Global Payments: Rumor and Innuendo

April 2, 2012
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Global Payments Inc., the Atlanta-based credit and debit card processor that recently announced a breach that exposed fewer than 1.5 million card accounts, held a conference call this morning to discuss the incident. Unfortunately, that call created more questions than it did answers, at least for me. The purpose of this post is to provide some information that I have gathered, and a few observations about the reporting on this breach so far.

In a conference call this morning, Paul Garcia, Chairman and CEO of Global Payments (NYSE: GPN), declined to offer few new details about how the breach happened, beyond the details the company released in its press release last night. He also declined to comment on reports that the breach may have dated back to at least January 2012. Garcia emphasized that the company self-reported and discovered the intrusion in early March, and proactively notified law enforcement officials and hired independent forensics investigators.

When asked about the timeline first reported by KrebsOnSecurity.com last Friday — that Visa and MasterCard were warning of a payment processor that had an exposure between Jan 21, 2012 and Feb. 25, 2012 — Garcia said, without elaborating:

“There’s a lot of rumor and innuendo out there which is not helpful to anyone, and most of it incredibly inaccurate. In terms of other timelines, I just cannot be specific further about that.”

He went on to state that, “This does not involve our merchants, our sales partners, or their relationships with their customers. Neither merchant systems, or point of sale devices, were involved in any way. This was self-discovered and self-reported.” Databreaches.net has a decent round-up of the call details, as well as other reporting on this breach. A recording of the conference call is available here.

I’d like to share a few thoughts on my own reporting as it relates to this breach. First, when I published the story early last Friday morning that is widely credited as the first to break the news of a large processor breach, at that time I did not know for sure that Global Payments had been compromised. I’d heard it from one source, but could not get it from a second source. The old-school reporter in me held back those details from my story.

Several readers have called me irresponsible for quoting anonymous sources stating that the Global Payments breach may have affected more than 10 million cards. This is simply not true. I didn’t even mention Global Payments in my original piece. That information was dug up by reporters at The Wall Street Journal. Indeed, given GPN’s statements thus far, I continue to be nagged by the possibility that my initial reporting may have been related to a separate, as-yet undisclosed breach at another processor. I mentioned this to a reporter at ABC News today, who included my perspective in a story here.

RUMOR AND INNUENDO

GPN said it would allow an hour for the call and for questions, but it told callers at the beginning of the conference that it would be using a portion of the call time to talk about its 4th quarter earnings. Although I sat in on the GPN call this morning for the entire hour and waited in the queue to ask questions, I was not afforded the opportunity. Nor did I hear questions allowed from reporters at mainstream news media outlets cited in this story. The company has not yet responded to my questions, which I submitted in a phone call after the news conference.

What follows is a partial brain dump on some of the information and interesting tidbits I’ve been able to uncover in my reporting today, in no particular order. Some or all of them may turn out to be relevant to the Global Payments breach, to a separate incident, or not at all. Continue reading →

Global Payments: 1.5MM Cards ‘Exported’

April 2, 2012
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Visa Drops Support for Breached Processor, Acknowledges Weekend Outage

Global Payments, the credit and debit card processor that disclosed a breach of its systems late Friday, said in a statement Sunday that the incident involved at least 1.5 million accounts. The news comes hours ahead of a planned conference call with investors, and after Visa said it had pulled its seal of approval for the company.

CNN Money charts Global Payments's stock dive on Friday.

In a press release issued 9:30 p.m. ET Sunday, Atlanta based Global Payments Inc. said it believes “the affected portion of its processing system is confined to North America and less than 1,500,000 card numbers may have been exported…Based on the forensic analysis to date, network monitoring and additional security measures, the company believes that this incident is contained. ”

It remains unclear whether there are additional accounts beyond these 1.5 million that were exposed by the breach; the company’s statement seems to be focusing on the number of cards it can confirm that thieves offloaded from its systems.

It’s also unclear how Global Payments’ timeline of the incident meshes with that of MasterCard and Visa. In an alert sent to card-issuing banks that was first reported early Friday by KrebsOnSecurity.com, the card associations said the window of vulnerability for the breached processor (at that time unnamed) was between Jan. 21, 2012 and Feb. 25, 2012. The alert also said that full Track 1 and Track 2 data was exposed, meaning thieves could use the stolen information to counterfeit new cards.

Yet, in a statement Friday, Global Payments said its own security systems identified and self-reported the breach, which it said was detected in early March 2012: “It is reassuring that our security processes detected an intrusion,” the company said. Continue reading →

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MasterCard, VISA Warn of Processor Breach

March 30, 2012
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VISA and MasterCard are alerting banks across the country about a recent major breach at a U.S.-based credit card processor. Sources in the financial sector are calling the breach “massive,” and say it may involve more than 10 million compromised card numbers.

Update, 4:32 p.m. ET: Atlanta-based processor Global Payments just confirmed that they discovered a breach in early March 2012. See their full statement and several other updates at the end of this story.

Original post:

In separate non-public alerts sent late last week, VISA and MasterCard began warning banks about specific cards that may have been compromised. The card associations stated that the breached credit card processor was compromised between Jan. 21, 2012 and Feb. 25, 2012. The alerts also said that full Track 1 and Track 2 data was taken – meaning that the information could be used to counterfeit new cards.

Neither VISA nor MasterCard have said which U.S.-based processor was the source of the breach. But affected banks are now starting to analyze transaction data on the compromised cards, in hopes of finding a common point of purchase. Sources at two different major financial institutions said the transactions that most of the cards they analyzed seem to have in common are that they were used in parking garages in and around the New York City area. Continue reading →

Critical Security Update for Adobe Flash Player

March 28, 2012
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Adobe has issued a security update for its Flash Player software that fixes at least two critical vulnerabilities in the widely-used program. At long last, this latest version also includes an auto-updating mechanism designed to streamline the deployment of Flash security fixes across multiple browsers.

If it seems like you just updated Flash to fix security holes, it’s not your imagination. This is the third security update for Flash in the last six weeks. Flash Player v. 11.2 addresses a couple of flaws  in Adobe Flash Player 11.1.102.63 and earlier versions for Windows, Macintosh, Linux and Solaris, and Adobe Flash Player 11.1.111.7 and earlier versions for Android 3.x and 2.x. Adobe warns that these vulnerabilities could cause a crash and potentially allow an attacker to take control of the affected system.

My previous posts on Flash updates have been accompanied by lengthy instructions about how to update the program. That’s in part because Adobe has traditionally deployed two separate installers for Windows based systems: One for Flash on Internet Explorer, and another for non-IE browsers. With the release of Flash Player 11.2, Adobe is introducing a new background update mechanism for Windows users that promises to take some of the pain out of updating. Continue reading →

Researchers Clobber Khelios Spam Botnet

March 28, 2012
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Experts from across the security industry collaborated this week to quarantine more than 110,000 Microsoft Windows PCs that were infected with the Khelios worm, a contagion that forces infected PCs to blast out junk email advertising rogue Internet pharmacies.

Most botnets are relatively fragile: If security experts or law enforcement agencies seize the Internet servers used to control the zombie network, the crime machine eventually implodes. But Khelios (a.k.a. “Kelihos”) was built to withstand such attacks, employing a peer-to-peer structure not unlike that used by popular music and file-sharing sites to avoid takedown by the entertainment industry.

Update, 11:07 a.m. ET: Multiple sources are now reporting that within hours of the Khelios.B takedown, Khelios.C was compiled and launched. It appears to be spreading via Facebook.

Original post: The distributed nature of a P2P botnet allows the botmaster to orchestrate its activities by seeding a few machines in the network with encrypted instructions. Those systems then act as a catalyst, relaying the commands from one infected machine to another in rapid succession.

P2P botnets can be extremely resilient, but they typically posses a central weakness: They are only as strong as the encryption that scrambles the directives that the botmaster sends to infected machines. In other words,  anyone who manages to decipher the computer language needed to talk to the compromised systems can send them new instructions, such as commands to connect to a control server that is beyond the reach of the miscreant(s) who constructed the botnet.

That’s precisely the approach that security researchers used to seize control of Khelios. The caper was pulled off by a motley band of security experts from the Honeynet Project, Kaspersky, SecureWorks, and startup security firm CrowdStrike. The group figured out how to crack the encryption used to control systems infected with Khelios, and then sent a handful of machines new instructions to connect to a Web server that the researchers controlled.

That feat allowed the research team to wrest the botnet from the miscreants who created it, said Adam Meyers, director of intelligence for CrowdStrike. The hijacking of the botnet took only a few minutes, and when it was complete, the team had more than 110,000 PCs reporting to its surrogate control server.

“Once we injected that information in the P2P node, it was essentially propagating everything else for us,” Meyers said. “By taking advantage of the intricacies of the protocol, we were providing the most up-to-date information that all of hosts were spreading.”

The group is now working to notify ISPs where the infected hosts reside, in hopes of cleaning up the bot infestations. Meyers said that, for some unknown reason, the largest single geographic grouping of Khelios-infected systems – 25 percent — were located in Poland. U.S.-based ISPs were home to the second largest contingent of Khelios bots. Meyers said about 80 percent of the Khelios-infected systems they sinkholed were running Windows XP, an increasingly insecure operating system that Microsoft released more than a decade ago. Continue reading →

New Java Attack Rolled into Exploit Packs

March 27, 2012
51 Comments

If your computer is running Java and you have not updated to the latest version, you may be asking for trouble: A powerful exploit that takes advantage of a newly-disclosed security hole in Java has been rolled into automated exploit kits and is rapidly increasing the success rates of these tools in attacking vulnerable Internet users.

The exploit targets a bug in Java (CVE-20120-0507) that effectively allows the bypassing of Java’s sandbox, a mechanism built into the ubiquitous software that is designed partly to blunt attacks from malicious code. Microsoft’s Malware Protection Center warned last week that new malware samples were surfacing which proved highly effective at exploiting the flaw. Microsoft says the samples it saw loaded the ZeuS Trojan, but thieves can use such attacks to install malware of their choosing.

According to posts on several underground carding forums, the exploit has now been automatically rolled out to miscreants armed with BlackHole, by far the most widely used exploit pack. An exploit pack is a software toolkit that gets injected into hacked or malicious sites, allowing the attacker to foist a kitchen sink full of browser exploits on visitors. Those visiting such sites with outdated browser plugins may have malware silently installed, and Java is almost universally the most successful method of compromise across all exploit kits.

According to software giant Oracle, Java is deployed across more than 3 billion systems worldwide. But the truth is that many people who have this powerful program installed simply do not need it, or only need it for very specific uses. I’ve repeatedly encouraged readers to uninstall this program, not only because of the constant updating it requires, but also because there seem to be a never-ending supply of new exploits available for recently-patched or undocumented vulnerabilities in the program.

Case in point: On at least two Underweb forums where I regularly lurk, there are discussions among several core members about the sale and availability of an exploit for an as-yet unpatched critical flaw in Java. I have not seen firsthand evidence that proves this 0day exploit exists, but it appears that money is changing hands for said code. Continue reading →

Microsoft Takes Down Dozens of Zeus, SpyEye Botnets

March 26, 2012
52 Comments

Microsoft today announced the execution of a carefully planned takedown of dozens of botnets powered by ZeuS and SpyEye — powerful banking Trojans that have helped thieves steal more than $100 million from small to mid-sized businesses in the United States and abroad.

Microsoft, U.S. Marshals pay a surprise visit to a Scranton, Pa. hosting facility.

In a consolidated legal filing, Microsoft received court approval to seize several servers in Scranton, Penn. and Lombard, Ill. used to control dozens of ZeuS and SpyEye botnets. The company also was granted permission to take control of 800 domains that were used by the crime machines.The company published a video showing a portion of the seizures, conducted late last week with the help of U.S. Marshals.

This is the latest in a string of botnet takedowns executed by Microsoft’s legal team, but it appears to be the first one in which the company invoked the Racketeer Influenced and Corrupt Organizations (RICO) Act.

“The RICO Act is often associated with cases against organized crime; the same is true in applying the civil section of the law to this case against what we believe is an organization of people behind the Zeus family of botnets,” wrote Richard Boscovich, senior attorney for Microsoft’s Digital Crimes Unit. “By incorporating the use of the RICO Act, we were able to pursue a consolidated civil case against everyone associated with the Zeus criminal operation, even if those involved in the “organization” were not necessarily part of the core enterprise.”

It’s too soon to say how much of an impact this effort will have, or whether it will last long. Previous takedowns by Microsoft — such as its targeting of the Kelihos botnet last fall — have produced mixed results. There also are indications that this takedown may have impacted legitimate — albeit hacked — sites that crooks were using in their botnet operations. According to data recorded by Abuse.ch, a Swiss security site that tracks ZeuS and SpyEye control servers, some of the domains Microsoft seized appear to belong to legitimate businesses whose sites were compromised and used to host components of the malware infrastructure. Among them is a site in Italy that sells iPhone cases, a Thai social networking forum, and a site in San Diego that teaches dance lessons.

The effort also shines a spotlight on an elusive group of cyber thieves operating out of Ukraine who have been tagged as the brains behind a great deal of the ebanking losses over the past five years, including the authors of ZeuS (Slavik/Monstr) and SpyEye (Harderman/Gribodemon), both identities that were outed on this blog more than 18 months ago. Over the past few years, KrebsOnSecurity has amassed a virtual treasure trove of data about these and other individuals named in the complaint. Look for a follow-up piece with more details on these actors.

A breakdown of the court documents related to this case is available at zeuslegalnotice.com.

A Busy Week for Cybercrime Justice

March 26, 2012
15 Comments

Last week was a bad one to be a cybercrook. Authorities in Russia arrested several men thought to be behind the Carberp banking Trojan, and obtained a guilty verdict against the infamous spammer Leo Kuvayev. In the United States, a jury returned a 33-month jail sentence against a Belarusian who ran a call service for cyber thieves. At the same time, U.S. prosecutors secured a guilty plea against a Russian man who was part of a gang that stole more than $3 million from U.S. businesses fleeced with the help of the ZeuS Trojan.

Kuvayev in Thailand, 2001

In August 2010, KrebsOnSecurity broke the news that spam king Leonid “Leo” Aleksandorovich Kuvayev, was being held in a Russian prison awaiting multiple child molestation charges.  Late Friday, a Moscow City court judge rendered a guilty verdict against Kuvayev for crimes against the sexual integrity of minors, according to Russian news agency Lenta.ru.

In 2005, the attorney general of Massachusetts successfully sued Kuvayev for violations of the CAN-SPAM Act, a law that prohibits the sending of e-mail that includes false or misleading information about the origins of the message, among other restrictions. Armed with a massive trove of spam evidence gathered largely by lawyers and security experts at Microsoft Corp., the state showed that Kuvayev’s operation, an affiliate program known as BadCow, was responsible for blasting tens of millions of junk e-mails peddling everything from pirated software to counterfeit pharmaceuticals and porn.

In an apparent bid to sidestep those charges, Kuvayev fled the United States for Russia. A Massachusetts judge later convicted Kuvayev of CAN-SPAM violations, and ordered him to pay $37 million in civil penalties. FBI officials say that at the time, BadCow was raking in more than $30 million each year.

Russian prosecutors said Kuvayev sexually abused at least 11 girls aged 13 to 18 years, many of them suffering from mental and psychological problems and pupils of orphanages and boarding schools nearby Kuvayev’s business and residence in Moscow.

According to information obtained by KrebsOnSecurity, Russian prosecutors had help from Kuvayev’s old nemesis Microsoft, which had hired a local forensics company in 2010 to keep tabs on his activities. Microsoft’s Samantha Doerr confirmed that Microsoft Russia consulted with Moscow-based cyber forensics firm Group-IB, but said the nature of the investigation was related to Kuvayev’s spamming activities. Lenta.ru reports that it’s not clear when Kuvayev may be sentenced, but that the most serious offense he faces carries a penalty of 20 years in prison.

Group-IB also assisted in another investigation that bore fruit last week: The arrest of eight men — including two ringleaders from Moscow — alleged to have been responsible for seeding computers worldwide Carberp and RDPdor, powerful banking Trojans. Russian authorities say the crime gang used the malware to raid at least 130 million rubles (~$4.43 million USD) from more than 100 banks around the world, and from businesses in Russia, Germany and the Netherlands. Russian police released a video showing one of the suspects loudly weeping in the moments following a morning raid on his home.

The arrests help explain why the makers of Carberp abruptly stopped selling the Trojan late last year. Until recently, Carberp was sold on shadowy underground forums for more than $9,000 per license. In the screen shot below, a lead coder for the Carberp Trojan can be seen announcing on Nov. 1, 2011 that he will be immediately suspending new sales of the malware, and will not be reachable going forward. Continue reading →

Bredolab Botmaster ‘Birdie’ Still at Large

March 21, 2012
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Employee and financial records leaked from some of the world’s largest sponsors of spam provide new clues about the identity of a previously unknown Russian man believed to have been closely tied to the development and maintenance of “Bredolab,” a massive collection of hacked machines that was disassembled in an international law enforcement sweep in late 2010.

Bredolab grew swiftly after Birdie introduced his load system.

In October 2010, Armenian authorities arrested and imprisoned 27-year-old Georg Avanesov on suspicion of running Bredolab, a botnet that infected an estimated 3 million PCs per month through virus-laden e-mails and booby-trapped Web sites. The arrest resulted from a joint investigation between Armenian police and cyber sleuths in the Netherlands, whose ISPs were home to at least 143 servers that were used to direct the botnet’s activities.

Dutch and Armenian investigators have long suspected that Avanesov worked closely with an infamous Russian botmaster who used the nickname “Birdie,” but so far they have been unable to learn the Russian’s real identity or whereabouts.

“He was a close associate of Gregory A.,” Pim Takkenberg, team leader of the National High Tech Crime Unit in the Netherlands, said of the hacker known as Birdie. “Actually, we were never able to fully identify him.”

According to records leaked from SpamIt — a pharmacy affiliate program that was the victim of a data breach in 2010 — Birdie was an affiliate with SpamIt along with Avanesov. Neither affiliates earned much from SpamIt directly; they both made far more money selling other spammers access to Bredolab.

Birdie was also the nickname of a top member of Spamdot.biz, a now-defunct forum that once counted among its members nearly all of the big names in Spamit, as well as a dozen competing spam affiliate programs. Birdie’s core offering on Spamdot was the “Birdie Load System,” which allowed other members to buy “installs” of their own malware by loading it onto machines already infected with Bredolab.

So successful and popular was the Birdie Load System among Spamdot members that Birdie eventually had to create a customer queuing system, scheduling new loads days or weeks in advance for high volume customers. According to his own postings on Spamdot, Birdie routinely processed at least 50,000 new loads or installs for customers each day.

“Due to the fact that many of my clients very much hate waiting in line, we’ve begun selling access to weekly slots,” Birdie wrote. “If a ‘slot’ is purchased, independently from other customers, the person who purchased the slot is guaranteed service.”

Using Birdie’s Bredolab load system, spammers could easily re-seed their own spam botnets, and could rely upon load systems like this one to rebuild botnets that had been badly damaged from targeted takedowns by anti-spam activists and/or law enforcement. Bredolab also was commonly used to deploy new installations of the ZeuS Trojan, which has been used in countless online banking heists against consumers and businesses.

Below is a translated version of Birdie’s Dec. 2008 post to Spamdot describing the rules, prices and capabilities of his malware loading machine (click the image below twice for an enlarged version of the Spamdot discussion thread from which this translation was taken). Continue reading →

Twitter Bots Target Tibetan Protests

March 20, 2012
10 Comments

Twitter bots — zombie accounts that auto-follow and send junk tweets hawking questionable wares and services — can be an annoyance to anyone who has even a modest number of followers. But increasingly, Twitter bots are being used as a tool to suppress political dissent, as evidenced by an ongoing flood of meaningless tweets directed at hashtags popular for tracking Tibetan protesters who are taking a stand against Chinese rule.

It’s not clear how long ago the bogus tweet campaigns began, but Tibetan sympathizers say they recently noticed that several Twitter hashtags related to the conflict — including #tibet and #freetibet — are now so constantly inundated with junk tweets from apparently automated Twitter accounts that the hashtags have ceased to become a useful way to track the conflict.

The discovery comes amid growing international concern over the practice of self-immolation as a means of protest in Tibet. According to the Associated Press, about 30 Tibetans have set themselves on fire since last year to protest suppression of their Buddhist culture and to call for the return of the Dalai Lama — their spiritual leader who fled during a failed 1959 uprising against Chinese rule.

I first heard about this trend from reader Erika Rand, who is co-producing a feature-length documentary about Tibet called State of Control. Rand said she noticed the tweet flood and Googled the phenomenon, only to find a story I wrote about a similar technique deployed in Russia to dilute Twitter hashtags being used by citizens protesting last year’s disputed parliamentary elections there.

“We first discovered these tweets looking at Twitter via the web, then looked at TweetDeck to see how quickly they were coming,” Rand said in an email to KrebsOnSecurity.com late last week. “They no longer appear when searching for Tibet on Twitter via the web, but are still flooding in fast via TweetDeck. This looks like an attempt to suppress news about recent activism surrounding Tibet. We’re not sure how long it’s been going on for. We noticed it last night, and it’s still happening now.” Continue reading →