threatmatrix

Hosted data centers have become a common avenue for enterprises to access and deliver IT services, but they’re also a hit with cyber criminals.

According to a recent report by ThreatMatrix, there is a correlation between top U.S. cities for online fraud and those that are home to hosted data centers, with Tampa, Fla. topping the list, followed by New York. Major U.S. cities rounding out the top 10 included Los Angeles, Atlanta and Chicago.

Alisdair Faulkner, chief products officer at ThreatMatrix, said the company found that in a majority of these cities, there were large concentrations of fraud attempts coming from recognized data centers. Although the data is restricted to the U.S., he expects it is a worldwide trend in large cities that are home to many of these types of facilities. “Cyber criminals are leveraging them to monetize stolen identities. There are plenty to choose from.”

In the past, ThreatMatrix has done city-specific research that looked at the true origin of fraud attacks. This time, the rankings were based on which proxies or virtual locations fraudulent transactions appear to come from, Faulkner said. This latest data represents the intersection of locations that have the largest concentration of data centers with offline identities that have been compromised in recent breaches.

The hosted data centers are being used to exploit stolen identities from recent data breaches, said Faulkner, as breached identities are being funneled through rented online servers using stolen credit cards and criminals set up VPN servers and proxy software at hosted service providers to appear in a location that is consistent with a stolen identity. He said location is important, and criminals are looking for a diversity of IP addresses.

Faulkner said hosted service providers and data centers end up becoming unwitting accomplices and victims of online fraud. It’s not so much that these data centers have security breaches; the criminals are in fact paying for server time, albeit with stolen credit cards, while leveraging legitimate infrastructure such as privacy-enhancing and VPN services being hosted at these locations. “The advantage is they don’t have to share it and be stealthier,” he said.

To keep cybercriminals at bay, hosted data centers should implement a cyber-security strategy that dynamically assesses the digital identities and devices of the entities they do business with to accurately identify illegitimate usage in real time. Faulkner said authentication systems and transaction monitoring systems have to be integrated. “They need to have means of verifying their customer.”

Faulkner said the use of hosted data centers is growing with the adoption of cloud computing and Platform-as-a-Service for enterprises become more popular and robust. And while cyber-criminals setting up shop are not likely to be a threat tolegitimate customers who have stringent security protocols, a significant amount of nefarious traffic could have an adverse impact on overall data center performance.

In early June,  Microsoft announced it was building two data centers in Canada to support its customers cloud computing requirements and is spending more than US$10 billion a year on Azure data centers. Other recent launches include facilities owned by Terago, among others.



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