Part of the potential of online education is to break the "credentialing chokehold" of traditional universities. But in order for a credential to have value, one has to be sure that the holder has actually mastered the subject matter. Thus, security in testing is important. Certainly, students can cheat at traditional universities, but the problem becomes much more severe for online-only education in which the educational institution may never have physical contact with the student. A security hole in an online proctoring system can be exploited wholesale, by thousands of people in different locations. (See also Magical Mystery Moocs and Whither Higher Education?)
Here is how to beat the online proctoring systems described in a recent Chronicle of Higher Education article.
Attach a second monitor to the test taker's computer (e.g., via a long cable) which is visible only to a hidden confederate, or otherwise arrange to have the image on the main screen visible to the hidden confederate.
The confederate works out problems and transmits answers via, e.g., tapping on the test-taker's leg, using a long stick (not visible to webcam). Another possibility is for the confederate to use a laser pointer (or other projection device) pointed at the wall behind the test taker's monitor. The confederate could also just hide under the desk/table at which the test taker sits. Most of these methods will work on multiple choice tests, but the projection method could even work on essay or programming tests. A commenter also suggests running multiple virtual machines (VMs) on the test taker's computer, one for the testing app and the other for secret communication. A quick toggle on the keyboard will make this difficult to detect by existing security measures.
Eventually I can imagine students setting up special "test (cheating) rooms" for this purpose. Ideally the monitoring company should obtain POV data from the test taker to defeat these methods.
Chronicle: ... The old biases against online education have begun to erode, but companies that offer remote-proctoring services still face an uphill battle in persuading skeptics, many of whom believe that the duty of preserving academic integrity should not be entrusted to online watchers who are often thousands of miles from the test-takers. So ProctorU and other players have installed a battery of protocols aimed at making their systems as airtight as possible.
The result is a monitoring regime that can seem a bit Orwellian. Rather than one proctor sitting at the head of a physical classroom and roaming the aisles every once in a while, remote proctors peer into a student's home, seize control of her computer, and stare at her face for the duration of a test, reading her body language for signs of impropriety. ...