convergence

Threat Finance
benefits offered by prepaid access.” 23 There are plans in place to begin regulating the international
transport of prepaid access products, as well, per a notice of proposed rulemaking issued
on October 11, 2011. 24
Mobile Payments
For many years, consumers worldwide have been using their mobile phones to make basic
monetary exchanges through simple transactions such as trading phone minutes and downloading
ringtones. The availability and variety of payment options and services are proliferating
as smart phone usage with Web access increases (especially in developed countries with disposable
income). Studies suggest that 35 percent of Americans currently own smart phones, 25
an increase from 17 percent of adults in 2009. 26 Whether one uses a phone as a mobile wallet
that is preloaded with currency, or as a tool to access bank or phone accounts for payments, or
as a vehicle for financial transactions via text/SMS, Web browsers, or applications (“apps”),
the phone may become the consumer’s financial settlement method of choice. Long available in
countries like India, Mexico, Kenya, and Afghanistan (with varying models and degrees of use),
the explosion of mobile services in the United States and globally is imminent. One projection
sets the mobile payments market at U.S. $630 billion globally by 2014. 27
The extent of criminal abuse of mobile payments is unknown at this time. What is certain
is that where there is money, there are criminals. Phone-based transactions can be more secure
than other means of financial transfer (for example, credit cards, which often leave the account
holder for use and are widely targeted by criminals who copy or steal the account access).
Nonetheless, the same malware that infects a desktop computer can and increasingly will affect
smart phones, making transactions vulnerable to abuse. “Apps” can be infected, passwords can
be stolen, and “phishing” emails and “smishing” texts can solicit personal information. (Antivirus
software is not widely used on smart phones because, at this stage in product history, to
run it constantly would drain the phone battery and limit the device’s convenience.) A new
study found that mobile malware for Android phones alone increased by 400 percent in the
18 months between the summer of 2010 and the report’s release in May 2011. 28 The biggest
vulnerability, however, may be the user who is unaware of the threat or is typically more relaxed
with connections made via social-networking tools. For example, a SANS Technology Institute
poll determined that 85 percent of smart phone users do not scan their devices to search for
malware from downloads and other sources. 29 There is a concern, too, that monetary sums
aside, some mobile transactions are not traceable or recordable to the extent needed by law enforcement
or intelligence to disrupt or prosecute those committing illicit activities. Simply put,
mobile payment systems can be considered the “Wild West” for savvy criminal organizations.
Virtual Payments
It may sound odd that virtual currency in a cartoon-like Internet space could have real-world
monetary value. This is the case, however, with Linden Dollars, the monetary unit within
the “Second Life” online community. Players in these worlds can earn or pass virtual dollars
through activities online (for example, by creating a virtual bar at which your virtual customers
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