2. Chapter 7 Computer Crime, Ethics, and Privacy
Introduction
Computer Crime, Abuse, and Fraud
Examples of Computer Crimes
Mitigating Computer Crime and Fraud
Ethical Issues, Privacy, and Identity Theft

3. Computer Crime Computer Crime
involvement of the computer in a criminal act
directly, or
indirectly.
definition important
because it affects how the statistics are accumulated.
a small proportion
gets detected
even smaller proportion gets reported.

4. Computer Crime & Abuse - the Difference
Computer crime involves the manipulation of a computer or computer data, to dishonestly
obtain money, acquire property, or get some other advantage of value, or to cause a loss.
Computer abuse is when someone’s computer is used or accessed
a mischievous manner with a motive of revenge or challenge
is punishable in extreme cases

5. Federal Legislation
The Computer Fraud and Abuse Act (CFFA) of 1986 which was amended in 1994 and 1996
Defines computer fraud as an illegal act for which computer technology is essential for its perpetration, investigation, or prosecution.
Defines seven fraudulent acts, the first
three are described as misappropriation
of assets and the last four as “other” crimes

6. 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.

7. 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.

8. Other Federal Legislation Affecting the Use of Computers
Fair Credit Reporting Act of 1970
Freedom of Information Act of 1970
Federal Privacy Act of 1974
Small Business Computer Security and Education Act of 1984
Computer Fraud and Abuse Act of 1986

9. Federal Legislation Affecting the Use of Computers
Computer Fraud and Abuse Act (1996 amendment)
Computer Security Act of 1987
USA Patriot Act of 2001
Cyber Security Enhancement Act of 2002
CAN-SPAM Act of 2003

10. Federal Legislation Affecting the Use of Computers
Question
Which of the following pieces of computer legislation is probably the most important?
a. Cyber Security Enhancement Act of 2002
b. Computer Security Act of 1987
c. The Computer Fraud and Abuse Act of 1986
d. Federal Privacy Act of 1974

11. The Lack of Computer-Crime Statistics
Good data unavailable
Three reasons
private companies handle abuse internally
surveys of computer abuse are often ambiguous
most computer abuse is probably not discovered.

12. The Growth of Computer Crime
Computer crime is growing because of
Exponential growth in computer resources
Internet pages give step-by-step instructions on how to perpetrate computer crime

13. Importance for Accountants
Importance of computer crime and abuse to accountants
because AISs
help control an organization’s financial resources
are favored targets of disgruntled employees
seeking financial gain or
seeking revenge

14. Importance for Accountants
because they are responsible for
designing,
implementing, and
monitoring the control procedures for AISs.
because firms suffer millions of dollars in computer-related losses
due to viruses,
unauthorized access, and
denial of service attacks

15. Three Representative Computer Crimes Cases
Compromising Valuable Information: The TRW Credit Data Case
Wire Fraud and Computer Hacking:
The Edwin Pena and Robert Moore Case
Denial of service:
The 2003 Internet Crash
Through a very speedy computer worm, the Slammer worm

16. The TRW Credit Data Case
This computer crime
is well known
involved computerized credit data
had two key issues:
the propriety of the input information
the protection afforded to both consumer and user in the accuracy and use of credit information

17. The TRW Credit Data Case
Question
The TRW case is notable because
a. the amount of dollars involved was not significant.
b. no one got caught.
c. the fraud was detected by a surprise audit.
d. the real victims were TRW customers.

18. Methods Used by Criminals
Hackers
people who break into the computer files of others for fun or personal gain.
Shoulder surfing
stealing calling credit numbers at public phones
Password controls
limiting computer access to bona fide users

19. Methods Used by Criminals
Social engineering
posing as bona fide employees
Lock-out systems
disconnecting telephone users after a set number of unsuccessful login attempts
Dial-back systems
disconnecting all login users,
reconnecting legitimate users after checking their passwords

20. Examples of Computer Crimes.
A graduate student infected a computer network with a virus that eventually disrupted over 10,000 separate systems.
A company accused a computer-equipment vendor of fraudulently representing the capabilities of a computer system, that the full system was never delivered and that the software was inadequate.
In a fit of resentment, a keyboard operator shattered a CRT screen with her high-heeled shoe.
Some employees of a credit bureau sent notices to some individuals listed as bad risks in its files.

21. Examples of Computer Crimes.
For a fee, the employees would withhold the damaging information, thereby enhancing the credit worthiness of the applicants.
A computer dating service was sued because referrals for dates were few and inappropriate. The owner eventually admitted that no computer was used to match dates, even though the use of a computer was advertised.
A programmer changed a dividends-payment program to reduce the dividends of selected stock-holders, and to issue a check to himself for the sum of the reductions—$56,000.

22. Robert T. Morris and the Internet Virus
created one of the world’s most famous computer viruses
became first person to be indicted under the Computer Fraud and Abuse Act of 1986
The case illustrated vulnerability of networks to virus infections.

23. Computer Viruses Computer virus is a program
that disrupts normal data processing and
that can usually replicate itself onto other files, computer systems or networks.
Boot-sector viruses
hide in the boot sectors of a disk
are accessed there by the operating system
every time the system is booted.
Worm viruses
replicate themselves until the user runs out of memory or disk space.

24. Computer Virus Programs
Trojan Horse programs
reside in legitimate copies of computer programs.
Logic Bomb programs
remain dormant until the computer system encounters a specific condition.
A virus may be stored in an applet, which is a small program stored on a WWW server.

25. Computer Virus Programs
Question
A computer program that remains dormant until some specified circumstance or date triggers the program to action is called a
a. trojan horse
b. logic bomb
c. data diddling
d. cookie

26. Thwarting Computer Viruses
Firewalls which limit external access to the computer.
Antivirus software.
Antivirus control procedures.

27. Thwarting Computer Viruses: Anti-Virus Software
Anti-virus software includes computer programs that can:
scan computer disks for virus-like coding;
identify active viruses already lodged in computer systems;
cleanse computer systems already infected;
perform a combination of these activities.

28. Drawbacks of Anti-Virus Software Programs
Anti-virus programs provide less-than- complete protection because
new, more powerful viruses are always being written that can avoid known detection schemes.
anti-virus programs can contain virus routines.

29. Anti-Virus Procedural Controls
Buy shrink-wrapped software from reputable sources
Avoid illegal software copying
Do not download suspicious Internet files
Delete messages from unknown sources before opening them
Maintain complete backup files

30. Organizational Safeguards Against Computer Viruses
Educate employees about viruses.
Encourage employees to follow virus prevention and detection techniques.
Establish policies that discourage the free exchange of computer disks or externally acquired computer programs.

31. Organizational Safeguards Against Computer Viruses
Use computer passwords to thwart unauthorized users from accessing the company’s operating systems and files.
Use anti-virus filters on LANs and WANs.
Have an approved and tested disaster recovery plan.

32. Methods for Thwarting Computer Abuse
Enlist top management support
Increase employee awareness and education
Conduct Security Inventory and protect passwords
Implement controls
Identify computer criminals
Look at technical backgrounds, morals, and gender and age

33. Thwarting Computer Abuse
Recognize the symptoms of employee fraud
Accounting irregularities such as forged, altered or destroyed input documents
Internal control weaknesses
Behavioral or lifestyle changes in an employee
Unreasonable anomalies that go unchallenged
Employ forensic accountants

34. Computers and Ethical Behavior
Ethics
a set of moral principles or values
governing an organization as well as individuals
Ethical behavior
making choices and judgments that are morally proper and then acting accordingly.

35. Ethical Issues Honesty Protecting Computer Systems
Protecting Confidential Information
Social Responsibility
Rights of Privacy
Acceptable Use of Computer Hardware and Software.

36. Encouraging Ethical Behavior
Inform employees that ethics are important.
Formally expose employees to relevant cases that teach how to act in specific situations.
Teach by example, that is, by managers acting responsibly.

37. Encouraging Ethical Behavior
Use job promotions and other benefits to reward those employees who act responsibly.
Encourage employees to join professional organizations with codes of conduct such as Codes of Conduct and Good Practice for Certified Computer Professional.

38. Computers and Privacy Issues
Company policies with respect to privacy issues
Privacy policy should include
who owns the computer
for what purposes can the computer be used
what uses are authorized or prohibited
disposal of computers

39. Methods Used to Obtain Your Personal Data
Shoulder surfing
Dumpster diving
Applications for “preapproved” credit cards
Key logging software
Spam and other s

40. Copyright Copyright 2008 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser may make backup copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

41. Chapter 7