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Fraud in the News: When A Dark Web Door Closes, A Dark Web Window Opens

posted on: Thu Aug 24 2017

We may have used this analogy before on the Kount Blog, and we’ll call upon it again because it’s true:  fighting fraud is like fighting the many-headed hydra—when you shut down one criminal element, another pops up in its place. Furthermore, it’s pretty difficult to cut any monster head off in the first place, a feat that requires herculean fraud prevention efforts.Dark Web

A recent piece of news concerning the dark web illustrates this point. As we’ve reported before, a key enabler of cybercrime and fraud is the dark web, which serves as a place for fraudsters to sell and access stolen data, perpetuating the cycle of fraud. It’s useful to think of the dark web as the anonymous network of sites where hackers exchange illicit information, leading to various types of fraud, including the development and refinement of malware, point-of-sale (POS) attacks, and the notorious Target data breach in 2013. 

Most recently, the dark web’s largest “black market,” AlphaBay, was shut down by law enforcement agencies across the U.S., Canada and Thailand. The site sold all kinds of illicit things, from stolen data and payment information to drugs. The physical details of the bust are wilder than an episode of Narcos, concluding with death in a jail cell in Bangkok.  But for our purposes—let’s stay grounded in the digital realm (please excuse that blatant paradox).

With the closure of the AlphaBay, the dark web’s largest and most active online marketplace, the runners up for that title, Hansa and Dream Market, are swelling with extra users. This is to say, the shutdown was not a definitive blow to cybercrime by any means. Rather, it opened a void for others to capitalize on new opportunity.

There is a lot of money (and bitcoin) on the dark web. According to Nicolas Christin (an associate research professor at Carnegie Mellon University), as reported by The Wall Street Journal, total sales on the AlphaBay averaged between $600,000 and $800,000 a day, earning its operators millions of dollars each year. Many think this estimate is on the conservative side.

With so much cash hanging in the balance, opportunists will come knocking. As reported by WIRED, again sourcing Christin, “each time the dark web's overall business took a temporary dive [it] came roaring back more quickly after those setbacks and continued to grow as a whole. AlphaBay, for example, had more than 20 times as many product listings as the original Silk Road.” Silk Road, was the dark web marketplace preceding AlphaBay.

This latest bust raises many questions: Who has the jurisdiction to prosecute digital crimes?  What happens to the massive sum of bitcoin lost when the site was shuttered? What is not a question, however, is whether or not a new criminal marketplace element will rise to take its place. It will.

For the time being, the best offense for businesses and consumers is defense—protecting against fraud so that sensitive data and information never ends up on the dark web in the first place.

Learn how you can stay ahead of fraudsters and reduce repeat fraud attacks in our eBook "Prosecuting the Perps: How to Ruin a Bad Guy's Day".

Prosecuting the Perps