Central and Eastern Europe: A Growing Cybercrime Hub

Posted February 8, 2018

Central and Eastern Europe: A Growing Cybercrime Hub

For the first time ever, Russia has emerged as one of the Top 5 attack originators in the world, according to the Q4 2017 Cybercrime Report from ThreatMetrix. But its former republics and allies could soon give this new cybercrime leader a run for its ill-gotten money.

Neighboring countries in the Central and Eastern Europe (CEE) region are quickly following in Russia’s footsteps once again, only this time as a hotbed of cybercrime activity rather than communism.

Are we seeing the beginning of what could turn out to be a not-so-friendly rivalry among neighbors?

Growing Up Quickly

Indeed, countries in the CEE region have been the launching point for some of today’s most malicious viruses – Tinba from Romania, Gozi from Bulgaria and GozNym from Poland. And, Interpol reports that cybercrime originating from this region is increasing in both scale and sophistication.

As we have seen in other areas of the globe, an increase in home-grown cybercrime can be linked to the economic growth of a region. The more an economy grows, the more cybercrime proliferates. And, the 18 CEE countries make for a rapidly developing market, both in terms of technology and economics.

This growth has economists predicting that the CEE region will play a substantive role in Europe’s future. After all, during the past five years, the region has registered impressive growth in one key area – information communication technology – as a share of its GDP. For example, Bulgaria saw its share rise from 1.3 percent in 2012 to 3.3 percent in 2016.

Having clearly surpassed many expectations, many are predicting this region will emerge at the forefront of what is often called the “fourth industrial revolution” – a wave of technological change – in the European Union.

Upward Mobility

As in many other regions, the rapid adoption of mobile technology has turned Central and Eastern Europe into a mobile-first region, with a majority of consumers preferring to shop via mobile devices rather than desktop.

Despite that, online shopper penetration in this region is relatively low, even though countries in this market experienced the highest eCommerce sales growth last year, representing a huge opportunity for online retailers.

However, payment and delivery methods differentiate these countries from their mature counterparts, with cash on delivery being the preferred payment method for online goods. Consumers in these countries also tend to receive goods at designated delivery terminals.

So, keen eCommerce players should offer a variety of languages as well as payment options and delivery methods to capitalize on this environment and encourage cross-border shopping in this growing region.

Making a Commitment

Back to that link between growth and cybercrime. As eCommerce continues to expand in the region, it has sparked a surge in card-not-present fraud and other financial crimes. Cybercriminals in the region are also targeting transport, logistics and financial companies that rely on often outdated legacy systems.

Just this past December, one of Eastern Europe’s most prolific cyber criminals was arrested in a joint operation involving Belarus, Germany and the United States aimed at dismantling a vast computer network used to carry out financial scams.

However, despite becoming more technologically advanced, many countries in this region still fall short when it comes to battling cybercrime. For example, Bosnia and Herzegovina are among those ranked as Europe’s least committed countries in terms of combating cybercrime.

Bots Away

As seen in our Digital Identity Network, much of the cybercrime emanating from this region is made up of bot attacks. The challenge for global digital businesses is that this pernicious bot activity can make up 90 percent of their daily traffic, making it even more critical to recognize and authorize good customer transactions to avoid unnecessary friction that can lead to cart abandonment.

What’s more, in the past, these bot spikes have tended to be short and sharp bursts of activity lasting a day or two. This last quarter saw more frequent and sustained peaks in bot activity.

Given bot traffic has the ability to slip under the radar of traditional authentication solutions and mimic good customer traffic, the onus is firmly on businesses to distinguish between good and bad transactions, or risk opening themselves up to fraud, expensive chargebacks and a host of other problems.

Comrades in Arms?

The fall of the Soviet Union left its former states in immediate distress, as many of these newly independent countries faced severe economic hardship in the years immediately following its dissolution. However, these countries have seen their economic fortunes turn around on the strength of technological advancements.

As with any breakup, hard feelings tend to linger. Maybe that’s why Latvia, a former Soviet state and one of the CEE countries, is a common destination for attacks emanating from Russia. Then again, it could just be cybercriminals trying to take out the competition.

So much for being neighborly.

To learn more about the latest cybercrime trends, download the Q4 2017 Cybercrime Report.

ThreatMetrix Team

ThreatMetrix Team

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