Target: Small Businesses


16
Jul 12

Spy Software Aims to Corral Money Mules

Borrowing from the playbook of corporations seeking better ways to track employee productivity, some cybercriminal gangs are investing in technologies that help them keep closer tabs on their most prized assets: “Money mules,” individuals willingly or unwittingly recruited to help fraudsters launder stolen funds. It seems that at least one mule recruitment gang employs custom software to spy on new recruits.

Last month, I heard from a reader in North Carolina named John who’d been roped into working for a company that claimed to be in the digital concierge and outsourcing business. John became suspicious that he was involved in something shady when they told him he should expect a transfer of nearly $10,000 to the personal bank account that he’d provided to his erstwhile employer in order to eventually receive a paycheck.

The software stole this glimpse of my test machine’s desktop.

The firm that hired John, a fictitious company called VIP One, recruits mules to help process fraudulent transfers from businesses victimized by account takeovers. Prior to sending its mules money, VIP One has prospective mules spend several weeks doing relatively meaningless busy work, for which they are promised payment at the end of the month.

VIP One requires all new recruits to install a “time tracking” application, basically a digital stopwatch that employees are expected to use to keep track of their time “on the job.” John was kind enough to let me take a peek inside his account at VIP One, and to download the time tracking software. It’s safe to say that time is certainly not the only thing being tracked by this program.

I installed the application in a Window XP virtual machine equipped with Wireshark, a free program that lets you inspect the data packets going in and out of a host machine. I pressed start and left the software alone for a few hours. A review of the Wireshark logs showed that the time tracking tool periodically and surreptitiously took screenshots of my system, uploading them to a site called gyazo.com. This Web site appears to be associated with a legitimate screen-grabbing application that automates the grabbing and posting online of screen captures.

My test machine also had several peripherals plugged into it, including a Webcam. To my surprise, further review of the logs showed that the time tracking tool hijacked my machine’s Web cam and took several pictures, also posting them to gyazo.com.

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12
Jul 12

Banking on a Live CD

An investigative series I’ve been writing over the past three years about organized cyber crime gangs using malware to steal millions of dollars from small to mid-sized organizations has generated more than a few responses from business owners concerned about how best to protect themselves from this type of fraud.

I said this nearly three years ago, and it remains true: The simplest, most cost-effective answer I know of? Don’t use Microsoft Windows when accessing your bank account online. All of the malware used in the attacks I’ve written about is built for Windows. That’s not to say bad guys behind these online heists won’t get around to targeting Mac OS X, or users of other operating systems. Right now, there are no indications that they are doing this.

What the Puppy desktop looks like.

The quickest way to temporarily convert your Windows PC into a Linux system is to use a Live CD. This involves burning an downloadable image file to a CD, inserting the disc into your computer, and rebooting. If this sounds difficult, don’t worry, it’s not.

Here’s a step-by-step guide that should get you up and running in no time flat, with Puppy Linux, an extremely lightweight and fast version of Linux. If you’d prefer to try another distribution, there are dozens to choose from.

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12
Jul 12

EU to Banks: Assume All PCs Are Infected

An agency of the European Union created to improve network and data security is offering some blunt, timely and refreshing advice for financial institutions as they try to secure the online banking channel: “Assume all PCs are infected.”

Source: zeustracker.abuse.ch

The unusually frank perspective comes from the European Network and Information Security Agency, in response to a recent “High Roller” report (PDF) by McAfee and Guardian Analytics on sophisticated, automated malicious software strains that are increasingly targeting high-balance bank accounts. The report detailed how thieves using custom versions of the ZeuS and SpyEye Trojans have built automated, cloud-based systems capable of defeating multiple layers of security, including hardware tokens, one-time transaction codes, even smartcard readers. These malware variants can be set up to automatically initiate transfers to vetted money mule or prepaid accounts, just as soon as the victim logs in to his account.

“Many online banking systems….work based on the assumption that the customer’s PC is not infected,” ENISA wrote in an advisory issued on Thursday. “Given the current state of PC security, this assumption is dangerous. Banks should instead assume that PCs are infected, and still take steps to protect customers from fraudulent transactions.”

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6
Jul 12

Court Ruling Could Be Boon to Cyberheist Victims

A decision handed down by a federal appeals court this week may make it easier for small businesses owners victimized by cyberheists to successfully recover stolen funds by suing their bank.

The U.S. Federal Court of Appeals for the First Circuit has reversed a decision from Aug. 2011, which held that Ocean Bank (now People’s United) was not at fault for a $588,000 cyberheist in 2009 against one of its customers — Sanford, Me. based Patco Construction Co. The appeals court sent specific aspects of the earlier decision back to the lower court for review, but it encouraged both parties to settle the matter out of court.

The appeals court in Boston called the bank’s security systems “commercially unreasonable,” reversing a lower court ruling that Ocean Bank’s reliance on passwords and secret questions was in line with guidance set out by federal banking regulators. A copy of the decision is here (PDF).

Charisse Castagnoli, a bank fraud expert and independent security consultant, said the decision could open the door lawsuits from small businesses that have been similarly victimized with the help of outdated security procedures at their banks.

“What this opinion offers is a strong basis for victims to challenge the security implementations of their banks regardless of whether they agreed that the implementation was ‘commercially reasonable’ at a single point in time in a ‘shrink wrap’ type contract,” Castagnoli said.

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26
Jun 12

Bank Settles With Calif. Cyberheist Victim

A California escrow firm that sued its bank last year after losing nearly $400,000 in a 2010 cyberheist has secured a settlement that covers the loss and the company’s attorneys fees. The settlement is notable because such cases typically favor the banks, and litigating them is often prohibitively expensive for small- to mid-sized businesses victimized by these crimes.

In March 2010, organized computer crooks stole $465,000 from Redondo Beach, Calif. based Village View Escrow Inc., sending 26 consecutive wire transfers from Village View’s accounts to 20 individuals around the world who had no legitimate or previous business with the firm. The escrow firm clawed back some of the stolen funds — $72,000 — but that still left Village View with a $393,000 loss, forcing the company’s owner to take out a personal loan at 12 percent interest to cover the loss of customer funds).

In June 2011, Village View sued its financial institutionProfessional Business Bank — arguing that the bank was negligent because it protected customer accounts solely with usernames and passwords. Last week, Village View announced that it had reached a settlement with its bank to recover more than just the full amount of the funds taken from the account plus interest for Village View Escrow.

Kim Dincel, a shareholder at Silicon Valley Law Group, which represented the plaintiffs, said the Uniform Commercial Code and its corresponding California Commercial Code limits the damages resulting from wire transfer fraud to only the actual amount of money lost plus interest – nothing more.  Common law claims such as negligence, breach of contract and fraud, and the damages that attached to them, are generally precluded from being asserted by a victim of wire transfer fraud in a lawsuit involving wire transfer fraud, he added.

“Banks typically deny liability for the cyber-theft which forces small businesses to spend money they do not have on legal fees and regulatory expenses in order to recover a limited and defined set of damages under the Uniform Commercial Code (UCC),” Dincel said in a prepared statement released Monday.

The Bank of Manhattan, which acquired Professional Business Bank last month, did not return calls seeking comment.

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21
Jun 12

A Closer Look: Email-Based Malware Attacks

Nearly every time I write about a small- to mid-sized business that has lost hundreds of thousands of dollars after falling victim to a malicious software attack, readers want to know how the perpetrators broke through the victim organization’s defenses, and which type of malware paved the way. Normally, victim companies don’t know or disclose that information, so to get a better idea, I’ve put together a profile of the top email-based malware attacks for each day over the past month.

Top malware email attacks in past 30 days. Source: UAB

This data draws from daily reports compiled by the computer forensics and security management students at the University of Alabama at Birmingham, a school I visited last week to give a guest lecture and to gather reporting for a bigger project I’m chasing. The UAB reports track the top email-based threats from each day, and include information about the spoofed brand or lure, the method of delivering the malware, and links to Virustotal.com, which show the percentage of antivirus products that detected the malware as hostile.

As the chart I compiled above indicates, attackers are switching the lure or spoofed brand quite often, but popular choices include Amazon.com, the Better Business Bureau, DHL, Facebook, LinkedIn, PayPal, Twitter and Verizon Wireless.

Also noticeable is the lack of antivirus detection on most of these password stealing and remote control Trojans. The average detection rate for these samples was 24.47 percent, while the median detection rate was just 19 percent. This means that if you click a malicious link or open an attachment in one of these emails, there is less than a one-in-five chance your antivirus software will detect it as bad.

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31
May 12

House Committee to Probe e-Banking Heists

The House Financial Services Committee is slated to hold a hearing this Friday on the impact of cyber heists against small- to mid-sized businesses. It’s too bad the committee has already finalized its witness list: It likely would be shocked to hear the story of Tennessee Electric Company Inc., a firm that lost $328,000 earlier this month in an account takeover that defeated multiple security measures commonly used by commercial banks to stop cyber thieves.

Executives at the Kingsport, Tenn. based construction and maintenance contractor thought that the security procedures employed by their bank — one-time tokens and verbal approval for all transactions — would deter attackers. But they recently discovered how deftly today’s e-thieves can bypass such defenses.

The attack began sometime before May 9, when thieves stole the online banking credentials for Tennessee Electric, presumably with some type of malicious software such as the ZeuS Trojan. That morning, the company’s controller Jenni Smith logged into the firm’s account at the Web site of Tri-Summit Bank, entering her password and a one-time password generated by a key fob supplied by the bank. After Smith entered the information, however, her browser was redirected to a Web page stating that the bank’s site was down for maintenance and would be offline for about an hour.

But the thieves lurking on Smith’s PC intercepted that one-time password, used her connection to log on to the bank’s site, and redirected her browser to the fake maintenance page. Meanwhile, the attackers used that browser session to put through a batch of fraudulent payroll payments to at least 50 “money mules,” willing or unwitting individuals scattered throughout the United States who were recruited to help the crooks funnel the funds out of the country.

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14
May 12

Global Payments Breach Fueled Prepaid Card Fraud

Debit card accounts stolen in a recent hacker break-in at card processor Global Payments have been showing up in fraud incidents at retailers in Las Vegas and elsewhere, according to officials from one bank impacted by the fraud.

At the beginning of March 2012, Danbury, Conn. based Union Savings Bank began seeing an unusual pattern of fraud on a dozen or so debit cards it had issued, noting that most of the cards had recently been used in the same cafe at a nearby private school. When the bank determined that the school was a customer of Global Payments, it contacted Visa to alert the card association of a possible breach at the Atlanta-based processor, according to Doug Fuller, Union Savings Bank’s chief risk officer.

That’s when USB heard from Tony Higgins, then a fraud investigator at Vons, a grocery chain in Southern California and Nevada owned by Safeway Inc.

According to Fuller, Higgins said the fraudsters were coming to the stores to buy low-denomination Safeway branded prepaid cards, and then encoding debit card accounts issued by USB onto the magnetic stripe on the backs of the prepaid cards. The thieves then used those cards to purchase additional prepaid cards with much higher values, which were then used to buy electronics and other high-priced goods from other retailers.

“Higgins said, ‘You have a problem,'” Fuller recalled, of a phone conversation the bank had with Higgins in early March. “He said he had a slew of these people going through their Vons and Safeway stores exchanging cards. He had them on surveillance tape, knew where they were from and everything.”

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13
Apr 12

Thieves Replacing Money Mules With Prepaid Cards?

Recent ebanking heists — such as a $121,000 online robbery at a New York fuel supplier last month — suggest that cyber thieves increasingly are cashing out by sending victim funds to prepaid debit card accounts. The shift appears to be an effort to route around a major bottleneck for these crimes: Their dependency on unreliable money mules.

Mules traditionally have played a key role in helping thieves cash out hacked accounts and launder money.  They are recruited through email-based work-at-home job scams, and are told they will be helping companies process payments. In a typical scheme, the mule provides her banking details to the recruiter, who eventually sends a fraudulent transfer and tells the mule to withdraw the funds in cash, keep a small percentage, and wire the remainder to co-conspirators abroad.

Some of the mule gangs I’ve identified.

But mules are hardly the most expedient method of extracting funds. To avoid arousing suspicion (and triggering anti-money laundering reporting requirements by the banks), cyber crooks usually send less than $10,000 to each mule. In other words, for every $100,000 that the thieves want to steal, they need to have  at least 10 money mules at the ready.

In reality, though, that number is quite often closer to 15 mules per $100,000. That’s because the thieves may send much lower amounts to mules that bank at institutions which have low transfer limit triggers. For instance, they almost always limit transfers to less than $5,000 when dealing with Bank of America mules, because they know transfers for more than that amount to consumer accounts will raise fraud flags at BofA.

Thus, the average mule is worth up to $10,000 to a cybercrook. Unsurprisingly, there is much competition and demand for available money mules in the cybercriminal underground. I’ve identified close to two dozen distinct money mule recruitment networks, most of which demand between 40-50 percent of the fraudulent transfer amounts for their trouble. Not only are mule expensive to acquire, they often take weeks to groom before they’re trusted with transfers.

But these mules also come with their own, well, baggage. I’ve interviewed now more than 200 money mules, and it’s hard to escape the conclusion that many mules simply are not the sharpest crayons in the box. They often have trouble following simple instructions, and frequently screw up important details when it comes time to cash out (there are probably good reasons that a lot of these folks are unemployed). Common goofs include transposing digits in account and routing numbers, or failing to get to the bank to withdraw the cash shortly after the fraudulent transfer, giving the victim’s bank precious time to reverse the transaction. In isolated cases, the mules simply disappear with the money and stiff the cyber thieves.

In several recent ebanking heists, however, thieves appear to have sent at least half of the transfers to prepaid cards, potentially sidestepping the expense and hassle of hiring and using money mules. For example, last month cyber crooks struck Alta East, a wholesale gasoline dealer in Middletown, N.Y. According to the firm’s comptroller Debbie Weeden, the thieves initiated 30 separate fraudulent transfers totaling more than $121,000. Half of those transfers went to prepaid cards issued by Metabank, a large prepaid card provider.

Prepaid cards are ideal because they can be purchased anonymously for small amounts ($25-$100 values) from supermarkets and other stores. A majority of these low-value cards are not reloadable, unless the cardholder goes online and provides identity information that the prepaid card issuer can tie to a legitimate credit holder. After that card is activated, it can be reloaded remotely by transferring or depositing funds into the account, and it can be used like a debit, ATM or credit card.

“The information we gather in opening it is the same information you’d be asked if you were opening a credit card account online,” said Brad Hanson, president of Metabank’s payment systems division. “We do checks against different public resources like Experian and LexisNexis to verify that all the information matches and is accurate, and that we have a reasonable belief that you are the person applying for the card.”

The trouble is, the thieves pulling these ebanking heists have access to massive amounts of stolen data that can be used to fraudulently open up prepaid cards in the names of people whose identities and computers have already been hijacked. Once those cards are approved, the crooks can simply transfer funds to them from cyberheist victims, and extract the cash at ATMs. Alternatively, wire transfer locations like Western Union even allow senders to use their debit cards to execute a “debit spend,” thereby sending money overseas directly from the card.

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13
Mar 12

Hacked Inboxes Lead to Bank Fraud

Hacked and phished email accounts increasingly are serving as the staging grounds for bank fraud schemes targeting small businesses. The scams are decidedly low-tech and often result in losses of just a few thousand dollars, but the attacks frequently succeed because they exploit existing trust relationships between banks and their customers.

Last month, scam artists hijacked private email accounts belonging to three different customers of Western National Bank, a small financial institution with seven branches throughout Central and West Texas. In each case, the thieves could see that the victim had previously communicated with bank personnel via email.

The attackers then crafted the following email, sending it to personnel at each victim’s respective local WNB bank branch.

Good Morning,

Can you please update me with the the available balance in my account and also the information needed to  complete an outgoing wire transfer for me today,i am on my way to my nephew funeral service but i will check my mail often for your response.

Thanks.

Wade Kuehler, an executive vice president at WNB, said bank personnel followed up on two of the requests, ignoring the request not to contact the customer via phone. In both cases, the customers were grateful for the contact, saying they had not sent such a request.

But the thieves struck paydirt with the third attempt, when a sympathetic associate at the bank responded to the message with the requested balance information. The follow-up email from the thieves included instructions to wire money to an account at another bank, and the assistant helpfully processed the transfer.

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