I like to read other people’s stories when it comes to spam, and I like Box of Meat. It’s always alerting me to interesting stories around the web that deals with cyber security. But the more I read, the more I see conflicting views on the state of the criminal cybercrime world. On the one hand, the Russian criminal cybercrime underworld is a scary, organized place where people are actively trying to do the rest of us harm. On the other hand, there is the position that that position is an exaggeration of what it is actually like and that it’s a bunch of ragtag folks who have some advanced computer skills but they are not formally organized. They trade amongst each other for the highest prices and exchange goods and services like the open market but they are not colluding with each other. I see this very similarly to how I see cyber warfare—on the one hand there are the hawks who believe national cyber threats are behind every corner, and on the other hand there are the doves (for lack of a better word) who claim there is no national cyber threat, it’s all about crime that has moved online.

Consider excerpts from this article from the New York Times:

MOSCOW—On the Internet, he was known as BadB, a disembodied criminal flitting from one server to another selling stolen credit card numbers despite being pursued by the United States Secret Service. And in real life, he was nearly as untouchable—because he lived in Russia. BadB’s real name is Vladislav A. Horohorin, according to a statement released last week by the United States Justice Department, and he was a resident of Moscow before his arrest by the police in France during a trip to that country earlier this month.

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The seizing of BadB provides a lens onto the shadowy world of Russian hackers, the often well-educated and sometimes darkly ingenious programmers who pose a recognized security threat to online commerce—besides being global spam nuisances—who often seem to operate with relative impunity.

Law enforcement groups in Russia have been reluctant to pursue these talented authors of Internet fraud, for reasons, security experts say, of incompetence, corruption or national pride. In this environment, BadB’s network arose as “one of the most sophisticated organizations of online financial criminals in the world,” according to a statement issued by Michael P. Merritt, the assistant director of investigations for the Secret Service, which pursues counterfeiting and some electronic financial fraud.

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According to the Secret Service statement, Mr. Horohorin managed Web sites for hackers who were able to steal large numbers of credit card numbers that were sold online anonymously around the globe. Those buyers would do the more dangerous work of running up fraudulent bills. The numbers were exchanged on Web sites called CarderPlanet carder.su and badb.biz—according to the Secret Service, and payment was made indirectly through accounts at a Russian online settlement system known as Webmoney, an analogue to PayPal.
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Computer security researchers have raised a more sinister prospect: that criminal spamming gangs have been co-opted by the intelligence agencies in Russia, which provide cover for their activities in exchange for the criminals’ expertise or for allowing their networks of virus-infected computers to be used for political purposes—to crash dissident Web sites, perhaps.

Reading this article, you would come away with the impression that these guys are very good at what they do—they have extensive computer hacking and social engineering skills, are well educated not to mention being good at money laundering (or being affiliated with people who are good at it). We see terms such as ‘sophisticated’ being used to describe these people. They are a definitive threat and the odds of actually arresting them are small; when they are arrested, it is seen as the exception and not the norm. In any case, they are not a ragtag bunch of people but instead are well organized and intentional about their behavior.

Worse yet, there are possible collusions between themselves and national intelligence agencies. This makes the general public even more concerned because the not-so-subtle implication is that not only do these people have extensive hacking skills, they could potentially use this to cripple national infrastructure if a hostile government, directed by an intelligence agency, instructed them to do so. The general public isn’t entirely clear on what spy agencies do anyway, but in our cultures we are ingrained with the belief that they do some nasty stuff. Just imagine what they could do with a small army of hackers.

However, contrast that article with excerpts from this one in eWeek:

When people think of cyber-crime, the typical image being pushed today is that of highly organized criminal operations. New research, however, suggests the underbelly of cyber-space may be less mafia-like than some think. In an effort to improve the level of understanding of today’s black hats, security researchers Fyodor Yarochkin and “The Grugq” have spent several months looking at Russian hacker forums.

“It is an ongoing project that we started about 18 months ago,” Grugq told eWEEK. “Originally it started when Fyodor investigated some service offerings from Russian hacker forums for a specific project that I was working on. It turned out to be extremely interesting and amusing, so we discussed doing more long-term monitoring on the forums. It grew from there into what is now a continuous monitoring program.”

Their research was presented last month at the Hack in the Box 2010 conference in Amsterdam. What the two found was that the image of a highly organized cyber-underworld run by hardcore criminals is not the order of the day. Instead, the dozen or so hacker forums they analyzed illustrated that many of the users are “geeks, not gangsters,” the researchers said.

“Basically, from what we’ve seen on the forums much of what goes on with the sales of services is much more petty criminal activity, or crimes of opportunity,” Grugq said. “Often poor students who like to hack for fun will sell access to a server they’ve owned. Many don’t even realize that this is an illegal activity. This sale will be for $20 or $30, which is a lot of money for a poor student in Russia, but for a hardened criminal mastermind bent on destroying Western civilization—not so much.”

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“In terms of percentage, there’d be two to three guys working on stuff professionally, versus 10 to 20 hobbyists,” he continued. “Most of the activity is essentially petty criminal activity where guys are trying to make a little extra cash on the side. You can think of it as a self-organizing hierarchical system with needs and people able to provide goods and services to satisfy the needs.”

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“From what we can guess,” Grugq said, “any [mob] involvement is more along the lines of some people at the very top of the stack have to pay off the real gangsters. ... So, for example, if you are organizing a massive credit card cash-out scam which nets millions of dollars, you’ll have to pay protection money to the mob to not get robbed. It doesn’t look like the mob itself is organizing these cash-outs though.

“We’re not disputing that organized crime is involved with cyber-crime, but the popular conception of leather jacketed thugs running around with firearms and laptops is not in line with what we have observed from the actual communities,” he said. “It seems like it is very useful for some companies to popularize the scary idea of Russian cyber-gangsters, but honestly the involvement seems to be much more hands off.”

This is quite a bit different than the perspective offered by the first article. Here, we still have perpetrators that are advanced hackers with strong computer skills. However, they are not organized amongst each other and view their craft like a bunch of frat boys. They boast amongst themselves. They argue amongst themselves. They don’t even seem to realize that what they are doing is illegal. What makes the problem so widespread is that the cost of technology has dropped so much and Internet access has become so ubiquitous that they can do a lot of damage with limited human resources.

A few weeks ago I wrote about how many hackers who get arrested are arrested because of their own hubris. They do not have their egos in check and therefore end up leading a cyber paper trail straight to their lairs. Their lack of life experience leads to carelessness, and when that occurs they get caught. It is more of a bunch of individual actors doing stuff, trading stuff, trying to make some money. This is hardly the portrait painted by the New York Times.

So which portrait is correct?

Well, to be sure, there are many hackers out there that are hobbyists, and they are the ones that get caught. But it certainly seems like there are plenty of organized criminal groups out there (such as Avalanche). A conspiracy is often a “nice” way to explain all that’s wrong in the world, but most conspiracies rarely hold up to close examination (never attribute to malfeasance what you can simply attribute to incompetence).

My theory is that this is a variant of the Pareto principle. The Pareto principle, also called the 80/20 rule, states that 80% of the effects are from 20% of the causes. In a business, 80% of the revenue comes from 20% of the sales. 80% of the systems crashes are caused by 20% of the bugs. 80% of the movement on the stock market comes on 20% of the days (not sure if this one is true… it sure feels like it).

In the same way, 80% of the cybercrime is caused by 20% of the cyber criminals. The other 80% of the cyber criminals do some damage and are not so difficult to back trace. They are nuisances and commit online fraud but will always remain small potatoes. By contrast the good ones, the 20%, are very good at what they do. They are smaller and better and cause more damage, and get paid more. The reason they get paid more is because they are more skilled and have the full repertoire—good computer skills and good people management skills, that is, the ability to stay anonymous.

People who are good at their craft usually make more money, and in order to stay alive in the criminal underworld (that is, without getting arrested), you need to be good. Not everyone is good at what they do (like the players on my favorite football team which explains their current 2-6 record). The ones who aren’t that good browse forums and chat openly about stuff. They don’t make too much money. The ones who are good are busy honing their craft, coming up with new ways to separate people from their money and they don’t browse forums. They are spending their time getting better at what they do, not raising their profile.

That’s why the second article paints a picture of a disorganized structure of hackers. The hackers that they can examined fall into the 80% that just aren’t the kingpins of the industry. That’s why the first article paints a picture of doom and gloom, they are studying the elite group of hackers that are difficult to catch and more difficult still to profile.

That’s my theory.