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This Defense Contractor Is Repeatedly Spear-Phishing 68,000 Innocent People

One company with deep Washington connections is running a huge online scam. It involves tens of thousands of victims. And it's completely legal.

The business in question is Northrop Grumman, one of the country's biggest defense firms. But before crying foul, know this: What the company's doing is actually a good thing. No real damage is being done, and the only individuals affected are Northrop employees.

In fact, the entire operation is itself a fraud. Cybersecurity pros within the company are posing as outside criminals looking to breach the firm's defenses. By sending fake e-mails to employees that encourage them to click on malicious attachments or links—a type of attack known as phishing or spear phishing—the firm's tech team is trying to understand how vulnerable Northrop's networks are from real attacks. The exercise is also meant to teach employees how to identify and report actual attempts at intrusion.

Here's how it works: Company security experts blast out a spoof e-mail to the entire company that looks like it's coming from outside the network. In the most recent example, 68,000 of Northrop Grumman's 70,000 employees got an e-mail telling them they'd made an error on their tax returns. Some gullible Northrop workers clicked the "malicious" link. Others recognized the e-mail for the threat it was, and deleted it. But some employees reported the incident back to the staffers who sent the test attacks. 

Michael Papay, Northrop Grumman's chief information security officer, said his goal is to increase the size of the last group.

"If I've got 70,000 employees who are smart enough to say, 'Whoa, looks like a spearphishing e-mail—I'm going to report it to my cybersecurity operations center,' then my operations center can dig into it and immediately block anyone else in the company from getting that e-mail," Papay said. "Having 70,000 people instead of a small number of people doing protection provides economy of scale."

Papay wouldn't reveal how many Northrop employees clicked the dummy link he sent. But he did say that he's seen improvement over time—to the point that now, some employees will take it upon themselves to investigate the origins of a suspicious e-mail. They'll look at the sender's address and conduct a "whois" search online to see if they can connect the e-mail to a registered physical address or phone number.

Northrop has made running phishing exercises a regular habit. The first ones started in 2009, and targeted no more than 20,000 employees in all. According to a 2010 analysis by the company (PDF), the exercises got very positive feedback and are now conducted on a quarterly basis.

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