Cyber-Physical Fraud: When Digital Hacking Opens Real Doors

[Professor]

Introduction: The New Era of Organized Crime​

In 2022, an incident occurred in Germany that forced us to rethink our understanding of modern crime. A group of criminals hacked the access control system of a major logistics center, disabled CCTV cameras in certain areas, and, posing as regular workers, stole goods worth over €500,000. This isn't a movie script, but a real-life example of cyber-physical fraud — a 21st-century hybrid threat where bits and bytes become keys to real doors, safes, and warehouses.

Cyber-physical fraud is a fusion of digital attacks and physical intrusions aimed at obtaining material gain. Unlike traditional hacking, where the target is data or money in accounts, here the ultimate goal is physical assets: goods, equipment, and raw materials.

Attack Mechanisms: How Hybrid Fraud Works​

1. Reconnaissance and Planning Phase​

Attackers begin with careful preparation:

• Digital Intelligence: Gathering information about the target organization through open sources, social media, and potentially phishing attacks on employees.
• Systems analysis: Study of the used access control systems, video surveillance, building management systems (BMS), logistics software.
• Vulnerability detection: Finding weaknesses in both software and physical security procedures.

2. Cyber attack on control systems​

At this stage, digital invasion occurs:

• Hacking access control systems: Obtaining administrative privileges in systems such as Paxton, Bosch, HID to create "ghost" access cards or change the rights of existing ones.
• Compromising video surveillance systems: Intrusion into video surveillance systems to replace video archives, create "blind spots" or disable recording at the desired time.
• Manipulation of building management systems: Interference with the operation of motion sensors, alarms, temperature control.

3. Physical execution​

When digital barriers fall, the physical phase begins:

• Targeted Intrusion: Using compromised credentials or access cards to enter secure areas.
• Digital covert actions: Committing thefts when security systems are disabled or bypassed.
• Minimizing traces: Removing digital logs, restoring original system settings.

Real-World Case Studies: From Theory to Practice​

Case 1: Attack on a Jewelry Store Chain (USA, 2020)​

Criminals hacked the cloud-based access control system used by a chain of 12 jewelry stores. In one night, they remotely opened eight stores in different cities, disabled the alarms, and organized a synchronized pickup of merchandise. The total damage exceeded $3 million.

Case 2: Oil Product Manipulation (Russia, 2019)​

A group of engineers and hackers hacked the oil depot's accounting system, manipulating data on the quantity and quality of petroleum products. They physically diverted "excess" fuel into their own tanks, while the system displayed standard loading figures. The damage amounted to approximately 200 million rubles.

Case 3: Pharmaceutical Theft (France, 2021)​

Hackers infiltrated the temperature control system of a vaccine warehouse and altered the settings, creating a pretext for an "emergency evacuation" of the spoiled product. Under this pretext, a fictitious disposal was organized, during which the products were diverted to the black market.

Goals and Motivation: Who is Behind the Attacks?​

Organized crime​

Modern criminal groups are increasingly hiring cyber specialists, creating hybrid teams. They are attracted to:

• High returns with relatively low detection risks
• The ability to scale attacks on multiple targets simultaneously
• Complexity for law enforcement (crimes cross jurisdictions)

Insider threats​

Attacks often involve current or former employees who:

• Have knowledge of internal procedures
• Have legitimate access to systems
• May be physically located on the premises

Industrial espionage​

Competing companies may use such methods to:

• Theft of product samples or equipment
• Gaining access to trade secrets
• Disruption of competitors' supplies

Weaknesses: Why are attacks possible?​

Technological vulnerabilities​

• Legacy Systems: Many physical security systems run on legacy software with known vulnerabilities.
• Over-connectivity: Systems that shouldn't be online are connected for "easier management"
• Default Credentials: Manufacturers often use default passwords that are not changed during installation.
• Lack of encryption: Data between system components is often transmitted in clear text.

Organizational deficiencies​

• Separation of responsibilities: IT is responsible for the digital, security is responsible for the physical, and cyber-physical systems are in a gray area
• Risk underestimation: Management often considers such attacks unlikely
• Weak authentication procedures: Use of simple access cards without additional verification
• Insufficient logging: Lack of correlation between events in digital systems and physical actions

Defense and Countermeasures: An Integrated Security Strategy​

Technical measures​

1. Network Segmentation: Critical physical security systems should be isolated from the corporate network into separate segments.
2. Zero Trust Principle: Multi-factor authentication for access to any critical systems, even from within the internal network.
3. Regular Updating and Patching: Create procedures for regularly updating not only IT systems, but also physical security systems.
4. Data Encryption: Encryption of both data at rest and data in motion between security system components.
5. Anomaly Detection: Implementation of systems capable of detecting abnormal behavior in both digital systems and physical access patterns.

Organizational measures​

1. Building cross-functional teams: Bringing together specialists in IT security, physical security, logistics, and operations.
2. Regular audits and testing: Conducting not only pentests of IT systems, but also physical penetration tests in combination with cyber attacks.
3. Response procedures: Developing incident plans that take into account the hybrid nature of attacks.
4. Staff training: Train employees to recognize signs of compromise of both digital and physical systems.
5. Supply Chain Control: Assess the security of partners and suppliers with access to systems.

Legal and regulatory aspects​

• Creating a legal framework: Developing legislation that takes into account the hybrid nature of such crimes.
• International cooperation: Strengthening cooperation between law enforcement agencies of different countries.
• Standardization of Requirements: Developing Industry Security Standards for Cyber-Physical Systems.

Future Threat: Development Trends​

Using AI and Machine Learning​

Attackers are starting to use AI to:

• Analysis of vulnerabilities in security systems
• Selecting the optimal time for attacks
• Creating deepfakes to deceive biometric identification systems

Supply chain attacks​

Instead of directly attacking the end target, criminals are increasingly targeting less secure security providers, gaining access to all of their customers.

Theft of data and physical assets simultaneously​

A new trend is combined attacks, where both physical goods and digital data about them (serial numbers, documents) are stolen, making them easier to sell and more difficult to find.

Using IoT devices​

With the spread of the Internet of Things, new attack vectors are emerging through smart sensors, lighting systems, and climate control systems, which often have weak security.

Conclusion: Inevitable Convergence​

Cyber-physical fraud is not a temporary trend, but a natural stage in the evolution of crime in the digital age. The line between the digital and physical worlds continues to blur, and security systems must evolve accordingly.

Organizations that continue to separate "cybersecurity" and "physical security" as independent areas create critical gaps in their defenses. Only by integrating these areas, creating unified monitoring and response centers, and continuously testing penetration tests on both sides can an adequate level of security be ensured.

As security expert James Lindsay notes, "Tomorrow's burglars won't be wearing balaclavas and crowbars — they'll be carrying laptops, and they won't need crowbars. Because all doors will open with the press of a key".

In a world where every physical device is becoming smart and connected, every lock becomes a potential vulnerability, and every sensor a possible entry point. Security in this reality requires not just new technologies, but a fundamentally new, holistic approach to protecting assets in a single digital-physical space.