Fraud At Sprint Offers Lessons For Enterprises, Experts Say

The recently revealed abuse of insiders' system privileges to commit fraud at Sprint could be a wake-up call for other enterprises to implement more stringent security practices, experts said this week.

Last week, nine Sprint employees were charged with misusing their access to the telecommunications giant's systems to redirect phone charges to other customers by "cloning" their cell phones -- to the tune of more than $15 million in fraudulent charges in the first six months of this year.

The case highlights the need for enterprises to implement controls that will help them catch insiders who might be focused on fraud, says Dawn Cappelli, technical manager of the threat and incident management team at Carnegie Mellon University's Software Engineering Institute CERT Program.

"Any controls that organizations can think of to put on their systems, as far as what data should this person be accessing [or] what would look out of the ordinary, are important," Cappelli says.

Such attacks are becoming more common, according to CMU's Software Engineering Institute. Last year, more than half of the respondents to the group's 2010 CyberSecurity Watch Survey said they were the victim of an insider attack. The average insider attack lasts about 15 months, Cappelli says.

"They don't do it once and stop," she says. "In most cases, they are caught from the outside -- and that takes time."

Insider attacks generally aren't as numerous as those from outside the company, according to industry research. In its annual Data Breach Investigations Report, Verizon Business found that the impact of external attackers far outweighed those of malicious employees: A compromised record is 70 times more likely to have been exposed by an external attacker, the company's data shows.

But a single insider attack can take a heavy toll on the company, researchers say. In fact, two-thirds of chief security officers estimate that insider attacks are more damaging than attacks by outsiders, according to the 2010 CyberSecurity Watch Survey conducted by CMU.

Insider fraud attacks, such as the Sprint incident, have different characteristics than insider attacks focused on stealing intellectual property or sabotaging company operations, Cappelli says. Fraud tends to be perpetrated by lower-paid employees without deep technical knowledge. Engineers, scientists, and managers are far more likely to steal intellectual property, especially if they had a hand in creating it. Fired programmers, IT workers, and database administrator are more likely to focus on sabotage, she says.

Access controls and monitoring can be very effective in preventing insider fraud, experts observe. Sprint's customers, for example, acted as a check on the activities of the company's insiders: When they saw extra charges on their bills, they reported the fraud to the telco.

Monitoring for other simple signs of fraud -- such as large-scale database manipulations -- can also help, says Phil Neray, vice president of security strategy at Guardium, now part of IBM.

"Look for specific things that violate policies -- new tables that are being created by people who are not supposed to change them," he says. "Typically, a database administrator or developer does not need to read information in the database."

Most companies need to improve their responses to malicious insider actions, CMU's Cappelli says. Disciplining the employee is not the end of the incident, she says.

"Organizations do catch people doing illegal or unauthorized activity," she says. "But then they just take some kind of action against that employee, and they don't think about what control they can put into place so that if someone else does [a similar attack], they can catch them or stop them."

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