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Many software firewalls will alert you on suspicious outbound connections. The biggest problem is that if correct, by then it's too late.
Isn't an outbound firewall really important in many situations? I deliberately installed a free version of a key logger on my system and ran thorough scans through my anti virus and anti spyware programs. But the running key logger wasn't detected even though the key logger icon was right there in the system tray.
You have said that when an outbound firewall stops something it is already too late. But don't you think outbound firewall might stop a key logger from at least sending logs to an email or remote computer? Or would it not?
A firewall with outbound detection can have a place, I suppose, but you've captured my thoughts already: if it finds something to detect, then it's too late.
Let's review what it means to be an outbound firewall, why I don't value them all that much, and perhaps why your key logger wasn't detected.
Firewalls protect you from the certain classes of bad things out on the internet.
Note that's "protect you from them". That implies that the primary function of a firewall is to prevent bad stuff "out there" from reaching or affecting your computer.
My preference is to use a hardware device such as a router with NAT (Network Address Translation) enabled. This does an incredibly effective job of hiding your computer from outside access. You can connect out, but outside computers cannot initiate a connection without your having explicitly configured your router to allow it.
Using a router also takes the burden of that work off of your computer. In fact, a single router can act as a single effective inbound firewall for all the computers that are connected behind it.
An "outbound" firewall looks for threats originating on your computer attempting to connect out to the internet. In a sense, it's "protecting them from you". While that may be very generous of you to protect everyone else from your computer, the real difference is that it will presumably block and more importantly tell you when something suspicious is happening so that you can take corrective action.
Outbound firewalls have several shortcomings, both technical and conceptual:
It's too late. As you pointed out, if an outbound firewall detects something that is, in fact, malicious in nature it's because your machine is already infected. Something in your inbound defense failed and your machine has acquired some form of malware. Yes, I suppose it'd be nice to know, but in fact those very inbound defenses - firewall and anti-malware scanners - should have already either prevented or detected the problem. With adequate inbound protection, an outbound firewall is redundant.
It's intrusive. Outbound firewalls are only practically available as components of software firewalls that you install on your machine. As such, these firewalls take up additional resources to do their job. Rather than do that, a router will give you the inbound protection you need without taking up additional resources on your machine.
It's frequently wrong. One of the very common complaints about outbound firewalls are warning messages that are either incomprehensible, overly frequent, or don't give the average user enough information to make an informed decision. Frequently, they'll simply report a connection attempt to or from an IP address with little or no additional information. I also commonly see people asking about warnings that arise from totally legitimate processes on their machine accessing the internet for things like software updates or the current time and date. With too many errors, indecipherable messages or false positives, people tend to ignore the warnings after a while, rendering the outbound firewall ineffective.
Now, don't get me wrong: software firewalls do have their place. In particular, when traveling and using open WiFi hotspots I'll absolutely turn on the built-in Windows firewall. Software firewalls are also a good choice if you have no router, or if you cannot trust the other computers that share your router. But in either case that's for the firewall's incoming protection against external threats, not the outgoing.
Is there a case for an outgoing firewall at all? Many experts will disagree with me and say absolutely, that they add a lot of value and that the issues I've raised are simply off target or over-stated. But I remain of the opinion that if an outgoing firewall is, in fact, adding value it's because your incoming protection is inadequate. If you're going to focus additional energy and resources at becoming more secure, I'd much rather have you focus on preventative solutions rather than solutions which will only kick in after it's too late.
Now, about your key logger.
My first reaction is that if it's showing up in the system tray I'm not sure I'd classify it as malware. It's open about what it's doing, and easily visible. A key logger isn't in and of itself necessarily malware - there are many legitimate uses for the technology. So part of my reaction is that I'm not really surprised that it wasn't detected as malware, because it's not behaving like malware.
But lets assume that you did get infected by a truly malicious key logger - one that was attempting to hide, and send all your keystrokes to some overseas hacker. Well, at the risk of repeating myself too many times: it's too late. Your machine has been compromised, and you can no longer trust it; and that includes trusting your firewall. Yes, your outbound firewall might block the transmission - or it might not. The malware could, in fact, include additional code to actually reconfigure your firewall to let the malware's communication through. It's been done.
This is almost worse than having no outbound protection at all. With the outbound firewall you might think you're protected, but in fact you're not. Without an outbound firewall, you know, and you know to focus your efforts on inbound protection to avoid the problem in the first place.
Like I said, I know that others will disagree with me, and I'm sure there'll be some compelling cases made in the comments.
But I'm not convinced, and outbound firewalls are not something I use or advise.
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