Brazilian ‘Boleto’ Bandits Bilk Billions

July 2, 2014
72 Comments

With the eyes of the world trained on Brazil for the 2014 FIFA World Cup, it seems a fitting time to spotlight a growing form of computer fraud that’s giving Brazilian banks and consumers a run for their money. Today’s post looks at new research into a mostly small-time cybercrime practice that in the aggregate appears to have netted thieves the equivalent of billions of dollars over the past two years.

A boleto.

A boleto.

At issue is the “boleto” (officially “Boleto Bancario”), a popular payment method in Brazil that is used by consumers and for most business-to-business payments. Brazilians can use boletos to complete online purchases via their bank’s Web site, but unlike credit card payments — which can be disputed and reversed — payments made via boletos are not subject to chargebacks and can only be reverted by bank transfer.

Brazil has an extremely active and talented cybercrime underground, and increasingly Brazilian organized  crime gangs are setting their sights on boleto users who bank online. This is typically done through malware that lies in wait until the user of the hacked PC visits their bank’s site and fills out the account information for the recipient of a boleto transaction. In this scenario, the unwitting victim submits the transfer for payment and the malware modifies the request by substituting a recipient account that the attackers control.

Many of the hijacked boleto transactions are low-dollar amounts, but in the aggregate these purloined payments can generate an impressive income stream for even a small malware gang. On Tuesday, for example, a source forwarded me a link to a Web-based control panel for a boleto-thieving botnet (see screenshot below); in this operation, we can see that the thieves had hijacked some 383 boleto transactions between February 2014 and the end of June, but had stolen the equivalent of nearly USD $250,000 during that time.

The records kept by a boleto-stealing botnet. Next to the date and time is the account of the intended recipient of the transfer; the "linea alterada" column shows the accounts used by the thieves to accept diverted payments. "Valor" refers to the amount, expressed in Brazilian Real.

The records kept by a boleto-stealing botnet. Next to the date and time is the account of the intended recipient of the transfer; the “linha alterada” column shows the accounts used by the thieves to accept diverted payments. “Valor” refers to the amount, expressed in Brazilian Real.

But a recent discovery by researchers at RSA, the security division of EMC, exposes far more lucrative and ambitious boleto banditry. RSA says the fraud ring it is tracking — known as the “Bolware” operation — affects more than 30 different banks in Brazil, and may be responsible for up to $3.75 billion USD in losses. RSA arrived at this estimate based on the discovery of a similar botnet control panel that tracked nearly a half-million fraudulent transactions. Continue reading →

Microsoft Darkens 4MM Sites in Malware Fight

July 1, 2014
161 Comments

Millions of Web sites were shuttered Monday morning after Microsoft executed a legal sneak attack against a malware network thought to be responsible for more than 7.4 million infections of Windows PCs worldwide.

A diagram showing how crooks abused no-ip.com's services to control malware networks. Source: Microsoft.

A diagram showing how crooks abused no-ip.com’s services to control malware networks. Source: Microsoft.

In its latest bid to harness the power of the U.S. legal system to combat malicious software and cybercrooks, Microsoft convinced a Nevada court to grant the software giant authority over nearly two dozen domains belonging to no-ip.com, a company that provides dynamic domain name services.

Dynamic DNS services are used to map domain names to numeric Internet address that may change frequently. Typically, the biggest users of dynamic DNS services are home Internet users who wish to have a domain name that will always point back to their home computer, no matter how many times their ISP changes the numeric Internet address assigned to that computer.

In this case, however, the attackers responsible for leveraging two malware families — remote-access Trojans known as “njrat” and “njw0rm” — were using no-ip.com’s services to guarantee that PCs they infected would always be able to reach the Internet servers.

Microsoft told the court that miscreants who were using these two malware strains were leveraging more than 18,400 hostnames that belonged to no-ip.com. On June 26, the court granted Microsoft the authority to temporarily seize control over 23 domains owned by no-ip.com — essentially all of the domains that power no-ip.com’s free dynamic DNS services.

Microsoft was supposed to filter out the traffic flowing to and from those 18,400+ hostnames, and allow the remaining, harmless traffic to flow through to its rightful destination. But according to no-ip.com marketing manager Natalie Goguen, that’s not at all what happened.

“They made comments that they’d only taken down bad hostnames and were supposedly redirecting all good traffic through to users, but it’s not happening, and they’re not able to handle our traffic volumes,” Goguen said. “Many legitimate users that use our services have been down all day.”

Goguen said while Microsoft claimed that there were more than 18,000 malicious hostnames involved, no-ip.com could only find a little more than 2,000 from that list that were still active as of Monday morning. Meanwhile, some four million hostnames remain offline, with customer support requests piling up.

“So, to go after 2,000 or so bad sites, [Microsoft] has taken down four million,” Goguen said. Continue reading →

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2014: The Year Extortion Went Mainstream

June 26, 2014
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The year 2014 may well go down in the history books as the year that extortion attacks went mainstream. Fueled largely by the emergence of the anonymous online currency Bitcoin, these shakedowns are blurring the lines between online and offline fraud, and giving novice computer users a crash course in modern-day cybercrime.

An extortion letter sent to 900 Degrees Neapolitan Pizzeria in New Hampshire.

An extortion letter sent to 900 Degrees Neapolitan Pizzeria in New Hampshire.

At least four businesses recently reported receiving “Notice of Extortion” letters in the U.S. mail. The letters say the recipient has been targeted for extortion, and threaten a range of negative publicity, vandalism and harassment unless the target agrees to pay a “tribute price” of one bitcoin (currently ~USD $561) by a specified date. According to the letter, that tribute price increases to 3 bitcoins (~$1,683) if the demand isn’t paid on time.

The ransom letters, which appear to be custom written for restaurant owners, threaten businesses with negative online reviews, complaints to the Better Business Bureau, harassing telephone calls, telephone denial-of-service attacks, bomb threats, fraudulent delivery orders, vandalism, and even reports of mercury contamination.

The missive encourages recipients to sign up with Coinbase – a popular bitcoin exchange – and to send the funds to a unique bitcoin wallet specified in the letter and embedded in the QR code that is also printed on the letter.

Interestingly, all three letters I could find that were posted online so far targeted pizza stores. At least two of them were mailed from Orlando, Florida.

The letters all say the amounts are due either on Aug. 1 or Aug. 15. Perhaps one reason the deadlines are so far off is that the attackers understand that not everyone has bitcoins, or even knows about the virtual currency.

“What the heck is a BitCoin?” wrote the proprietors of New Hampshire-based 900 Degrees Neapolitan Pizzeria, which posted a copy of the letter (above) on their Facebook page.

Sandra Alhilo, general manager of Pizza Pirates in Pomona, Calif., received the extortion demand on June 16.

“At first, I was laughing because I thought it had to be a joke,” Alhilo said in a phone interview. “It was funny until I went and posted it on our Facebook page, and then people put it on Reddit and the Internet got me all paranoid.”

Nicholas Weaver, a researcher at the International Computer Science Institute (ICSI) and at the University California, Berkeley, said these extortion attempts cost virtually nothing and promise a handsome payoff for the perpetrators.

“From the fraudster’s perspective, the cost of these attacks is a stamp and an envelope,” Weaver said. “This type of attack could be fairly effective. Some businesses — particularly restaurant establishments — are very concerned about negative publicity and reviews. Bad Yelp reviews, tip-offs to the health inspector..that stuff works and isn’t hard to do.”

While some restaurants may be an easy mark for this sort of crime, Weaver said the extortionists in this case are tangling with a tough adversary — The U.S. Postal Service — which takes extortion crimes perpetrated through the U.S. mail very seriously.

“There is a lot of operational security that these guys might have failed at, because this is interstate commerce, mail fraud, and postal inspector territory, where the gloves come off,” Weaver said. “I’m willing to bet there are several tools available to law enforcement here that these extortionists didn’t consider.”

It’s not entirely clear if or why extortionists seem to be picking on pizza establishments, but it’s probably worth noting that the grand-daddy of all pizza joints — Domino’s Pizza in France — recently found itself the target of a pricey extortion attack earlier this month after hackers threatened to release the stolen details on more than 650,000 customers if the company failed to pay a ransom of approximately $40,000).

Meanwhile, Pizza Pirates’s Alhilo says the company has been working with the local U.S. Postal Inspector’s office, which was very interested in the letter. Alhilo said her establishment won’t be paying the extortionists.

“We have no intention of paying it,” she said. “Honestly, if it hadn’t been a slow day that Monday I might have just throw the letter out because it looked like junk mail. It’s annoying that someone would try to make a few bucks like this on the backs of small businesses.” Continue reading →

The ‘Fly’ Has Been Swatted

June 24, 2014
81 Comments

A Ukrainian man who claimed responsibility for organizing a campaign to send heroin to my home last summer has been arrested in Italy on suspicion of trafficking in stolen credit card accounts, among other things, KrebsOnSecurity.com has learned.

Sergei "Fly" Vovnenko was arrested in Naples, Italy.

Passport photo for Sergei “Fly” Vovnenko. He was arrested in Naples, Italy earlier this month.

Last summer, appropos of nothing, an infamous cybercrook known as “Fly,” “Flycracker” and “Muxacc” began sending me profane and taunting tweets. On top of this, he posted my credit report on his blog and changed his Twitter profile picture to an image of an action figure holding up my severed head.

The only thing I knew about Fly then was that he was the founder and administrator of a closely-guarded Russian-language crime forum called thecc.bz (the “cc” part referring to credit cards). Fly also was a trusted moderator on Mazafaka, one of the most exclusive and venerable Russian carding forums online today.

Shortly after Fly began sending those nasty tweets, I secretly gained access to his forum, where I learned that he had hatched a plot to buy heroin on the Silk Road, have it shipped to my home, and then spoof a call from one of my neighbors to the local police when the drugs arrived (see Mail from the Velvet Cybercrime Underground).

Thankfully, I was able to warn the cops in advance, even track the package along with the rest of the forum members thanks to a USPS tracking link that Fly had posted into a discussion thread on his forum.

Angry that I’d foiled his plan to have me arrested for drug possession, Fly had a local florist send a gaudy floral arrangement in the shape of a giant cross to my home, complete with a menacing message that addressed my wife and was signed, “Velvet Crabs.”

Irina Gumenyuk-Vovnenko lists her hometown as Naples in her Odnoklassniki.ru profile.

Irina Gumenyuk-Vovnenko’s lists her hometown as Naples in her Odnoklassniki.ru profile.

After this incident, I became intensely curious about the identity of this Fly individual, so I began looking through databases of hacked carding and cybercrime forums. My first real break came when Russian computer forensics firm Group-IB provided a key piece of the puzzle (they also were quite helpful on the heroin sleuthing as well). Group-IB found that on the now-defunct vulnes[dot]com, Fly maintained an account under the nickname Flycracker, and signed up with the email address mazafaka@libero.it (.it is the country code for Italy).

According to a trusted source in the security community, that email account was somehow compromised last year. The source said the account was full of emailed reports from a keylogging device that was tied to another email address — 777flyck777@gmail.com (according to Google, mazafaka@libero.it is the recovery email address for 777flyck777@gmail.com).

Those keylog reports contained some valuable information, and indicated that Fly had planted a keylogger on his wife Irina’s computer. On several occasions, those emails show Fly’s wife typed in her Gmail address, which included her real first and last name — Irina Gumenyuk.

Later, Gumenyuk would change the surname on her various social networking profiles online to Vovnenko. She even mentioned her husband by name several times in emails to friends, identifying him as 28-year-old “Sergei Vovnenko”. Payment information contained in those emails — including shipping and other account information — put the happy couple and their young son in Naples, Italy. Continue reading →

Card Wash: Card Breaches at Car Washes

June 23, 2014
75 Comments

Ooh, you might not ever get rich
But let me tell ya, it’s better than diggin’ a ditch
“Car Wash” by Rose Royce

An investigation into a string of credit card breaches at dozens of car wash locations across the United States illustrates the challenges facing local law enforcement as they seek to connect the dots between cybercrime and local gang activity that increasingly cross multiple domestic and international borders.

Car WashEarlier this month, police in Everett, Massachusetts arrested a local man named Jean Pierre for possessing nine stolen credit card accounts. The cards themselves weren’t stolen: They were gift cards that had been re-encoded with data from cards that were stolen from a variety of data breaches at merchants, including a Splash Car Wash in Connecticut.

How authorities in Massachusetts connected Pierre to a cybercrime at a Connecticut car wash is a mix of odd luck and old-fashioned police work. In May, the Everett police department received a complaint from a sheriff’s department in South Carolina about a resident who’d had his credit card account used repeatedly for fraudulent transactions at a Family Dollar store in Everett.

Everett PD Detective Michael Lavey obtained security camera footage from the local Dollar Store in question. When Lavey asked the store clerk if he knew the individuals pictured at the date and time of the fraudulent transactions, the clerk said the suspects had been coming in for months — several times each week — always purchasing gift cards.

“The clerk told me they would come into the store in pairs, using multiple credit cards until one of them was finally approved, at which point they’d buy $500 each in prepaid gift cards,” Lavey said. “We have two Family Dollar stores in Everett and a bunch in the surrounding area, and these guys would come in three to four times a week at each location, laundering money from stolen cards.”

Not long after Lavey posted snapshots from the video footage on a state-wide police network, he heard from an officer in Boston who said a suspect resembling one of the men in the photos was recently questioned at a city hospital after being stabbed in the legs and buttocks in an unrelated robbery. The assailant in that attack was arrested, but his victim — Jean Pierre — refused to answer questions about the incident. The police seized Jean Pierre’s pants as evidence in the assault case, and discovered numerous prepaid cards in the pockets of the trousers.

Lavey said he subpoenaed the credit card records, and working with investigators at American Express and Citibank was able to determine that at least one of the cards had been stolen from the Splash Car Wash in Connecticut. In effect, thieves were buying stolen cards to finance the purchase of gift cards, some of which would later serve as hosts for new stolen card data once their balance was exhausted. The cops call it money laundering, but in this case it might as well be called card washing.

WILL THAT BE A SUPER OR DELUXE WASH?

Soon enough, Lavey had linked up with Michael Chaves, a detective with the police department in Monroe, Conn. who’d been investigating card breaches at 14 separate car washes in his state, including the Splash case. Working with the Connecticut Financial Crimes Task Force, a broad law enforcement group that includes the U.S. Secret Service and state police, they determined that the local company was but one of at least 40 car washes across the country that had been hacked and relieved of countless customer credit and debit cards since at least February 2014.

A list of car washes allegedly compromised by card thieves this year.

A list of car washes identified by various banks as compromised by card thieves this year.

Chaves said he interviewed several of the car wash owners, and discovered that they were all using the same point-of-sale systems developed by Randolph, N.J.-based Micrologic Associates. Chaves said the store owners told him the devices had remote access via Symantec’s pcAnywhere enabled, access that was granted to anyone who knew the same set of default credentials.

“The pcAnywhere credentials were created by Micrologic, but unchanged for years,” Chaves said.

That was the same conclusion independently reached by Detective Steven LaMears with the police department in Keene, N.H. Earlier this month, a police captain at the Keene Police Dept. saw fraudulent charges show up on his credit card shortly after using it at the town’s Key Road Car Wash, an establishment which used Micrologic’s point-of-sale system.

LaMears also heard from a company in New York which reported that two its executives each had their cards compromised multiple times after visiting the Key Road Car Wash in Keene.

“We confronted them, and working with the U.S. Secret Service got them back up and running,” LaMears said of the local compromised car wash. “The Secret Service told us they were running an old version of Micrologic that had the same, one login for everything, and were using an old version of Windows XP.” Continue reading →

Oil Co. Wins $350,000 Cyberheist Settlement

June 20, 2014
55 Comments

A California oil company that sued its bank after being robbed of $350,000 in a 2011 cyberheist has won a settlement that effectively reimbursed the firm for the stolen funds.

oilmoneysmallTRC Operating Co. Inc., an oil production firm based in Taft, Calif., had its online accounts hijacked after an account takeover that started late in the day on Friday, November 10, 2011. In the ensuing five days, the thieves would send a dozen fraudulent wires out of the company’s operating accounts, siphoning nearly $3.5 million to accounts in Ukraine.

The oil firm’s financial institution, Fresno-based United Security Bank, successfully blocked or recalled all but one of the wires – for $299,000. Nevertheless, TRC  later sued its bank to recover the remaining wire amount, arguing that USB failed to offer a commercially reasonable security procedure because the bank offered little more than a user name and password to help secure the account.

“For all intents and purposes, they got a user name and password, but were never offered any other security,” said Julie Rogers, an attorney for the Dincel Law Group, the San Jose firm that represented TRC in the dispute (as well as another California cyberheist victim that successfully sued its bank for $400,000 in 2012).  “TRC had a cash management liaison assigned to them by the bank who assured them that this was all safe and reliable.”

Last week, just days before the case was set to go to trial, the insurance company for the bank settled the lawsuit, agreeing to cut a check for $350,000 to the oil company and with neither side admitting fault in the incident. Under California law, the most that any business can recover from a cyber fraud lawsuit is the amount stolen from its accounts — plus interest. Continue reading →

Gear to Block ‘Juice Jacking’ on Your Mobile

June 18, 2014
94 Comments

Ever since I learned about the threat of “juice-jacking” — the possibility that plugging your mobile device into a random power charging station using a USB cord could jeopardize the data on that device — I’ve been more mindful about bringing a proper power-outlet charging adapter on my travels. But in the few cases when I forgot or misplaced the adapter, I’ve found myself falling back on one of two devices I’ll review today that are both designed to block USB charging cords from transmitting data.

The USB Condom, in action at 35k feet.

The USB Condom, in action at 35k feet.

Juice-jacking as a threat probably first crept into the collective paranoia of gadget geeks in the summer of 2011, after I wrote a story about two researchers at the DefCon hacker convention in Vegas who’d set up a mobile charging station designed to educate the unwary to the fact that many mobile devices (particularly Apple devices) are set up to connect to a computer and immediately sync data.

Their proof-of-concept was a reminder that in the (admittedly unlikely) event that a clever attacker managed to hide a small computer inside of a USB charging kiosk, he might be able to slurp up your device’s data.

Since that story, several products have sprung up to help minimize such threats. These small USB pass-through devices are designed to allow charging yet block any data transfer capability. The two products I’ve been using over the past few months include the “USB Condom” and a device called the “Juice-Jack Defender.”

Both prophylactics (cue the crude jokes) function the same way — with male and female USB adapters at either end — but the two have a slightly different form factor and feel. True to its name, the USB Condom is a rectangular black circuit board wrapped in a clear plastic sheath, measuring approximately 54 millimeters/2 inches long and 20 mm/.75 inches wide.

The Juice-Jack Defender is slightly smaller — about 45 mm long and roughly 16 mm wide — and is wrapped in rubberized black plastic, although the device picture on the Web site of the vendor, chargedefense.com, shows a product coated in blue plastic. Continue reading →

If It Sounds Too Good To Be True…

June 17, 2014
65 Comments

The old adage “If it sounds too good to be true, it probably is” no doubt is doubly so when it comes to steeply discounted brand-name stuff for sale on random Web sites, especially sports jerseys, designer shoes and handbags. A great many stores selling these goods appear to be tied to an elaborate network of phony storefronts and credit card processing sites based out of China that will happily charge your card but deliver nothing (or at best flimsy knockoffs).

Screenshot 2014-06-08 02.16.03Earlier this month I heard from a reader whose wife had purchased ladies clothing from bearcrs.co.uk, a site that until very recently billed itself as an official seller of Victoria Secrets goods. Most of the items for sale were roughly 60-70 percent off the retail price advertised anywhere else. The checkout process brought her to payment site called unimybill.com, which took her credit card information and said she’d been successfully charged for her purchases. The goods never arrived.

“They charged her card about $100,” said the reader, who asked to remain anonymous. “I tried to contact them, they never replied back. I started to discover similar websites by entering phrases from bearcrs.co.uk into Google. All websites have the same php engine, same phrases, registered in China, same checkout process, all they sell brand clothes for 30% of real price.”

Bearcrs.co.uk is one of hundreds of bogus storefronts that list products of well-known brands like Nike, Ray Ban, Michael Kors and others, hoping to lure bargain-hunting shoppers. Among the many fraudulent sites is michaelkorshandbags.co.uk, a site that claims to be a merchant in the United Kingdom but whose infrastructure is all Chinese.

The same network is tied to michaelkorshandbags.co.uk and hundreds of other similarly structured sites, all of which have left a trail of complaints online from customers who were charged for goods that never arrived. Order anything from this shop and you are taken to a checkout page at sslcreditpay.com, which tries to assure shoppers that the page is legitimate by posting a number of logos and trust seals from a variety of security and payment security providers such as Verisign, Symantec, Trustwave and the PCI Security Standards Council. Trouble is, none of these organizations actually authorized this payment gateway to use their seals, which are supposed to be clickable icons that provide information to help support that claim.

sslcreditpay.com uses a variety of security seals to make you feel more at ease submitting your credit card for goods you'll never get.

sslcreditpay.com uses a variety of security seals to make you feel more at ease submitting your credit card for goods you’ll never get.

A check with Trustwave showed that the seal was bogus. John Randall, senior product manager for the company, said Trustwave only issues the Trustwave seal for customers that purchase its domain validation or extended validation (EV) certificates, and that the site in question hadn’t done either.

Likewise, the PCI Security Standards Council said it doesn’t authorize the use of its logo for payment processing sites.

“As a standards setting organization we do not validate compliance with PCI Standards – this is managed separately by each payment card brand,” said Ella Nevill, vice president of stakeholder engagement at the PCI Counil. “As such, we don’t provide any sort of compliance ‘seal’ or use of our company logo. What we do provide is use of a PCI Participating Organization logo for our member organizations that pay to be PCI Participating Organizations and be involved in standards development process.”

Sslcreditpay.com is one of many apparently bogus online payment processing sites tied to this fraud network. Other phony payment portals include payitrust.com and paymentsol.com. You can’t reach the payment pages for these processors directly unless you actually check out from an associated online store. At that point, you’ll be directed to a subdomain like https://payment.payitrust.com and https://payment.paymentsol.com. Continue reading →