the medium is still so new. Yet we all know how important it is, and that far reaching policy decisions are being made today. So it’s good to see new conceptual frameworks for analyzing the range of ways that people engage with and utilise the Internet.

Vast fortunes are being made through online business models that purport to feed a natural hunger to be social. With its vast reach and zero friction, the digital medium might radically amplify aspects of the social drive, quite possibly beyond what nature intended. As supremely communal beings, we humans have evolved elaborate social bearings for getting on in diverse groups, and we've built social conventions that govern how we meet, collaborate, refer, partner, buy and sell, amalgamate, marry, and split. We are incredibly adept at reading body language, spotting untruths, and gaming each other for protection or for personal advantage. In cyberspace, few of the traditional cues are available to us; we literally lose our bearings online. And therefore naive Internet users fall prey to spam, fake websites and all manner of scams.

How are online users adapting to their new environment and evolving new instincts? I expect there will be interesting correlations between digital resilience and the sophistication measures in Alan’s digital proficiency framework. We might expect Digital Natives to be better equipped inherently to detect and respond to online threats, although they might be somewhat more at risk by virtue of being more active. I wonder too if the risk-taking behavior which exacerbates some online risks for adolescents would be relatively more common amongst Digital Immigrants? By the same token, the Digital Skeptics who are knowledgeable yet uncomfortable may be happy staying put in that quadrant, or only venturing out for selected cyber activities, because they’re consciously managing their digital exposure.

We certainly do need new ways like Alan's Digital Proficiency Framework to understand society’s complex "Analog to Digital" conversion. I commend it to you.

Posted in Social Media, Internet, Culture, Constellation Research

Big Privacy: a new Constellation Research Report

I've just completed a major new Constellation Research report looking at how today's privacy practices cope with Big Data. The report draws together my longstanding research on the counter-intuitive strengths of technology-neutral data protection laws, and melds it with my new Constellation colleagues' vast body of work in data analytics. The synergy is honestly exciting and illuminating.

Big Data promises tremendous benefits for a great many stakeholders but the potential gains are jeopardised by the excesses of a few. Some cavalier online businesses are propelled by a naive assumption that data in the "public domain" is up for grabs, and with that they often cross a line.

For example, there are apps and services now that will try to identify pictures you take of strangers in public, by matching them biometrically against data supersets compiled from social networking sites and other publically accessible databases. Many find such offerings quite creepy but they may be at a loss as to what to do about it, or even how to think through the issues objectively. Yet the very metaphor of data mining holds some of the clues. If, as some say, raw data is like crude oil, just waiting to be mined and exploited by enterprising prospecters, then surely there are limits, akin to mining permits?

Many think the law has not kept pace with technology, and that digital innovators are free to do what they like with any data they can get their hands on. But technologists repreatedly underestimate the strength of conventional data protection laws and regulations. The extraction of PII from raw data may be interpreted under technology neutral privacy principles as an act of Collection and as such is subject to existing statutes. Around the world, Google thus found they are not actually allowed to gather Personal Data that happens to be available in unencrypted Wi-Fi transmission as StreetView cars drive by homes and offices. And Facebook found they are not actually allowed to automatically identify people in photos through face recognition without consent. And Target probably would find, if they tried it outside the USA, that they cannot flag selected female customers as possibly pregnant by analysing their buying habits.

On the other hand, orthodox privacy policies and static user agreements do not cater for the way personal data can be conjured tomorrow from raw data collected today. Traditional privacy regimes require businesses to spell out what personally identifiable information (PII) they collect and why, and to restrict secondary usage. Yet with Big Data, with the best will in the world, a company might not know what data analytics will yield down the track. If mutual benefits for business and customer alike might be uncovered, a freeze-frame privacy arrangement may be counter-productive.

Thus the fit between data analytics and data privacy standards is complex and sometimes surprising. While existing laws are not to be underestimated, we do need something new. As far as I know it was Ray Wang in his Harvard Business Review blog who first called for a fresh privacy compact amongst users and businesses.

The spirit of data privacy is simply framed: organisations that know us should respect the knowledge they have, they should be open about what they know, and they should be restrained in what they do with it. In the Age of Big Data, let's have businesses respect the intelligence they extract from data mining, just as they should respect the knowledge they collect directly through forms and questionnaires.

I like the label "Big Privacy"; it is grandly optimistic, like "Big Data" itself, and at the same time implies a challenge to do better than regular privacy practices.

Ontario Privacy Commissioner Dr Ann Cavoukian writes about Big Privacy, describing it simply as "Privacy By Design writ large". But I think there must be more to it than that. Big Data is quantitatively but also qualitatively different from ordinary data analyis.

To summarise the basic elements of a Big Data compact:

  • Respect and Restraint: In the face of Big Data’s temptations, remember that privacy is not only about what we do with PII; just as important is what we choose not to do.
  • Super transparency: Who knows what lies ahead in Big Data? If data privacy means being open about what PII is collected and why, then advanced privacy means going further, telling people more about the business models and the sorts of results data mining is expected to return.
  • Engage customers in a fair deal for PII: Information businesses ought to set out what PII is really worth to them (especially when it is extracted in non-obvious ways from raw data) and offer a fair "price" for it, whether in the form of "free" products and services, or explicit payment.
  • Really innovate in privacy: There’s a common refrain that “privacy hampers innovation” but often that's an intellectually lazy cover for reserving the right to strip-mine PII. Real innovation lies in business practices which create and leverage PII while honoring privacy principles.

My report, "Big Privacy" Rises to the Challenges of Big Data may be downloaded from the Constellation Research website.

Posted in Social Media, Privacy, Constellation Research, Big Data

Security Heartache

For the second time in as many months, a grave bug has emerged in core Internet security software. In February it was the "Goto Fail" bug in the Apple operating system iOS that left web site security inoperable; now we have "Heartbleed", a flaw that leaves many secure web servers in fact open to attackers sniffing memory contents looking for passwords and keys.

Who should care?

There is no shortage of advice on what to do if you're a user. And it's clear how to remediate the Heartbleed bug if you're a web administrator (a fix has been released). But what is the software fraternity going to do to reduce the incidence of these disastrous human errors? In my view, Goto Fail and Heartbleed are emblematic of chaotic software craftsmanship. It appears that goto statements are used with gay abandon throughout web software today, creating exactly the unmaintainable spaghetti code that the founders of Structured Programming warned us about in the 1970s. Testing is evidently lax; code inspection seems non-existent. The Heartbleed flaw is in a piece of widely used Open Source software, and was over-looked first by the programmer, and then by the designated inspector, and then it went unnoticed for two years in the wild.

What are the ramifications of Heartbleed?

"Heartbleed" is a flaw in an obscure low level feature of the "Transport Layer Security" (TLS) protocol. TLS has an optional feature dubbed "Heartbeat" which a computer connected in a secure session can use to periodically test if the other computer is still alive. Heartbeat involves sending a request message with some dummy payload, and getting back a response with duplicate payload. The bug in Heartbeat means the responding computer can be tricked into sending back a dump of 64 kiloytes of memory, because the payload length variable goes unchecked. (For the technically minded, this error is qualitatively similar to a buffer overload; see also the OpenSSL Project description of the bug). Being server memory used in security management, that random grab has a good chance of including sensitive TLS-related data like passwords, credit card numbers and even TLS session keys. The bug is confined to the OpenSSL security library, where it was introduced inadvertently as part of some TLS improvements in late 2011.

The flawed code is present in almost all Open Source web servers, or around 66% of all web servers worldwide. However not all servers on the Internet run SSL/TLS secure sessions. Security experts Netcraft run automatic surveys and have worked out that around 17% of all Internet sites would be affected by Heartbleed – or around half a million widely used addresses. These include many banks, financial services, government services, social media companies and employer extranets. An added complication is that the Heartbeat feature leaves no audit trail, and so a Heartbleed exploit is undetectable.

If you visit an affected site and start a secure ("padlocked") session, then an attacker that knows about Heartbleed can grab random pieces of memory from your session. Researchers have demonstrated that session keys can be retrieved, although it is said to be difficult. Nevertheless, Heartbleed has been described by some of the most respected and prudent commentators as catastrophic. Bruce Schneier for one rates its seriousness as "11 out of 10".

Should we panic?

No. The first rule in any emergency is "Don't Panic". But nevertheless, this is an emergency.

The risk of any individual having been harmed through Heartbleed is probably low, but the consequences are potentially grave (if for example your bank is affected). And soon enough, it will be simple and cheap to take action, so you will hear experts say 'it is prudent to assume you have been compromised' and to change your passwords.

However, you need to wait rather than rush into premature action. Until the websites you use have been fixed, changing passwords now may leave you more vulnerable, because it's highly likely that criminals are trying to exploit Heartbleed while they can. It's best to avoid using any secure websites for the time being. We should redouble the usual Internet precautions: check your credit card and bank statements (but not online for the time being!). Stay extra alert to suspicious looking emails not just from strangers but from your friends and colleagues too, for their cloud mail accounts might have been hacked. And seek out the latest news from your e-commerce sites, banks, government and so on. The Australian banks for instance were relatively quick to act; by April 10 the five biggest institutions confirmed they were safe.

Lessons for the Software Craft

Heartbleed for me is the last straw. I call it pathetic that mission critical code can harbour flaws like this. So for a start, in the interests of clarity, I will no longer use the term "Software Engineering". I've written a lot in the past about the practice and the nascent profession of programming but it seems we're just going backwards. I'm aware that calling programming a "craft" will annoy some people; honestly, I mean no offence to basket weavers.

I'm no merchant of doom. I'm not going to stop banking and shopping online (however I do refuse Internet facing Electronic Health Records, and I would not use a self-drive car). My focus is on software development processes and system security.

The modern world is increasingly dependent on software, so it passes understanding we still tolerate such ad hoc development processes.

The programmer responsible for the Heartbleed bug has explained that he made a number of changes to the code and that he "missed validating a variable" (referring to the unchecked length of the Heartbeat payload). The designated reviewer of the OpenSSL changes also missed that the length was not validated. The software was released into the wild in March 2012. It went unnoticed (well, unreported) until a few weeks ago and was rectified in an OpenSSL release on April 7.

I'd like to avoid apportioning individual blame, so I am not interested in the names of the programmer and the reviewer. But we have to ask: when so many application security issues boil down to overflow problems, why is it not second nature to watch out for bugs like Heartbleed? How did experienced programmers make such an error? Why was this flaw out in the wild for two years before it was spotted? I thought one of the core precepts of Open Source Software was that having many eyes looking over the code means that errors will be picked up. But code inspection seems not to be widely practiced anymore. There's not much point having open software if people aren't actually looking!

As an aside, criminal hackers know all about overflow errors and might be more motivated to find them than innocent developers. I fear that the Heartbleed overflow bug could have been noticed very quickly by hackers who pore over new releases looking for exactly this type of exploit, or equally by the NSA which is reported to have known about it from the beginning.

Where does this leave systems integrators and enterprise developers? Have they become accustomed to taking Open Source Software modules and building them in, without a whole lot of regression testing? There's a lot to be said for Free and Open Source Software (FOSS) but no enterprise can take "free" too literally; the total cost of development has to include reasonable specification, verification and testing of the integrated whole.

As discussed in the wake of Goto Fail, we need to urgently and radically lift coding standards.

Posted in Software engineering, Security

Calling for a uniform approach to card fraud, offline and on

This blog is an edited extract from an article of the same name, first published in the Journal of Internet Banking and Commerce, December 2012, vol. 17, no.3.

Abstract

The credit card payments system is a paragon of standardisation. No other industry has such a strong history of driving and adopting uniform technologies, infrastructure and business processes. No matter where you keep a bank account, you can use a globally branded credit card to go shopping in almost every corner of the world. Seamless convenience is underpinned by the universal Four Party settlement model, and a long-standing card standard that works the same with ATMs and merchant terminals everywhere.

So with this determination to facilitate trustworthy and supremely convenient spending everywhere, it’s astonishing that the industry is still yet to standardise Internet payments. Most of the world has settled on the EMV standard for in-store transactions, but online we use a wide range of confusing and largely ineffective security measures. As a result, Card Not Present (CNP) fraud is growing unchecked. This article argues that all card payments should be properly secured using standardised hardware. In particular, CNP transactions should use the very same EMV chip and cryptography as do card present payments.

Skimming and Carding

With “carding”, criminals replicate stolen customer data on blank cards and use those card copies in regular merchant terminals. “Skimming” is one way of stealing card data, by running a card through a copying device when the customer isn’t looking (but it’s actually more common for card data to be stolen in bulk from compromised merchant and processor databases).

A magnetic stripe card stores the customer’s details as a string of ones and zeroes, and presents them to a POS terminal or ATM in the clear. It’s child’s play for criminals to scan the bits and copy them to a blank card.

The industry responded to skimming and carding with EMV (aka Chip-and-PIN). EMV replaces the magnetic storage with an integrated circuit, but more importantly, it secures the data transmitted from card to terminal. EMV works by first digitally signing those ones and zeros in the chip, and then verifying the signature at the terminal. The signing uses a Private Key unique to the cardholder and held safely inside the chip where it cannot be tampered with by fraudsters. It is not feasible to replicate the digital signature without having access to the inner workings of the chip, and thus EMV cards resist carding.

Online Card Fraud

Conventional Card Not Present (CNP) transactions are vulnerable because, a lot like the old mag stripe cards, they rest on clear text cardholder data. On its own, a merchant server cannot tell the difference between the original card data and a copy, just as a terminal cannot tell an original mag stripe card from a criminal's copy.

So CNP fraud is just online carding.

Despite the simplicity of the root problem, the past decade has seen a bewildering patchwork of flimsy and expensive online payments fixes. Various One Time Passwords have come and gone, from scratchy cards to electronic key fobs. Temporary SMS codes have been popular but were recently declared unsafe by the Communications Alliance in Australia, a policy body representing the major mobile carriers.

“3D Insecure”

Meanwhile, extraordinary resources have been squandered on the novel “3D Secure” scheme (MasterCard “SecureCode” and “Verified by Visa”). 3D Secure take-up is piecemeal; it’s widely derided by merchants and customers alike. It is often blocked by browsers; and it throws up odd looking messages that can appear like a phishing attack or other malfunction. Moreover, it upsets the underlying Four Party settlements architecture, slowing transactions to a crawl and introducing untold legal complexities. Payments regulators too appear to have lost interest in 3D Secure.

So why doesn’t the card payments industry go back to its roots, preserve its global Four Party settlement architecture and standards, and tackle the real issue?

Kill two birds with one chip

We could stop most online fraud by using the same chip technologies we deployed to kill off skimming and carding.

It is technically simple to reproduce the familiar card-present user experience in a standard computer. It would just take the will of the financial services industry to make payments by smartcard standard. Computers with built-in smartcard readers have come and gone; they're commonplace in some Eastern European and Asian markets where smartcards are normal for e-health and online voting.

With dual interface and contactless smartcards, the interface options open right up. The Dell E series Latitudes have contactless card readers as standard (aimed at the US Personal ID Verification PIV market). But most mobile devices now feature NFC or “Near Field Communications”, a special purpose device-to-device networking capability, which until now has mostly been used to emulate a payment card. But NFC tablets and smartphones can switch into reader emulation mode, so as to act as a smartcard terminal. Other researchers have recently demonstrated how to read a smartcard via NFC to authenticate the cardholder to a mobile device.

As an alternative, the SIM or other "Secure Element" of most mobile devices could be used to digitally sign card transactions directly, in place of the card. That’s essentially how NFC payment apps works for Card Present transactions – but nobody has yet made the leap to use smart phone hardware security for Card Not Present.

Using a smart payment card with a computer could and should be as easy as using Paywave or Paypass.

Conclusion: Hardware security

All serious payments systems use hardware security. The classic examples include SIM cards, EMV, the Hardware Security Modules mandated by regulators in all ATMs, and the Secure Elements of NFC devices. With well designed hardware security, we gain a lasting upper hand in the criminal arms race.

The Internet and mobile channels will one day overtake the traditional physical payments medium. Indeed, commentators already like to say that the “digital economy” is simply the economy. Therefore, let us stop struggling with stopgap Internet security measures, and let us stop pretending that PCI-DSS audits will stop organised crime stealing card numbers by the million. Instead, we should kill two birds with one stone, and use chip technology to secure both card present and CNP transactions, to deliver the same high standards of usability and security in all channels.

Posted in Smartcards, Security, Payments, Fraud

Who's listening to Ed Snowden?

In one of the most highly anticipated sessions ever at the annual South-by-Southwest (SXSW) culture festival, NSA whistle blower Ed Snowden appeared via live video link from Russia. He joined two privacy and security champions from the American Civil Liberties Union – Chris Soghoian and Ben Wizner – to canvass the vexed tensions between intelligence and law enforcement, personal freedom, government accountability and digital business models.

These guys traversed difficult ground, with respect and much nuance. They agreed the issues are tough, and that proper solutions are non-obvious and slow-coming. The transcript is available here.

Yet afterwards the headlines and tweet stream were dominated by "Snowden's Tips" for personal online security. It was as if Snowden had been conducting a self-help workshop or a Cryptoparty. He was reported to recommend we encrypt our hard drives, encrypt our communications, and use Tor (the special free-and-open-source encrypted browser). These are mostly fine suggestions but I am perplexed why they should be the main takeaways from a complex discussion. Are people listening to Snowdenis broader and more general policy lessons? I fear not. I believe people still conflate secrecy and privacy. At the macro level, the confusion makes it difficult to debate national security policy properly; at a micro level, even if crypto was practical for typical citizens, it is not a true privacy measure. Citizens need so much more than secrecy technologies, whether it's SSL-always-on at web sites, or do-it-yourself encryption.

Ed Snowden is a remarkably measured and thoughtful commentator on national security. Despite being hounded around the word, he is not given to sound bites. His principal concerns appear to be around public accountability, oversight and transparency. He speaks of the strengths and weaknesses of the governance systems already in place; he urges Congress to hold security agency heads to account.

When drawn on questions of technology, he doesn't dispense casual advice; instead he calls for multifaceted responses to our security dilemmas: more cryptological research, better random number generators, better testing, more robust cryptographic building blocks and more careful product design. Deep, complicated engineering stuff.

So how did the media, both mainstream and online alike, distill Snowden's sweeping analysis of politics, policy and engineering into three sterile and quasi-survivalist snippets?

Partly it's due to the good old sensationalism of all modern news media: everyone likes a David-and-Goliath angle where individuals face off against pitiless governments. And there's also the ruthless compression: newspapers cater for an audience with school-age reading levels and attention spans, and Twitter clips our contributions to 140 characters.

But there is also a deeper over-simplification of privacy going on which inhibits our progress.

Too often, people confuse privacy for secrecy. Privacy gets framed as a need to hide from prying eyes, and from that starting position, many advocates descend into a combative, everyone-for-themselves mindset.

However privacy has very little to do with secrecy. We shouldn't have to go underground to enjoy that fundamental human right to be let alone. The social reality is that most of us wish to lead rich and quite public lives. We actually want others to know us – to know what we do, what we like, and what we think – but all within limits. Digital privacy (or more clinically, data protection) is not about hiding; rather it is a state where those who know us are restrained in what they do with the knowledge they have about us.

Privacy is the protection you need when your affairs are not confidential!

So encryption is a sterile and very limited privacy measure. As the SXSW panellists agreed, today's encryption tools really are the preserve of deep technical specialists. Ben Wizner quipped that if the question is how can average users protect themselves online, and the answer is Tor, then "we have failed".

And the problems with cryptography are not just usability and customer experience. A fundamental challenge with the best encryption is that everyone needs to be running the tools. You cannot send out encrypted email unilaterally – you need to first make sure all your correspondents have installed the right software and they've got trusted copies of your encryption keys, or they won't be able to unscramble your messages.

Chris Soghoian also nailed the business problem that current digital revenue models are largely incompatible with encryption. The wondrous free services we enjoy from the Googles and Facebooks of the world are funded in the main by mining our data streams, figuring out our interests, habits and connections, and monetising that synthesised information. The web is in fact bankrolled by surveillance – by Big Business as opposed to government.

End-to-end encryption prevents data mining and would ruin the business model of the companies we've become attached to. If we were to get serious with encryption, we may have to cough up the true price for our modern digital lifestyles.

The SXSW privacy and security panellists know all this. Snowden in particular spent much of his time carefully reiterating many of the basics of data privacy. For instance he echoed the Collection Limitation Principle when he said of large companies that they "can't collect any data; [they] should only collect data and hold it for as long as necessary for the operation of the business". And the Openness Principle: "data should not be collected without people's knowledge and consent". If I was to summarise Snowden's SXSW presentation, I'd say privacy will only be improved by reforming the practices of both governments and big businesses, and by putting far more care into digital product development. Ed Snowden himself doesn't promote neat little technology tips.

It's still early days for the digital economy. We're experiencing an online re-run of the Wild West, with humble users understandably feeling forced to take measures into their own hands. So many individuals have become hungry for defensive online tools and tips. But privacy is more about politics and regulation than technology. I hope that people listen more closely to Ed Snowden on policy, and that his lasting legacy is more about legal reform and transparency than Do-It-Yourself encryption.

Posted in Security, Privacy, Internet