1. Forensic and Investigative Accounting
Chapter 15
Cybercrime Management:
Legal & Ethical Issues

2. Forensic and Investigative Accounting
Professor’s Note:
I have incorporated material from other sources into this presentation to include ethical issues.
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3. Culture Helps Determine Laws and Ethical Standards
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4. Forensic and Investigative Accounting
Ethical Principles
Golden rule: Do unto others as you would have them do unto you
Immanuel Kant’s categorical imperative: If an action is not right for everyone to take, then it is not right for anyone
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5. Forensic and Investigative Accounting
Ethical Principles
Descartes’ rule of change: If an action cannot be taken repeatedly, then it is not right to be taken at any time
Utilitarian principle: Put values in rank order and understand consequences of various courses of action
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6. Forensic and Investigative Accounting
Ethical Principles
Risk aversion principle: Take the action that produces the least harm or incurs the least cost
Ethical “no free lunch” rule: All tangible and intangible objects are owned by creator who wants compensation for the work
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7. Information Rights: Privacy and Freedom in the Internet Age
Privacy: Claim of individuals to be left alone, free from surveillance or interference from other individuals, organizations, or the state
Fair information practices: Set of principles governing the collection and use of information on the basis of U.S. and European privacy laws
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8. U.S. Federal Privacy Laws
General Federal Privacy Laws
Freedom of Information Act, 1968
Privacy Act of 1974
Electronic Communications Privacy Act of 1986
Computer Matching and Privacy Protection Act of 1988
Computer Security Act of 1987
Federal Managers Financial Integrity Act of 1982
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9. Communications with Children
Children’s Online Privacy Protection Act of (COPPA)
Provides restrictions on data collection that must be followed by electronic commerce sites aimed at children
Requires schools that receive federal funds to install filtering software on computers
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10. Sanrio’s Approach to COPPA Compliance
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11. Forensic and Investigative Accounting
Ethical Issues
Web businesses find ethical issues are important to consider when making policy decisions
Differences in cultures throughout the world have resulted in different expectations about privacy in electronic commerce
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12. Ethical Issues (continued)
Principles for handling customer data
Use data collected to provide improved customer service
Do not share customer data with others outside your company without the customer’s permission
Tell customers what data you are collecting and what you are doing with it
Give customers the right to have you delete any of the data you have collected about them
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13. Forensic and Investigative Accounting
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14. Forensic and Investigative Accounting
Ethical Issues
Under what conditions should the privacy of others be invaded?
What legitimaizes intruding into others’ lives through unobtrusive surveillance, through market research, or by whatever means?
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15. Forensic and Investigative Accounting
Ethical Issues
Do we have to inform people that we are eavesdropping?
Do we have to inform people that we are using credit history information for employment screening purposes?
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16. Property Rights: Intellectual Property
Intellectual property: Intangible creations protected by law
Trade secret: Intellectual work or product belonging to business, not in public domain
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17. Property Rights: Intellectual Property
Copyright: Statutory grant protecting intellectual property from getting copied for 28 years
Patents: Legal document granting the owner an exclusive monopoly on the ideas behind an invention for 20 years
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18. Jurisdiction on the Internet
Power, effects, legitimacy, and notice do not translate well to the virtual world of electronic commerce
Governments that want to enforce laws must establish jurisdiction over business conduct
Contract
Promise or set of promises between two or more legal entities
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19. Jurisdiction on the Internet (continued)
Tort
Intentional or negligent action taken by a legal entity that causes harm to another legal entity
Court has sufficient jurisdiction in a matter if it has both subject matter jurisdiction and personal jurisdiction
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20. Subject-matter Jurisdiction
Court’s authority to decide a type of dispute
Personal jurisdiction
Determined by the residence of the parties
Forum selection clause
States that a contract will be enforced according to laws of a particular state
Long-arm statutes
Create personal jurisdiction over nonresidents who transact business in the state
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21. Forum Selection Clause on the Qpass Web Site
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22. Use and Protection of Intellectual Property in Online Business
Includes all products of the human mind
Products can be tangible or intangible
Intellectual property rights
Include protections by governments through
Granting of copyrights and patents
Registration of trademarks and service marks
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23. Web Site Content Issues
Fair use of a copyrighted work
Includes copying it for use in criticism, comment, news reporting, teaching, or research
Vicarious copyright infringement
Entity becomes liable if
It is capable of supervising infringing activity
Obtains financial benefit from infringing activity
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24. Domain Names, Cybersquatting, and Name Stealing
Registering a trademark domain name
Name changing
Registering misspelled variations of well-known domain names
Name stealing
Ownership of a site’s assigned domain name is changed to another site and owner
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25. Domain Names, Cybersquatting, and Name Stealing (continued)
U.S. Anticybersquatting Consumer Protection Act (ACPA)
Protects trademarked names from being registered as domain names by other parties
Parties found guilty of cybersquatting can be held liable for damages of up to $100,000 per trademark
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26. Protecting Intellectual Property Online
Proposed solutions to problems in digital copyright protection
Host name blocking
Packet filtering
Proxy servers
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27. Forensic and Investigative Accounting
Defamation
Defamatory statement
Statement that is false and injures the reputation of another person or company
Product disparagement
If a defamatory statement injures the reputation of a product or service instead of a person
Per se defamation
Court deems some types of statements to be so negative that injury is assumed
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28. Deceptive Trade Practices
Federal Trade Commission
Regulates advertising in the United States
Publishes regulations and investigates claims of false advertising
Provides policy statements
Policies cover specific areas such as
Bait advertising
Consumer lending and leasing
Endorsements and testimonials
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29. U.S. Federal Trade Commission Advertising Guidance page
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30. Online Crime, Terrorism, and Warfare
Obstacles faced by law enforcement
Jurisdiction
Difficulty applying laws written before the Internet became prevalent to criminal actions
Online warfare and terrorism
Sustained effort by a well-financed terrorist group could slow down operation of major transaction-processing centers
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31. Introduction to Cybercrime
Most common complaints:
Virus attacks—78%
Insider abuse of net access—59%
Laptop/mobile theft—49%
Unauthorized access to information—39%
System penetration—37%
Denial of service—17%
Theft of proprietary information—10%
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32. Forensic and Investigative Accounting
Net Frauds
Net frauds ensnare unsuspecting Internet users into giving up their resources to an online criminal.
Phishing
Nigerian Letters
Pharming
valid URL redirects to the criminals' websites
Social engineering
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33. Forensic and Investigative Accounting
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34. Forensic and Investigative Accounting
Intangible Assets
Information on the Internet and in computer databases represents intangible assets composed of bits and bytes.
The destruction of electronic representations or the erasure of data without physically damaging a tangible computer asset may not be considered a crime.
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35. Forensic and Investigative Accounting
Intangible Assets
If data is accessed but not used for any purpose, then no crime is committed.
Statutes may not provide for the recognition of criminal trespass, a property crime, based on a virtual presence (and no physical presence).
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36. Forensic and Investigative Accounting
Cybercrime or Not?
Spoofing
Use of bots
Chaffing
Steganography
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37. Forensic and Investigative Accounting
International Law
Although 249 countries have IP domain registrations, the countries with cybercrime statutes are fewer.
Some countries have broad provisions for computer crimes, some have limited provisions, and still some had no provisions at all.
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38. Forensic and Investigative Accounting
International Law
In 2001, the Council of Europe Convention on Cybercrime issued a model law for its member states including transactional cooperation recommendations. The Council’s model law has 48 sections for incorporation into national laws on cybercrime.
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39. Federal Statutes Related to Cybercrimes
18 U.S.C. 1029
Fraud and Related Activity in Connection with Access Devices
18 U.S.C. 1030
Fraud and Related Activity in Connection with Computers
18 U.S.C. 2701
Unlawful Access to Stored Communications
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40. Forensic and Investigative Accounting
USA Patriot Act of 2001
The USA Patriot Act has strengthened U.S. cyber laws and expanded cybercrime definitions.
Under the Act, an activity covered by the law is considered a crime if it causes a loss exceeding $5,000, impairment of medical records, harm to a person, or threat to public safety.
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41. Forensic and Investigative Accounting
USA Patriot Act of 2001
Amendments made by the Act make it easier for an Internet service provider (ISP) to make disclosures about unlawful customer actions without the threat of civil liability to the ISP.
Another revision made by the Act provides that victims of hackers can request law enforcement help in monitoring trespassers on their computer systems.
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42. Forensic and Investigative Accounting
State Legislation
Many of the states have separately enacted money laundering, identity theft, online gambling, cyberstalking and other Internet statutes in their codes.
Many statutes do not refer to “cybercrimes” as they were originally enacted when there was no Internet. Thus, legislative oversight in the acts tends to focus on “computer crimes,” “unlawful access,” or “property crimes.”
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43. Forensic and Investigative Accounting
Fighting Cybercrime
The following list describes the skill set needed to fight cybercrime:
Ability to build an Internet audit trail
Skills needed to collect “usable” courtroom electronic evidence
Ability to trace an unauthorized system user
(continued on next slide)
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44. Forensic and Investigative Accounting
Fighting Cybercrime
Knowledge base to use in recommending or reviewing security policies
Knowledge of the most recent computer fraud techniques
Basic understanding of the information that can be collected from various computer logs
Ability to place a valuation on incurred losses from attacks
(continued on next slide)
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45. Forensic and Investigative Accounting
Fighting Cybercrime
Technical familiarity with the Internet, web servers, firewalls, attack methodologies, security procedures, and penetration testing
Understanding of organizational and legal protocols in incident handling to prevent employee rights violations
An established relationship with law enforcement agencies
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46. Forensic and Investigative Accounting
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47. Forensic and Investigative Accounting
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48. Forensic and Investigative Accounting
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49. Forensic and Investigative Accounting
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50. Forensic and Investigative Accounting
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51. Forensic and Investigative Accounting
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52. Forensic and Investigative Accounting
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58. Filing Reports of Cybercrimes
An investigator should know where, besides law enforcement, such crimes can be reported. There are a number of websites that collect information about events that may be cybercrimes.
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59. Forensic and Investigative Accounting
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62. End Ch. 15 Resources Listed Below
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