Late last month I wrote about Citadel, an “open source” version of the ZeuS Trojan whose defining feature is a social networking platform where users can report and fix programming bugs, suggest and vote on new features, and generally guide future development of the botnet malware. Since then, I’ve been given a peek inside that community, and the view so far suggests that Citadel’s collaborative approach is fueling rapid growth of this new malware strain.

The CRM page shows democracy in action among Citadel botnet users.

A customer who bought a license to the Citadel Trojan extended an invitation to drop in on that community of hackers. Those who have purchased the software can interact with the developers and other buyers via comments submitted to the Citadel Store, a front-end interface that is made available after users successfully navigate through a two-step authentication process.

Upon logging into the Citadel Store, users see the main “customer resource management” page, which shows the latest breakdown of votes cast by all users regarding the desirability of proposed new features in the botnet code.

In the screen shot to the right, we can see democracy in action among miscreants: The image shows the outcome of voting on several newly proposed modules for Citadel, including a plugin that searches for specific files on the victim’s PC, and a “mini-antivirus” program that can clean up a variety of malware, adware and other parasites already on the victim’s computer that may prevent Citadel from operating cleanly or stealthily. Currently, there are nine separate modules that can be voted and commented on by the Citadel community.

Drilling down into the details page for each suggested botnet plugin reveals comments from various users about the suggested feature (screenshot below). Overall, users seem enthusiastic about most suggested new features, although several customers used the comments section to warn about potential pitfalls in implementing the proposed changes.

Citadel users discuss the merits of including a module to remove other parasites from host PCs.

The customer resource management page also reveals that although the principal authors of the Citadel Trojan treat this as their day job, they try their best to have a life on the weekends. A notice prominetly posted to the Citadel CRM homepage reads:

Please note regarding the Help Desk in the Jabber chat & CRM page:

Daily from 10.00 to 00.30
Sat, Sun – closed, you can write us offline.
All requests and questions will be processed on Monday.

The collegial atmosphere being cultivated by the Citadel authors appears to have hastened the malware’s maturity, according to researchers at Seculert. In a blog post published Wednesday, researchers there said that they’d observed at least five new versions of Citadel since first spotting the malware on Dec. 17, 20011.

Seculert’s Aviv Raff said that means the miscreants behind Citadel are pushing out a new version of the Trojan about once a week.

“The only similar Trojan who got close to this pace was the so called ‘SpyZeus’ Trojan,” Raff said. “Others, including ZeuS itself, took between a month to several months to release a new version.”

Anyone who’s run a Web site is probably familiar with the term “malvertising,” which occurs when crooks hide exploits and malware inside of legitimate-looking ads that are submitted to major online advertising networks. But there’s a relatively new form of malware-based advertising that’s gaining ground — otherwise harmless ads for illicit services that are embedded inside the malware itself.

At its most basic, this form of advertising — which I’m calling “crimevertising” for want of a better term — has been around for many years. Most often it takes the form of banner ads on underground forums that hawk everything from cybercriminal employment opportunities to banking Trojans and crooked cashout services. More recently, malware authors have started offering the ability to place paid ads in the Web-based administrative panels that customers use to control their botnets. Such placements afford advertisers an unprecedented opportunity to keep their brand name in front of the eyeballs of their target audience for hours on end.

The author of the Blackhole exploit pack is selling ad space on his kit's administration page, as seen in this screenshot.

A perfect example of crimevertising 2.0 is the interface for the Blackhole Exploit Kit, crimeware that makes it simple for just about anyone to build a botnet. The business end of this kit is stitched into hacked or malicious Web sites, and visitors with outdated browser plugins get redirected to sites that serve malware of the miscreant’s choosing. Blackhole users can monitor new victims and the success rates of the compromised sites using a browser-based administrative panel.

In the screen shot above, the administration panel of a working Blackhole exploit kit shows two different ads; both promote the purchase and sale of Internet traffic. And here is a prime example of just how targeted this advertising can be: The most common reason miscreants purchase Internet traffic is to redirect it to sites they’ve retrofitted with exploit kits like Blackhole.

I wanted to find out how much it would cost to place such targeted ads, so I chatted up the author of this kit — a hacker who uses the nickname “Paunch.” He said an ad that would run on administration panels across the entire Blackhole user base would cost me $700 per month. He declined to say just how many “impressions” that money would buy, or exactly how many Blackhole users there are today.

But it’s probably quite an audience: According to security firm Sophos, Blackhole is now by far the most popular method of delivering drive-by attacks. In its 2012 Security Threat Report, the company found that “in the second half of 2011, 67% of [malware] detections were redirections on compromised legitimate sites. Of these, approximately half are believed to be redirections to Blackhole exploit sites.”

Interestingly, when Paunch doesn’t have ads to run from paying customers, he runs ads for his own ancillary services. In the screen shot below (taken from a different working Blackhole exploit kit) Paunch can be seen pitching his subscription-based malware obfuscation service.

I suppose it’s possible that miscreants could try to place malware-laced crimevertisements in a bid to hijack the browsers of other hackers, but that’s probably unlikely to happen as long as malware authors like Paunch are manually reviewing purchased ads and disallowing anything other than plain text. In the end, crimeware kit buyers may have more to fear from a kit’s author himself: The author of the infamous SpyEye botnet creation kit once acknowledged adding a hidden backdoor to his software that let him remotely access all customer installations.

Underground hacker forums are full of complaints from users angry that a developer of some popular banking Trojan or bot program has stopped supporting his product, stranding buyers with buggy botnets. Now, the proprietors of a new ZeuS Trojan variant are marketing their malware as a social network that lets customers file bug reports, suggest and vote on new features in upcoming versions, and track trouble tickets that can be worked on by the developers and fellow users alike.

A screenshot of the Citadel botnet panel.

The ZeuS offshoot, dubbed Citadel and advertised on several members-only hacker forums, is another software-as-a-service malware development. Its target audience? Those frustrated with virus writers who decide that coding their next creation is more lucrative and interesting than supporting current clients.

“Its no secret that the products in our field — without support from the developers — result in a piece of junk on your hard drive. Therefore, the product should be improved according to the wishes of our customers,” Citadel’s developers claim in an online posting. “One problem is that you have probably experienced developers who ignore your instant messages, because there are many customers but there is only one developer.”

In the following excerpt, taken from a full description of Citadel’s innovations, the developers of this malware strain describe its defining feature as a social networking platform for malware users that is made available through a Web-based portal created by the malware itself.

“We have created for you a special system — call it the social network for our customers. Citadel CRM Store allows you to take part in product development in the following ways:

- Report bugs and other errors in software. All tickets are looked at by technical support you will receive a timely response to your questions. No more trying to reach the author via ICQ or Jabber.

-Each client has the right to create an unlimited number of applications within the system. Requests can contain suggestions on a new module or improvements of existing module. Such requests can be public or private.

-Each client has a right to vote on new ideas suggested by other members and offer his/her price for development of the enhancement/module. The decision is made by the developers on whether to go forward with certain enhancement or new module depending on the voting results.

-Each client has the right to comment on any application and talk to any member. Now it is going to be interesting for you to find partners and like-minded people and also to take active parts in discussions with the developers.

- You can see all stages of module development, if it is approved other members. We update the status and time to completion.

- You may pay a deposit, if module is approved (50%). After the deposit is paid by the members, the project starts moving forward, so that the money is paid directly to coders and there will be no laziness or inaction. Everything is clear: every stage of development is thoroughly shown.

-Easy jabber [instant message] notification of new member or developer comments, or the availability of new custom applications.

The Citadel store lets users file and track bug reports, and request and vote on new features.

Citadel may be the first notable progeny of ZeuS since the ZeuS source code was leaked online last year. The authors claim that it includes a number of bug fixes for the most recent ZeuS version, including full support for grabbing credentials from victims using Google Chrome. Also bundled with this update is a component that can record and transmit videos of the victim’s screen activity.

The basic Citadel package — a bot builder and botnet administration panel — retails for $2,399 + a $125 monthly “rent,” but some of its most innovative features are sold as a la carte add-ons. Among those is a $395 software module that allows botmasters to sign up for a service which automatically updates the bot malware to evade the last antivirus signatures. The updates are deployed via a separate Jabber instant message bot, and each update costs an extra $15.

Citadel also boasts a feature that hints at its creator’s location(s). According to the authors, if the malware detects that the victim’s machine is using a Russian or Ukrainian keyboard, it will shut itself down. This feature is almost certainly a hedge to keep the developers out of trouble: Authorities in those regions are far less likely to pursue the Trojan’s creators if there are no local victims.

The Citadel bot builder.

It will be interesting to see if these malware developers hold true to their word. The growth of a more real-time, user-driven and crowdsourced malicious software market would be a truly disturbing innovation. For now, the miscreants behind Citadel appear upbeat about their chances of ushering in such a reality.

“It’s very interesting for us to work with our clients,” they wrote in an online forum posting. “A lot of authors write in forums that they ‘support the product,’ but at the end the updates only come out once every three months or the author disappears forever. Problem is in author’s motivation. You support us, we support you. It is easy.”

A new service aims to be the Google search of underground Web sites, connecting buyers to a vast sea of shops that offer an array of dodgy goods and services, from stolen credit card numbers to identity information and anonymity tools.

MegaSearch results for BIN #423953

A glut of data breaches and stolen card numbers has spawned dozens of stores that sell the information. The trouble is that each shop requires users to create accounts and sign in before they can search for cards.

Enter MegaSearch.cc, which lets potential buyers discover which fraud shops hold the cards they’re looking for without having to first create accounts at each store. This free search engine aggregates data about compromised payment cards, and points searchers to various fraud shops selling them.

According to its creator, the search engine does not store the compromised card numbers or any information about the card holders. Instead, it works with card shop owners to index the first six digits of all compromised account numbers that are for sale.  These six digits, also known the “Bank Identification Number” — or BIN — identify which bank issued the cards. Searching by BIN, MegaSearch users are given links to different fraud shops that are currently selling cards issued by the corresponding bank.

I first read about this offering in a blog post by RSA Fraud Action Research Labs. It didn’t take much time poking around a few hacker boards to find the brains behind MegaSearch pitching his idea to the owners of different fraud shops. He agreed to discuss his offering with me via instant message, using the search service as his screen name.

“I’m standing on a big startup that is going to be [referred to as] the ‘underground Google,’” MegaSearch told KrebsOnSecurity. “Many users spend a lot of time looking [through] shops, and I thought why not make that convenient?”

The service currently indexes compromised BINs from five different card shops, although he said several more shops are close to completing their integration with MegaSearch. He acknowledged garnering a small advertising fee for each relationship, although he repeatedly declined to discuss the particulars of those arrangements. But he said both sides benefit: stolen card data grows less reliable with age, and fraud shops that are indexed by MegaSearch stand a better chance of clearing their inventory faster, the hacker argues.

MegaSearch said that when his site first launched at the end of 2011 and began indexing the five card shops he’s now tracking, those shops had some 360,000 compromised accounts for sale, collectively. Since then, those shops have moved more than 200,000 cards. The search engine currently has indexed 352,000 stolen account numbers that are for sale right now in the underground.

According to BIN search stats published on the site, Citibank cards are the most sought-after, followed by cards issued by FIA Card Services, Capital One and Chase.

In the coming weeks, he said, the site will include new features that index other types of criminal wares, including Social Security numbers and proxies — addresses of hacked PCs that paying clients can use as a relay to anonymize their online communications.

“I’m about to add more services to that site that would help newbie underground, including proxies, stolen identity information, etc.,” MegaSearch told me. “I’m also going to add a survey [to rate] the best shop.”

2011 has been called the Year of the Data Breach. If services like MegaSearch are indicative of a trend, 2012 may well become known as the year the criminal underground started getting a clue about how to better index and use all of its stolen data.

Given the heightened security surrounding air travel these days, it may be hard to believe that fraudsters would try to board a plane using stolen tickets. But incredibly, there are a number of criminal travel agencies doing business in the underground, and judging from the positive feedback left by patrons, business appears to be booming.

Ad above says: Maldives Turkey Goa Bora-Bora, Carribes, Any country, any hotels and resorts of the world.

The tickets often are purchased at the last minute and placed under the criminal buyer’s real name. The reservations are made using either stolen credit cards or hijacked accounts belonging to independent contractors in the travel industry.  Customers are charged a fraction of the cost of the tickets and/or reservations, typically between 25 and 35 percent of the actual cost.

Criminal travel services are contributing to a recent spike in airline ticket fraud. In December, the Airlines Reporting Corporation, an industry clearinghouse, said it was seeing a marked increase in unauthorized tickets issued. Between August and November of last year, 113 incidents of fraudulently booked tickets were reported to ARC, up from just 18 such incidents reported in all of 2010. The aggregate face value of the unauthorized tickets in 2011 was more than $1 million. The ARC believes the increase in fraud is mainly due to an surge in phishing emails targeting travel agency employees and contractors.

Some of the travel agencies in the criminal underground are full-service, pitching package deals that  include airfare, car rentals and even hotel stays. A hacker using the nickname “Yoshimo” on one prominent fraudster forum offers “80-95 percent working flight tickets in most countries (some restrictions apply),” for 25 percent of the original price, and 40 percent of the price for carded hotel stays and car rentals. He has been offering this service for more than two years, and has at least 275 positive reviews from current and former customers.

At first glance, it may seem unlikely that your typical paranoid fraudster would dare take advantage of such a service. But according to the proprietors, few customers are ever stopped, and those that are can simply claim that they were victims of fraud. At least that’s how it’s explained by “Jeferi,” a criminal travel agent who has set up shop on the fraudster forum Kurupt.su.

To assuage fears of potential customers, Jeferi allows buyers to verify the status of their e-tickets the day of travel before paying for them. And of course, none of these bogus travel services accept credit cards: They only take payment via virtual currencies, such as WebMoney and Liberty Reserve.

“The story is simple,” Jeferi explained in a discussion thread that spans five pages and includes questions from dozens of skeptical and interested members. “The thing is, you are thinking as a criminal. Think about yourself as a victim of an online scam. You saw an advertisement of a “Travel Agency” in the Internet, and it seemed interesting. So you contacted them through a forum and finally arranged a deal. The travel agency told you that the tickets were last-hour tickets and that they were affiliate with the airlines, so they could offer these kinds of prices, and you thought they were legit. OMG! I never thought it was going to be a scam! Bastards!”

Chalk it up to professional pride or just greed, but it seems that many people who steal for a living have difficulty legitimately purchasing anything online. There is probably also a strong emotional jolt that these guys receive from getting a stranger to pick up the tab for a tropical vacation. As Jeferi says in his ad: “What’s better? Money for one day to buy some chips? Or Big Money each day to do whatever your want?”

Jobs in the hi-tech sector can be hard to find, but employers in one corner of the industry are creating hundreds of full-time positions, offering workers on-the-job training and the freedom to work from home. The catch? Employees will likely toil for cybercrooks, and their weekly paychecks may barely cover the cost of a McDonald’s Happy Meal.

Kolotibablo.com home page

The abundance of these low-skilled, low-paying jobs is coming from firms that specialize in the shadowy market of mass-solving CAPTCHAs, those blurry and squiggly words that some websites force you to retype. One big player in this industry is KolotiBablo.com, a service that appeals to spammers and exploits low cost labor in China, India, Pakistan, and Vietnam.

KolotiBablo, which means “earn money” in transliterated Russian, helps clients automate the solving of puzzles designed to prevent automated activity by bots, such as leaving spammy comments or mass-registering accounts at Webmail providers and social networking sites. The service offers an application programming interface (API) that allows clients to feed kolotibablo.com CAPTCHAs served in real time by various sites, which are then solved by KolotiBablo workers and fed back to the client’s system.

Paying clients interface with the service at antigate.com, a site hosted on the same server as kolotibablo.com. Antigate charges clients 70 cents to $1 for each batch of 1,000 CAPTCHAs solved, with the price influenced heavily by volume. KolotiBablo says employees can expect to earn between $0.35 to $1 for every thousand CAPTCHAs they solve.

The twin operations say they do not condone the use of their services to promote spam, or “all those related things that generate butthurt for the ‘big guys,’” mostly likely a reference to big free Webmail providers like Google and Microsoft. Still, both services can be found heavily advertised and recommended in several underground forums that cater to spammers and scam artists.

Registered antigate.com users can read more about why customers typically purchase the service, and how KolotiBablo is run. From the description:

“All CAPTCHAs in our service are completely solved by real humans, there are usually 500-1000 (and growing) workers online from all the world. That’s why we can process any CAPTCHAs at any volume for a fixed price $1 per 1000 CAPTCHAs.

You may probably think that using human resource inappropriate or inhumane. However, keep in mind that we pay the most of collected money to our workers who sit in the poorest corners of our planet and this work gives them a stable ability to buy food, clothes for themselves and their families. Most of our staff is from China, India, Pakistan and Vietnam.”

To get started as a CAPTCHA-solving worker at Kolotibabo.com (pictured at left), you’ll need to provide a working account at WebMoney, a virtual currency. After that, the system will start feeding you live CAPTCHAs to solve, prefacing each with an notice about the rate that the client has agreed to pay per batch.

Depending on the demands that clients place on the service, there may be a brief delay between CAPTCHAs, but generally only a few seconds pass between the time a solved puzzle is submitted and when a new one is offered. Each new puzzle is preceded by an audible “beep,” and workers are expected to solve and type each of the CAPTCHAs in less than 10 seconds. During downtime, the system displays workers’ average puzzle solving times, as well as actual and projected weekly earnings.

If sort of drudgery sounds like easy money, take a moment to work out the math. Assuming that you can solve six CAPTCHAs per minute and work eight hours straight, you’d be able to solve about 2,880 puzzles each day. Even at the highest CAPTCHA solving rate, you’d only make $2.88 daily; at the lowest rate, you’d make just over a dollar a day.

No, the real earnings only come when you assemble an army of workers to solve CAPTCHAs for your WebMoney account, as described by this FAQ at KolotiBablo.com.

As long as there is low-cost human labor willing to do this kind of work for pennies per day, CAPTCHAs will continue to be an ineffective way to prevent automated account creation and spammy Web site comments. But at least experts are working on making CAPTCHAs less annoying: Some firms are starting to pitch more user-friendly alternatives to the hard-to-read squiggly CAPTCHAs.

If you’d like to learn more about CAPTCHAs and the semi-automated systems being built to defeat them, I’d suggest reading this paper (PDF) on CAPTCHA-solving services, from researchers at University of California, San Diego. Also, in Nov. 2010, I wrote about CAPTCHABot, another puzzle-solving service with similar rates and practices.

A new service on the cyber criminal underground can be hired to tie up the phone lines of any targeted mobile or land line around the world. The service is marketed as a diversionary tactic to assist e-thieves in robbing commercial customers of banks that routinely call customers to verify large financial transfers.

For just $5 an hour, or $40 per day, you can keep anyone’s phone so tied up with incoming junk calls that the number is unable to receive legitimate calls.

The seller offers discounts for frequent buyers of his service, and promises that each call to the targeted number will appear to come from a unique phone number, thereby foiling any efforts to block the bogus calls by caller ID. The vendor also is offering this service under escrow payment, which many fraud forums use to ensure both parties to a transaction are happy before payment is rendered.

The FBI first warned about these attacks in June 2010, advising that that receiving rapid-fire “dead air” calls could be a sign that your bank account is being emptied. From that advisory:

“Denial-of-service attacks, by themselves, are nothing new—computer hackers use them to take down websites by flooding them with large amounts of traffic.”

“In a recent twist, criminals have transferred this activity to telephones, using automated dialing programs and multiple accounts to overwhelm the phone lines of unsuspecting citizens.”

“Why are they doing it? Turns out the calls are simply a diversionary tactic: while the lines are tied up, the criminals—masquerading as the victims themselves—are raiding the victims’ bank accounts and online trading or other money management accounts.”

The easy availability of this criminal offering highlights once again how nearly every aspect of the cyber underground has been converted into a service for hire. Take cyber heists, for instance: Everything about them can now be outsourced to third party services.

You can rent a botnet to send your Trojan-laced emails and steal online banking credentials from thousands who click the booby-trapped attachments. You can purchase Web injects that allow you to change the behavior of targeted bank Web sites as they are displayed in the victim’s browser. If you want help hauling the loot, you can rent access to money mules that are hired by mule recruitment gangs. And if you need a diversion to distract or otherwise occupy your victims while you rob them, you can rent this service.

Thousands of Twitter accounts apparently created in advance to blast automated messages are being used to drown out Tweets sent by bloggers and activists this week who are protesting the disputed parliamentary elections in Russia, security experts said.

Image: Twitterbot.info

Amid widespread reports of ballot stuffing and voting irregularities in the election, thousands of Russians have turned out in the streets to protest. Russian police arrested hundreds of protesters who had gathered in Moscow’s Triumfalnaya Square, including notable anti-corruption blogger Alexei Navalny. In response, protesters began tweeting their disgust in a Twitter hashtag #триумфальная (Triumfalnaya), which quickly became one of the most-tweeted hashtags on Twitter.

But according to several experts, it wasn’t long before messages sent to that hashtag were drowned out by pro-Kremlin tweets that appear to have been sent by countless Twitter bots. Maxim Goncharov, a senior threat researcher at Trend Micro, observed that “if you currently check this hash tag on twitter you’ll see a flood of 5-7 identical tweets from accounts that have been inactive for month and that only had 10-20 tweets before this day. To this point those hacked accounts have already posted 10-20 more tweets in just one hour.”

“Whether the attack was supported officially or not is not relevant, but we can now see how social media has become the battlefield of a new war for freedom of speech,” Goncharov wrote.

I’ve been working with a few security researchers inside of Russia who asked not to be named for fear of retribution by patriotic Russian hackers or the government. Since Trend’s posting, they’ve identified thousands of additional accounts (e.g., @ALanskoy, @APoluyan, @AUstickiy, @AbbotRama, @AbrahamCaldwell…a much longer list is available here) that are rapidly posting anti-protester or pro-Kremlin sentiments to more than a dozen hashtags and keywords that protesters are using to share news, including #Navalny.

A review of the 2,000 Twitter accounts linked above indicates that most of them were created at the beginning of July 2011, and have very few tweets other than those meant to counter the protesters, or to simply fill the hashtag feeds with meaningless garbage. Some of the bot messages include completely unrelated hashtags or keywords, seemingly to pollute the news stream for the protester hashtags.

In addition, almost all of the bot accounts are mostly following each other, with a handful of exceptions:  It appears that most of the auto-created accounts that are flooding the protester hashtags are following the Twitter account @master_boot, which looks like it belongs to an actual user. In fact, one of Master_boot’s 17,000+ followers recently tweeted to inquire about Twitter bots. The person behind the @master_boot account did not immediately respond to requests.

Interestingly, the Kremlin leadership appears to be using their Twitter accounts to bash those calling the recent elections a fraud. Reuters is reporting that Russian President Dmitry Medvedev caused shock and jeers on Wednesday after an obscene insult directed at political opponents appeared on his official Twitter feed. According to cached copies of the feed and a notification of the post received by a Reuters reporter, Medvedev’s tweet read:

“It has become clear that if a person writes the expression ‘party of swindlers and thieves’ in their blog then they are a stupid sheep getting f****d in the mouth .”

Trend Micro’s Rik Ferguson posted a good piece on Thursday about a major shortcoming in credit card security programs maintained by MasterCard and Visa. Although the loophole that Ferguson highlighted may be unsettling to some, fraudsters who specialize in stealing and using stolen credit cards online have been exploiting it for years.

At issue is a security protocol called “3 Domain Secure,” (3DS), a program designed to reduce card fraud and shift liability for fraud from online merchants to the card issuing banks. Visa introduced the program in 2001, branding it “Verified by Visa,” and MasterCard has a similar program in place called “SecureCode.”

Cardholders who chose to participate in the programs can register their card by entering the card number, filling in their ZIP code and birth date, and picking a passcode. When a cardholder makes a purchase at a site that uses 3DS, he enters the code, which is verified by the issuing bank and is never shared with the merchant site.

But as Ferguson notes, people are human and tend to forget things, especially passcodes and passwords, and it is the password reset function that eliminates any security provided by Verified by Visa or SecureCode. From his blog:

“What would a criminal do if they access to your card details but not your password? Of course, there’s that handy “I forgot my password” link. Let’s see how well protected that is.”

The first step in the password reset procedure is to enter your card number, obviously to ensure you are resetting the password for the correct account. Once that number is entered the system now requires some corroborating data to be sure that you are the legitimate account holder, let’s have a look at that “Identification” phase.”

“Oh noes, this doesn’t look good at all! Three out of four of the items of information used to verify my identity are all contained in the credit card data itself, embossed or printed on the card and contained in the magnetic stripe data. Wouldn’t the criminal already have access to this? So what remains? One piece of information that is not included on the card. Trouble is, it’s information that is not only widely shared on social networks, surveys, sign-up forms and a myriad of other places, but also freely available in public records. We cannot and should not consider our date of birth to be a secret.”

“Having entered the required information all that remains is to enter a new password of your choosing and your transaction is authorised. Worse still, no email notification is sent to alert the cardholder that their account has been accessed or modified. The cardholder need never know until they check their statements.”

This would all be very shocking if it wasn’t already painfully obvious to today’s cyber crooks. When I read the Trend blog post, I began searching for several screen shots I had taken of a discussion on an underground carding forum more than two years ago, which explained very clearly how to get around this added level of card security. The tutorial in the screen shot below was posted by an administrator from the carding forum carder.pro on Halloween, 2009:

Programs like these are a good example of security that is designed to make people feel more secure but that add little in the way of real security, or merely shift the risk to another party. Supporters of 3DS would do well to adopt the password reset advice offered in the Trend post, and to absorb the main points in a paper released last year by researchers at the University of Cambridge, “Verified by Visa and MasterCard SecureCode: How Not to Design Authentication” (PDF).

The FBI is warning that computer crooks have begun launching debilitating cyber attacks against banks and their customers as part of a smoke screen to prevent victims from noticing simultaneous high-dollar cyber heists.

The bureau says the attacks coincide with corporate account takeovers perpetrated by thieves who are using a modified version of the ZeuS Trojan called “Gameover.” The rash of thefts come after a series of heavy spam campaigns aimed at deploying the malware, which arrives disguised as an email from the National Automated Clearing House Association (NACHA), a not-for-profit group that develops operating rules for organizations that handle electronic payments. The ZeuS variant steals passwords and gives attackers direct access to the victim’s PC and network.

In several recent attacks, as soon as thieves wired money out of a victim organization’s account, the victim’s public-facing Internet address was targeted by a network attack, leaving employees at the organization unable to browse the Web.

A few of the attacks have included an odd twist that appears to indicate the perpetrators are using money mules in the United States for at least a portion of the heists. According to an FBI advisory, some of the unauthorized wire transfers from victim organizations have been transmitted directly to high-end jewelry stores, “wherein the money mule comes to the actual store to pick up his $100K in jewels (or whatever dollar amount was wired).”

The advisory continues:

“Investigation has shown the perpetrators contact the high-end jeweler requesting to purchase precious stones and high-end watches. The perpetrators advise they will wire the money to the jeweler’s account and someone will come to pick up the merchandise. The next day, a money mule arrives at the store, the jeweler confirms the money has been transferred or is listed as ‘pending’ and releases the merchandise to the mule. Later on, the transaction is reversed or cancelled (if the financial institution caught the fraud in time) and the jeweler is out whatever jewels the money mule was able to obtain.”

The attackers also have sought to take out the Web sites of victim banks. Jose Nazario, manager of security research at Arbor Networks, a company that specializes in helping organizations weather large cyber attacks, said that although many of the bank sites hit belong to small to mid-sized financial institutions, the thieves also have taken out some of the larger banks in the course of recent e-heists.

“It’s a disturbing trend,” Nazario said.

Nazario said the handful of attacks he’s aware of in the past two weeks have involved distributed denial-of-service (DDoS) assaults launched with the help of “Dirt Jumper” or “Russkill” botnets. Dirt Jumper is a commercial crimeware kit that is sold for a few hundred bucks on the hacker underground, and is made to be surreptitiously installed on hacked PCs. The code makes it easy for the botnet owner to use those infected systems to overwhelm targeted sites with junk traffic (KrebsOnSecurity.com was the victim of a Dirt Jumper botnet attack earlier this month).

Security experts aren’t certain about the strategy behind the DDoS attacks, which are noisy and noticeable to both victims and their banks. One theory is that the perpetrators are hoping the outages will distract the banks and victims.

“The belief is the DDoS is used to deflect attention from the wire transfers as well to make them unable to reverse the transactions (if found),” the FBI said.

That strategy seemed to have worked well against Sony, which focused on weathering a DDoS attack from Anonymous while information on more than 100 million customers was being siphoned by hackers.

“In the chaos of a DDoS, typically network administrators are so busy trying to keep the network up that they miss the real attack,” said Jose Enrique Hernandez, a security expert at Prolexic, a Hollywood, Fla. based DDoS mitigation company. “It’s a basic diversion technique.”

Another theory about the DDoS-enhanced heists holds that the thieves are trying to prevent victim organizations from being able to access their accounts online. One crime gang responsible for a large number of cyber heists against small to mid-sized U.S. businesses frequently invoked the “kill operating system” command built into the ZeuS Trojan after robbing victims.

Organizations that bank online should understand that they are liable for any losses stemming from cyber fraud. I have consistently advised small to mid-sized entities to consider using a dedicated computer for online banking — one that is not used for everyday Web surfing — and preferably a non-Windows system, or a “live CD” distribution.