Microsoft today kicked off a new Web-based mechanism for researchers to securely report stolen credentials, bank and credit card data, or other data they discover, and as a way to quickly alert the appropriate banks, retailers, or government agencies of a compromise.

The new Internet Fraud Alert system is a free, members-only portal of sorts that centralizes the stolen information found by investigators and automatically determines the affected bank or retailer. Aside from Microsoft, Citizens Bank, eBay, and PayPal are all charter members of new program, which was launched today with the blessing of the Federal Trade Commission (FTC), the American Bankers Association, the Anti-Phishing Working Group, and the National Consumers League.

Tim Cranton, associate general counsel for Microsoft's Digital Crimes Unit, says Microsoft developed the underlying tool for the alert system, which will be housed and managed by the National Cyber-Forensics & Training Alliance (NCFTA). "Before, it's been an ad hoc system in place" for reporting stolen information, Cranton says. "Researchers don't have to know any more than the stolen [information] they found. The tool does the batch lookups to determine the bank involved," for instance, he says. "The bank that owns those accounts will only [be alerted] that it was compromised."

Microsoft's recent work on the takedown of the Waledac botnet helped inspire the creation of the new Internet Fraud Alert program, according to Cranton. "We uncover large volumes of compromised data across all of our investigations. It was real frustrating for us as well as other researchers to learn that there was no mechanism to deal with [the reporting of it]," he says. "We felt that in addition to strong enforcement efforts, we wanted to add a prevention level."

Cranton says the system is secure: All of the data collected via the service will sit on firewall-protected servers and use multiple levels of encryption. The system was heavily penetration-tested before its launch, according to Microsoft. NCFTA is a nonprofit that unites local, state, and federal law enforcement, businesses, and academic institutions to collaborate on cybercrime. Accuity, a provider of global payment routing data, provided a tool for NCFTA to vet potential members of the Internet Fraud Alert service.

"Internet Fraud Alert is a promising and innovative approach to help financial and online institutions discover hijacked accounts and close them or inform the affected consumers. We hope that someday there won't be a need for a secure database of stolen account credentials," said Chuck Harwood, deputy director of the FTC, in a statement.

It's up to the member institutions to inform their customers if their information is breached. Microsoft's Cranton said another dozen members signed up today, but he could not reveal the names of the organizations. The ABA has informed its 1,000 banking institution members about the new service.

Participating organizations are currently U.S.-based, but Cranton says the next step is to advocate similar centralized fraud-reporting mechanisms in other countries. And the hope is that the information gathered and identified is there to help law enforcement process cybercrime cases. "We want to make sure this information also supports law enforcement and bridges some of the gaps in evidence for enforcement," Cranton says.

So ideally, the service would help correlate stolen data with actual attacks, victims, and attackers. "Then they can start building those big cases and figure out who the major sources are. And when they prosecute, they will have real numbers in the damages," Cranton says.

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