Adobe, Microsoft Issue Critical Security Fixes

November 11, 2014

Adobe and Microsoft today each issued security updates to fix critical vulnerabilities in their software. Microsoft pushed 14 patches to address problems in Windows, Office, Internet Explorer and .NET, among other products. Separately, Adobe issued an update for its Flash Player software that corrects at least 18 security issues.

brokenwindowsMicrosoft announced 16 bulletins, but curiously two of those are listed as pending. Topping the list of critical updates from Microsoft is a fix for a zero-day vulnerability disclosed last month that hackers have been using in targeted cyber espionage attacks. Another critical patch targets 17 weaknesses in Internet Explorer, including a remotely exploitable vulnerability in all supported versions of Windows that earned a CVSS score of 9.3 (meaning it is highly likely to be exploited in drive-by attacks, and probably soon).

That flaw is a rare “unicorn-like” bug according to IBM X-Force, which discovered and reported the issue privately to Microsoft. In a blog post published today, IBM researchers described how the vulnerability can be used to sidestep the Enhanced Protected Mode sandbox in IE11, as well as Microsoft’s EMET anti-exploitation tool that Microsoft offers for free.

“In this case, the buggy code is at least 19 years old, and has been remotely exploitable for the past 18 years,” writes IBM researcher Robert Freeman. “Looking at the original release code of Windows 95, the problem is present. In some respects this vulnerability has been sitting in plain sight for a long time, despite many other bugs being discovered and patched in the same Windows library (OleAut32).”

Freeman said while unpatched Internet Explorer users are most at risk from this bug, the vulnerability also could be exploited through Microsoft Office files. “The other attack vectors this vulnerability could work with are Microsoft Office with script macros, for example in Excel documents,” Freeman told KrebsOnSecurity. “Most versions of Office (since about 2003) have macros disabled by default so the user would have to enable them (which can be a fairly mindless YES click at the top of the screen). Or if a user is using an old enough version of Office, the macros will be enabled by default.”

macrosms

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Home Depot: Hackers Stole 53M Email Addresses

November 7, 2014

As if the credit card breach at Home Depot didn’t already look enough like the Target breach: Home Depot said yesterday that the hackers who stole 56 million customer credit and debit card accounts also made off with 53 million customer email addresses.

pwnddepotIn an update (PDF) released to its site on Thursday, Home Depot warned customers about the potential for thieves to use the email addresses in phishing attacks (think a Home Depot “survey” that offers a gift card for the first 10,000 people who open the booby-trapped attachment, for example). Home Depot stressed that the files containing the stolen email addresses did not contain passwords, payment card information or other sensitive personal information.

Home Depot said the crooks initially broke in using credentials stolen from a third-party vendor. The company said thieves used the vendor’s user name and password to enter the perimeter of Home Depot’s network, but that these stolen credentials alone did not provide direct access to the company’s point-of-sale devices. For that, they had to turn to a vulnerability in Microsoft Windows that was patched only after the breach occurred, according to a story in Thursday’s Wall Street Journal.

Recall that the Target breach also started with a hacked vendor — a heating and air conditioning company in Pennsylvania that was relieved of remote-access credentials after someone inside the company opened a virus-laden email attachment. Target also came out in the days after the breach became public and revealed that the attackers had stolen more than 70 million customer email addresses. Continue reading

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Feds Arrest Alleged ‘Silk Road 2’ Admin, Seize Servers

November 6, 2014

Federal prosecutors in New York today announced the arrest and charging of a San Francisco man they say ran the online drug bazaar and black market known as Silk Road 2.0. In conjunction with the arrest, U.S. and European authorities have jointly seized control over the servers that hosted Silk Road 2.0 marketplace.

The home page of the Silk Road 2.0 market has been replaced with this message indicating the community's Web servers were seized by authorities.

The home page of the Silk Road 2.0 market has been replaced with this message indicating the community’s Web servers were seized by authorities.

On Wednesday, agents with the FBI and the Department of Homeland Security arrested 26-year-old Blake Benthall, a.k.a. “Defcon,” in San Francisco, charging him with drug trafficking, conspiracy to commit computer hacking, and money laundering, among other alleged crimes.

Benthall’s LinkedIn profile says he is a native of Houston, Texas and was a programmer and “construction worker” at Codespike, a company he apparently founded using another company, Benthall Group, Inc. Benthall’s LinkedIn and Facebook profiles both state that he was a software engineer at Space Exploration Technologies Corp. (SpaceX), although this could not be immediately confirmed. Benthall describes himself on Twitter as a “rocket scientist” and a “bitcoin dreamer.”

Blake Benthall's public profile page at LinkedIn.com

Blake Benthall’s public profile page at LinkedIn.com

Benthall’s arrest comes approximately a year after the launch of Silk Road 2.0, which came online less than a month after federal agents shut down the original Silk Road community and arrested its alleged proprietor — Ross William Ulbricht, a/k/a “Dread Pirate Roberts.” Ulbricht is currently fighting similar charges, and made a final pre-trial appearance in a New York court earlier this week.

According to federal prosecutors, since about December 2013, Benthall has secretly owned and operated Silk Road 2.0, which the government describes as “one of the most extensive, sophisticated, and widely used criminal marketplaces on the Internet today.” Like its predecessor, Silk Road 2.0 operated on the “Tor” network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the network’s users.

“Since its launch in November 2013, Silk Road 2.0 has been used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions,”reads a statement released today by Preet Bharara, the United States Attorney for the Southern District of New York. “As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month and had approximately 150,000 active users.”

Benthall's profile on Github.

Benthall’s profile on Github.

The complaint against Benthall claims that by October 17, 2014, Silk Road 2.0 had over 13,000 listings for controlled substances, including, among others, 1,783 listings for “Psychedelics,” 1,697 listings for “Ecstasy,” 1,707 listings for “Cannabis,” and 379 listings for “Opioids.” Apart from the drugs, Silk Road 2.0 also openly advertised fraudulent identification documents and computer-hacking tools and services. The government alleges that in October 2014, the Silk Road 2.0 was generating at least approximately $8 million in monthly sales and at least $400,000 in monthly commissions.

The complaint describes how federal agents infiltrated Silk Road 2.0 from the very start, after an undercover agent working for Homeland Security investigators managed to infiltrate the support staff involved in the administration of the Silk Road 2.0 website.

“On or about October 7, 2013, the HSI-UC [the Homeland Security Investigations undercover agent] was invited to join a newly created discussion forum on the Tor network, concerning the potential creation of a replacement for the Silk Road 1.0 website,” the complaint recounts. “The next day, on or about October 8, 2013, the persons operating the forum gave the HSI‐UC moderator privileges, enabling the HSI‐UC to access areas of the forum available only to forum staff. The forum would later become the discussion forum associated with the Silk Road 2.0 website.”

The complaint also explains how the feds located and copied data from the Silk Road 2.0 servers. “In May 2014, the FBI identified a server located in a foreign country that was believed to be hosting the Silk Road 2.0 website at the time. On or about May 30, 2014, law enforcement personnel from that country imaged the Silk Road 2.0 Server and conducted a forensic analysis of it. Based on posts made to the SR2 Forum, complaining of service outages at the time the imaging was conducted, I know that once the Silk Road 2.0 server was taken offline for imaging, the Silk Road 2.0 website went offline as well, thus confirming that the server was used to host the Silk Road 2.0 website.” Continue reading

Still Spamming After All These Years

November 5, 2014

A long trail of spam, dodgy domains and hijacked Internet addresses leads back to a 37-year-old junk email purveyor in San Diego who was the first alleged spammer to have been criminally prosecuted 13 years ago for blasting unsolicited commercial email.

atballLast month, security experts at Cisco blogged about spam samples caught by the company’s SpamCop service, which maintains a blacklist of known spam sources. When companies or Internet service providers learn that their address ranges are listed on spam blacklists, they generally get in touch with the blacklister to determine and remediate the cause for the listing (because usually at that point legitimate customers of the blacklisted company or ISP are having trouble sending email).

In this case, a hosting firm in Ireland reached out to Cisco to dispute being listed by SpamCop, insisting that it had no spammers on its networks. Upon investigating further, the hosting company discovered that the spam had indeed come from its Internet addresses, but that the addresses in question weren’t actually being hosted on its network. Rather, the addresses had been hijacked by a spam gang.

Spammers sometimes hijack Internet address ranges that go unused for periods of time. Dormant or “unannounced” address ranges are ripe for abuse partly because of the way the global routing system works: Miscreants can “announce” to the rest of the Internet that their hosting facilities are the authorized location for given Internet addresses. If nothing or nobody objects to the change, the Internet address ranges fall into the hands of the hijacker (for another example of IP address hijacking, also known as “network identity theft,” check out this story I wrote for The Washington Post back in 2008).

So who’s benefitting from the Internet addresses wrested from the Irish hosting company? According to Cisco, the addresses were hijacked by Mega-Spred and Visnet, hosting providers in Bulgaria and Romania, respectively. But what of the spammers using this infrastructure?

One of the domains promoted in the spam that caused this ruckus — unmetegulzoo[dot]com — leads to some interesting clues. It was registered recently by a Mike Prescott in San Diego, to the email address mikeprescott7777@gmail.com. That email was used to register more than 1,100 similarly spammy domains that were recently seen in junk email campaigns (for the complete list, see this CSV file compiled by DomainTools.com).

Enter Ron Guilmette, an avid anti-spam researcher who tracks spammer activity not by following clues in the junk email itself but by looking for patterns in the way spammers use the domains they’re advertising in their spam campaigns. Guilmette stumbled on the domains registered to the Mike Prescott address while digging through the registration records on more than 14,000 spam-advertised domains that were all using the same method (Guilmette asked to keep that telltale pattern out of this story so as not to tip off the spammers, but I have seen his research and it is solid).

persaud-fbOf the 5,000 or so domains in that bunch that have accessible WHOIS registration records, hundreds of them were registered to variations on the Mike Prescott email address and to locations in San Diego. Interestingly, one email address found in the registration records for hundreds of domains advertised in this spam campaign was registered to a “michaelp77x@gmail.com” in San Diego, which also happens to be the email address tied to the Facebook account for one Michael Persaud in San Diego.

Persaud is an unabashed bulk emailer who’s been sued by AOL, the San Diego District Attorney’s office and by anti-spam activists multiple times over the last 15 years. Reached via email, Persaud doesn’t deny registering the domains in question, and admits to sending unsolicited bulk email for a variety of “clients.” But Persaud claims that all of his spam campaigns adhere to the CAN-SPAM Act, the main anti-spam law in the United States — which prohibits the sending of spam that spoofs that sender’s address and which does not give recipients an easy way to opt out of receiving future such emails from that sender.

As for why his spam was observed coming from multiple hijacked Internet address ranges, Persaud said he had no idea. Continue reading

Thieves Cash Out Rewards, Points Accounts

November 3, 2014

A number of readers have complained recently about having their Hilton Honors loyalty accounts emptied by cybercrooks. This type of fraud often catches consumers off-guard, but the truth is that the recent spike in fraud against Hilton Honors members is part of a larger trend that’s been worsening for years as more companies offer rewards programs.

HHONORSMany  companies give customers the ability to earn “loyalty” or “award” points and miles that can be used to book travel, buy goods and services online, or redeemed for cash. Unfortunately, the online accounts used to manage these reward programs tend to be less secured by both consumers and the companies that operate them, and increasingly cyber thieves are swooping in to take advantage.

Brendan Brothers, a frequent traveler from St. John’s in Newfoundland, Canada, discovered a few days ago that his Hilton Honors account had been relieved of more than a quarter-million points, rewards that he’d accumulated using a credit card associated with the account. Brothers said the fraudsters were brazen in their theft, using his account to redeem a half-dozen hotel stays in the last week of September, booking rooms all along the East Coast of the United States, from Atlanta, GA to Charlotte, N.C. all the way up to Stamford, CT.

The thieves reserved rooms at more affordable Hilton properties, probably to make the points stretch further, Brothers said. When they exhausted his points, they used the corporate credit card that was already associated with the account to purchase additional points.

“They got into the account and of course the first thing they did was change my primary and secondary email accounts, so that neither me nor my travel agent were getting notifications about new travel bookings,” said Brothers, co-founder of Verafin, a Canadian software security firm that focuses on anti-money laundering and fraud detection.

Brothers said he plans to dispute the credit card charges, but he’s unsure what will happen with his purloined points; nearly a week after he complained to Hilton about the fraud, Brothers has yet to receive a response from the company. Hilton also did not respond to requests for comment from KrebsOnSecurity.

PUT A PIN IN IT

Hilton gives users two ways to log into accounts: With a user name and password, or a member number and a 4-digit PIN. What could go wrong here?  Judging from changes that Hilton made recently to its login process, thieves have been breaking into Hilton Honors accounts using the latter method. According to the travel loyalty Web site LoyaltyLobby, Hilton recently added a CAPTCHA to its login process, ostensibly to make it more difficult for crooks to use brute-forcing programs (or botnets) to automate the guessing of PINs associated with member accounts.

In a post on October 30, LoyaltyLobby’s John Ollila wrote about a hacker selling Hilton Honors accounts for a tiny fraction of the real world value of points in those accounts. For example, the points stolen from Brothers would have fetched around USD $12 — even though the thieves in his case managed to redeem the stolen miles for approximately USD $1,200 worth of hotel reservations.

I did a bit of sleuthing on my own and was able to find plenty of sellers on shady forums offering them for about three to five percent of their actual value. As this ad from the online black market/drug bazaar known as Evolution Market indicates, the points can be redeemed for gift cards (as good as cash) at points.com and other locations that convert points to currency. The points also can be used to buy items from the Hilton shopping mall, including golf clubs, watches, Apple products and other electronics.

A merchant on the Evolution black market hawking hijacked Hilton points for a fraction of their value.

A merchant on the Evolution black market hawking hijacked Hilton points for a fraction of their value.

“I don’t recommend using them for personal hotel stays, but they ARE safer (and cheaper) than using a carded hotel service,” the Evolution seller advises, referring to the risks associated with using purloined points versus trying to book a stay somewhere using a stolen credit card. Continue reading

KrebsOnSecurity Honored for Fraud Reporting

October 31, 2014

The Association of Certified Fraud Examiners today announced they have selected Yours Truly as the recipient of this year’s “Guardian Award,” an honor given annually to a journalist “whose determination, perseverance, and commitment to the truth have contributed significantly to the fight against fraud.”

acfeThe Guardian Award bears the inscription “For Vigilance in Fraud Reporting.”

Previous honorees include former Washington Post investigative reporter and two-time Pulitzer Prize winner Susan Schmidt; Diana Henriques, a New York Times contributing writer and author of The Wizard of Lies (a book about Bernie Madoff); and Allan Dodds Frank, a regular contributor to Fortune.com and The Daily Beast.

I’d like to thank the ACFE for this prestigious award, and offer a special note of thanks to all of you dear readers who continue to support my work as an independent journalist.

The ACFE’s blog post about the award is here.

Chip & PIN vs. Chip & Signature

October 30, 2014

The Obama administration recently issued an executive order requiring that federal agencies migrate to more secure chip-and-PIN based credit cards for all federal employees that are issued payment cards. The move marks a departure from the far more prevalent “chip-and-signature” standard, an approach that has been overwhelmingly adopted by a majority of U.S. banks that are currently issuing chip-based cards. This post seeks to explore some of the possible reasons for the disparity.

emvkeyChip-based cards are designed to be far more expensive and difficult for thieves to counterfeit than regular credit cards that most U.S. consumers have in their wallets. Non-chip cards store cardholder data on a magnetic stripe, which can be trivially copied and re-encoded onto virtually anything else with a magnetic stripe.

Magnetic-stripe based cards are the primary target for hackers who have been breaking into retailers like Target and Home Depot and installing malicious software on the cash registers: The data is quite valuable to crooks because it can be sold to thieves who encode the information onto new plastic and go shopping at big box stores for stuff they can easily resell for cash (think high-dollar gift cards and electronics).

The United States is the last of the G20 nations to move to more secure chip-based cards. Other countries that have made this shift have done so by government fiat mandating the use of chip-and-PIN. Requiring a PIN at each transaction addresses both the card counterfeiting problem, as well as the use of lost or stolen cards.

Here in the States, however, the movement to chip-based cards has evolved overwhelmingly toward the chip-and-signature approach. Naturally, if your chip-and-signature card is lost or stolen and used fraudulently, there is little likelihood that a $9-per-hour checkout clerk is going to bat an eyelash at a thief who signs your name when using your stolen card to buy stuff at retailers. Nor will a signature card stop thieves from using a counterfeit card at automated payment terminals (think gas pumps).

But just how broadly adopted is chip-and-signature versus chip-and-PIN in the United States? According to an unscientific poll that’s been running for the past two years at the travel forum Flyertalk, only a handful of major U.S. banks issue chip-and-PIN cards; most have pushed chip-and-signature. Check out Flyertalk’s comprehensive Google Docs spreadsheet here for a member-contributed rundown of which banks support chip-and-PIN versus chip-and-signature.

I’ve been getting lots of questions from readers who are curious or upset at the prevalence of chip-and-signature over chip-and-PIN cards here in the United States, and I realized I didn’t know much about the reasons behind the disparity vis-a-vis other nations that have already made the switch to chip cards. So  I reached out to several experts to get their take on it.

Julie Conroy, a fraud analyst with The Aite Group, said that by and large Visa has been pushing chip-and-signature and that MasterCard has been promoting chip-and-PIN. Avivah Litan, an analyst at Gartner Inc., said MasterCard is neutral on the technology. For its part, Visa maintains that it is agnostic on the technology, saying in an emailed statement that the company believes “requiring stakeholders to use just one form of cardholder authentication may unnecessarily complicate the adoption of this important technology.”

BK: A lot of readers seem confused about why more banks wouldn’t adopt chip-and-PIN over chip-and-signature, given that the former protects against more forms of fraud.

Conroy: The PIN only addresses fraud when the card is lost or stolen, and in the U.S. market lost-and-stolen fraud is very small in comparison with counterfeit card fraud. Also, as we looked at other geographies — and our research has substantiated this — as you see these geographies go chip-and-PIN, the lost-and-stolen fraud dips a little bit but then the criminals adjust. So in the UK, the lost-and-stolen fraud is now back above where was before the migration. The criminals there have adjusted. and that increased focus on capturing the PIN gives them more opportunity, because if they do figure out ways to compromise that PIN, then they can perpetrate ATM fraud and get more bang for their buck.

So, PIN at the end of the day is a static data element, and it only goes so far from a security perspective. And as you weigh that potential for attrition versus the potential to address the relatively small amount of fraud that is lost and stolen fraud, the business case for chip and signature is really a no-brainer.

Litan: Most card issuing banks and Visa don’t want PINs because the PINs can be stolen and used with the magnetic stripe data on the same cards (that also have a chip card) to withdraw cash from ATM machines. Banks eat the ATM fraud costs. This scenario has happened with the roll-out of chip cards with PIN – in Europe and in Canada. Continue reading

‘Replay’ Attacks Spoof Chip Card Charges

October 27, 2014

An odd new pattern of credit card fraud emanating from Brazil and targeting U.S. financial institutions could spell costly trouble for banks that are just beginning to issue customers more secure chip-based credit and debit cards.

emvblueOver the past week, at least three U.S. financial institutions reported receiving tens of thousands of dollars in fraudulent credit and debit card transactions coming from Brazil and hitting card accounts stolen in recent retail heists, principally cards compromised as part of the breach at Home Depot.

The most puzzling aspect of these unauthorized charges? They were all submitted through Visa and MasterCard‘s networks as chip-enabled transactions, even though the banks that issued the cards in question haven’t even yet begun sending customers chip-enabled cards.

The most frustrating aspect of these unauthorized charges? They’re far harder for the bank to dispute. Banks usually end up eating the cost of fraud from unauthorized transactions when scammers counterfeit and use stolen credit cards. Even so, a bank may be able to recover some of that loss through dispute mechanisms set up by Visa and MasterCard, as long as the bank can show that the fraud was the result of a breach at a specific merchant (in this case Home Depot).

However, banks are responsible for all of the fraud costs that occur from any fraudulent use of their customers’ chip-enabled credit/debit cards — even fraudulent charges disguised as these pseudo-chip transactions.

CLONED CHIP CARDS, OR CLONED TRANSACTIONS?

The bank I first heard from about this fraud — a small financial institution in New England — battled some $120,000 in fraudulent charges from Brazilian stores in less than two days beginning last week. The bank managed to block $80,000 of those fraudulent charges, but the bank’s processor, which approves incoming transactions when the bank’s core systems are offline, let through the other $40,000. All of the transactions were debit charges, and all came across MasterCard’s network looking to MasterCard like chip transactions without a PIN.

The fraud expert with the New England bank said the institution had decided against reissuing customer cards that were potentially compromised in the five-month breach at Home Depot, mainly because that would mean reissuing a sizable chunk of the bank’s overall card base and because the bank had until that point seen virtually no fraud on the accounts.

“We saw very low penetration rates on our Home Depot cards, so we didn’t do a mass reissue,” the expert said. “And then in one day we matched a month’s worth of fraud on those cards thanks to these charges from Brazil.” Continue reading

‘Spam Nation’ Publisher Discloses Card Breach

October 23, 2014

In the interests of full disclosure: Sourcebooks — the company that on Nov. 18 is publishing my upcoming book about organized cybercrime — disclosed last week that a breach of its Web site shopping cart software may have exposed customer credit card and personal information.

Fortunately, this breach does not affect readers who have pre-ordered Spam Nation through the retailers I’ve been recommending — Amazon, Barnes & Noble, and Politics & Prose.  I mention this breach mainly to get out in front of it, and because of the irony and timing of this unfortunate incident.

From Sourcebooks’ disclosure (PDF) with the California Attorney General’s office:

“Sourcebooks recently learned that there was a breach of the shopping cart software that supports several of our websites on April 16, 2014 – June 19, 2014 and unauthorized parties were able to gain access to customer credit card information. The credit card information included card number, expiration date, cardholder name and card verification value (CVV2). The billing account information included first name, last name, email address, phone number, and address. In some cases, shipping information was included as first name, last name, phone number, and address. In some cases, account password was obtained too. To our knowledge, the data accessed did not include any Track Data, PIN Number, Printed Card Verification Data (CVD). We are currently in the process of having a third-party forensic audit done to determine the extent of this breach.”

So again, if you have pre-ordered the book from somewhere other than Sourcebook’s site (and that is probably 99.9999 percent of you who have already pre-ordered), you are unaffected.

I think there are some hard but important lessons here about the wisdom of smaller online merchants handling credit card transactions. According to Sourcebooks founder Dominique Raccah, the breach affected approximately 5,100 people who ordered from the company’s Web site between mid-April and mid-June of this year. Raccah said the breach occurred after hackers found a security vulnerability in the site’s shopping cart software.

Shopping-Cart-iconExperts say tens of thousands of businesses that rely on shopping cart software are a major target for malicious hackers, mainly because shopping cart software is generally hard to do well.

“Shopping cart software is extremely complicated and tricky to get right from a security perspective,” said Jeremiah Grossman, founder and chief technology officer for WhiteHat Security, a company that gets paid to test the security of Web sites.  “In fact, no one in my experience gets it right their first time out. That software must undergo serious battlefield testing.”

Grossman suggests that smaller merchants consider outsourcing the handling of credit cards to a solid and reputable third-party. Sourcebooks’ Raccah said the company is in the process of doing just that. Continue reading