SpyEye, ZeuS Users Target Tracker Sites

March 9, 2011
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Crooks who create botnets with the help of crimeware kits SpyEye and ZeuS are actively venting their frustration with two Web services that help ISPs and companies block infected machines from communicating with control networks run by these botmasters. The lengths to which established cyber criminals are willing to go to disable and discredit these anti-fraud services provide convincing proof that the services are working as designed, and that the bad guys are suffering financially as a result.

The creations of Swiss security expert Roman Hüssy, ZeusTracker and its sister service SpyEye Tracker have endured countless distributed denial-of-service (DDoS) attacks from botmasters apparently retaliating for having their network infrastructure listed by these services. At one point, someone wrote a fake suicide in Hüssy’s name and distributed it to his family and friends, prompting local police to rouse him from slumber to investigate his well-being. But, those attacks haven’t deterred Hüssy or sidelined his services.

Now, the attackers are beginning to consider stealthier and more diabolical ways to strike back. A  series of discussions on an uber-exclusive Russian language forum that caters to identity and credit card thieves reveal that botmasters are becoming impatient in their search for a solution that puts Hüssy and/or his tracking services out of commission once and for all (click the images in this post twice to read along).

“DDoSing doesn’t bring satisfactory results. We’re now working on mapping his entire infrastructure, flag his scripts,” writes a user named Sal, who claims to specialize in providing bulletproof servers. “Now we will engage in a pinpointed assault. This should be cheaper + should bring results at least temporarily….Let’s brainstorm here.”

Other members join the discussion. One suggests pooling funds to hire a hitman. “It’s easier and more productive to just use a joint fund to hire a killer, and story’s over,” writes user “Femar.” Another forum member named “Deviant” recommends dosing Hüssy with organic mercury. “Dimethylmercury – the fluid has no color. One drop on your hand will penetrate thick latex gloves. Lethal result is guaranteed within one month.”

But forum members seemed to coalesce around an idea for seeding the ZeuS and SpyEye configuration files (those that list the location of key parts of the botnet, such as the place to deposit stolen data) with legitimate Web sites. Their stated goal? To cause SpyEye Tracker and ZeuS Tracker to flag legitimate sites as hostile, and thereby to lose credibility with ISPs that rely on the trackers.

I caught up with Hüssy via instant message yesterday, and asked whether he’d seen any SpyEye or ZeuS configuration files seeded with legitimate sites. He just laughed.

“ZeusTracker checks if a command and control server is really up before adding it to the blocklist,” Hüssy said. “These guys have no clue how ZeusTracker works.”

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Patch Tuesday, Etc.

March 8, 2011
35 Comments

Microsoft has issued security updates to fix at least four security holes in its Windows operating system and other software. Not exactly a fat Patch Tuesday from Microsoft, but depending on how agile you are in updating third-party applications like Flash, iTunes and Shockwave, you may have some additional patching to do.

One of the updates from Microsoft earned a “critical” rating, meaning Redmond believes it could be exploited to break into vulnerable systems with little to no help from users. That flaw, a bug in the way Windows Media Player and Media Center process certain types of media files, could be leveraged by convincing a user to open a tainted video file. This flaw affects Windows XP, Vista and Windows 7.

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WHOIS Problem Reporting System to Gain Privacy Option

March 8, 2011
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A system that allows anti-spam activists to report entities that bulk-register domain names using false or misleading identity data is about to gain a much-needed new privacy feature: The option for activists not to expose their identities to the very spammers they’re trying to report.

The Internet Corporation for Assigned Names and Numbers (ICANN), the organization that oversees the Internet’s domain name system, runs a program called the WHOIS Data Problem Reporting System (WDPRS). It’s designed to allow Internet community members to alert registrars about customers that list incomplete or inaccurate contact records for domain registrations.

The policy of requiring registrars to make WHOIS data publicly searchable is no doubt a contentious one, but the reality is that spammers and scammers frequently bulk register large numbers of domains in one go, and tend to take their business to registrars that don’t ask too many questions. Indeed, some domain registrars have built a business out of catering to spammers and scammers.

In many cases, spammers will mass-register domains using completely bogus contact information, or — as appears to have been the case with hundreds of domains that were used recently in an attack against KrebsOnSecurity.com — with the contact information belonging to people whose stolen credit cards were used to fraudulently register the spammy domains.

Some anti-spam activists have pursued bulk registrants with false WHOIS data because, under ICANN’s rules, registrars are supposed to investigate and eventually suspend domains whose owners fail to respond to requests to verify or correct false WHOIS data. And in direct response to a massive influx of reporting on these domains by such activists, ICANN built the WPDRS.

But at some point, ICANN began sharing the names and email addresses of people who were reporting the erroneous WHOIS information with the registrars for each offending domain, exposing the identities of any anti-spam activists who used their real contact information in reporting the issues to ICANN.

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ChronoPay’s Scareware Diaries

March 3, 2011
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If your Windows PC has been hijacked by fake anti-virus software or “scareware” anytime in the past few years, chances are good that the attack was made possible by ChronoPay, Russia’s largest processor of online payments.

Tens of thousands of documents stolen and leaked last year from ChronoPay offer a fascinating look into a company that has artfully cultivated and handsomely profited from the market for scareware, programs that infiltrate victim PCs to display fake security alerts in a bid to frighten users into paying for worthless security software.

Click image for PDF version of timeline. Each entry is clickable and links to supporting documents.

ChronoPay handles Internet bill payments for a variety of major Russian companies, including domestic airlines and utilities. But ChronoPay also specializes in processing the transactions of so-called “high-risk” industries, including online pharmacies, tobacco sales, porn and software sales. A business is generally classified as high-risk when there is a great potential for credit card chargebacks and a fair chance that it will shut down or vanish without warning.

In June 2009, The Washington Post published the results of a six-month investigation into ChronoPay’s high-risk business. At the time, ChronoPay was one of a handful of processors for Pandora Software, the most prevalent brand of rogue software that was besieging consumers at the time. That story drew links between ChronoPay and an entity called Innovagest2000, which was listed as the technical support contact in the end-user license agreements that shipped with nearly all Pandora rogue anti-virus products.

When I confronted ChronoPay’s CEO Pavel Vrublevsky in 2009 about the apparent ties between Innovagest and his company, he insisted that there was no connection, and that his company’s processing services were merely being abused by scammers. But the recently leaked ChronoPay documents paint a very different picture, showing that Innovagest2000 was but one example of a cookie-cutter operation that ChronoPay has  refined and repeated over the last 24 months.

The documents show that Innovagest was a company founded by ChronoPay’s Spanish division, and that ChronoPay paid for everything, from the cost of Innovagest’s incorporation documents to the domain registration, virtual hosting and 1-800 technical and customer support lines for the company.

The same dynamic would play out with other ChronoPay “customers” that specialized in selling rogue anti-virus software. For example, leaked internal documents indicate that ChronoPay employees created two companies in Cyprus that would later be used in processing rogue anti-virus payments: Yioliant Holdings; and the strangely named Flytech Classic Distribution Ltd. ChronoPay emails show that employees also paid for domains software-retail.com and creativity-soft.com, rogue anti-virus peddling domains that were registered in the names and addresses of Yioliant Holdings and Flytech, respectively. Finally, emails also show that ChronoPay paid for the virtual hosting and telephone support for these operations. This accounting document, taken from one of the documents apparently stolen from ChronoPay, lists more than 75 pages of credit card transactions that the company processed from Americans who paid anywhere from $50 to $150 to rid their computers of imaginary threats found by scareware from creativity-soft.com (the amounts in the document are in Russian Rubles, not dollars, and the document has been edited to remove full credit card numbers and victim names).

Further, the purloined documents show these domains were aggressively promoted by external rogue anti-virus affiliate programs, such as Gelezyaka.biz, as well as a rogue anti-virus affiliate program apparently managed in-house by ChronoPay, called “Crusader.”

MEETING IN MOSCOW

Last month, I traveled to Moscow and had a chance to sit down with Vrublevsky at his offices. When I asked him about Innovagest, his tone was much different from the last time we discussed the subject in 2009. This may have had something to do with my already having told him that someone had leaked me his company’s internal documents and emails, which showed how integral ChronoPay was to the rogue anti-virus industry.

“By the time which correlates with your story, we didn’t know too much about spyware, and that Innovagest company that you tracked wasn’t used just for spyware only,” Vrublevsky said. “It was used for a bunch of shit.”

Vrublevsky further said that some of ChronoPay’s customers have in the past secretly sub-let the company’s processing services to other entities, who in turn used it to push through their own shady transactions. He offered, as an example, an entity that I wasn’t previously aware had been a customer of ChronoPay’s: A rogue anti-virus promotion program called TrafficConverter.biz.

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Renewal Buddy: Comparison Shopping for Anti-Virus Software

March 2, 2011
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The anti-virus industry has long drawn its biggest share of profits from loyal customers, extracting full-price for the software from existing customers seeking license renewals while steeply discounting their products for new users. But a new comparison shopping site makes it simple for renewing customers to take advantage of these introductory deals, or to switch to a competing product for a hefty price reduction.

Launched a month ago, renewalbuddy.com is intended to streamline the process of searching for deals to renew your existing anti-virus product without paying the full renewal price. For example, I have Norton Internet Security installed on one of my Windows 7 machines; I selected that product from the pull-down menu, told it I wanted a 3-user license, and instantly saw an offer for NIS 2011 for $29.99. Had I simply waited until the product was about to expire and followed the prompt from the currently-installed software to renew my license, that renewal would have cost me $62.99, according to Symantec’s site.

True, you can find these deals on your own just by spending a few minutes searching the Web (the $29.99 link offered by this service brought me to an offer on Amazon.com). But my sense is that very few people who pay for anti-virus software ever do this.

“People assume that a renewal license key is somehow different from a new license key, and that’s why most people click on the expiration pop-up and go through the process and end up paying full price for renewals,” said  Graham O’Reilly, renewalbuddy.com’s chief executive and a former sales director of the U.K. division of anti-virus maker AVG Technologies. “What people don’t understand is that a license key is a license key, and that they can just pop it in to the program without having to reinstall it, and it will extend a license in the same way.”

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Before You Install Windows 7 Service Pack 1

February 26, 2011
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Microsoft is now offering Windows 7 users “Service Pack 1,” a bundle of security updates and minor feature improvements. If you’re thinking about installing this update, read on for a few caveats and tips that may change your mind.

First off, this service pack is mainly a bundle of previously-released security updates. If you are staying up-to-date in security patches, you are not going to gain much by installing this service pack, which contains a few uber-geeky feature improvements that are mostly a bonus for users of Windows Server 2008 R2 — not Windows 7.

My take? I’d say that the main benefit of this service pack for Windows 7 users would be if you were considering re-installing the operating system for some reason. In that case, Service Pack 1 would streamline the process quite a bit. Otherwise, I would urge Windows 7 users who are up-to-date to ignore this offering, at least for now.

If you decide to go forward with this Service Pack, there are several important considerations, particularly if your system has certain hotfixes installed (hotfixes are small patches designed to address specific — not necessarily security — issues). For example, Microsoft says that systems with hotfixes (2406705, 979350 or 983534) will block the installation of the service pack and may experience problems as a result.

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Pharma Wars

February 25, 2011
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How do you chronicle the struggle for control of an underground empire when neither combatant wants to admit that he is fighting or even that a war is underway? That’s the nature of a business-feud turned turf-war that is playing out right now between the bosses of two of the Internet’s largest illicit pharmacy operations.

On Thursday, I wrote about an anonymous source using the pseudonym “Despduck” who shared a copy of the back-end database for Glavmed, a.k.a. “SpamIt”, until recently the biggest black market distributor of generic pharmaceuticals on the Internet. The database indicates that Glavmed processed in excess of 1.5 million orders from more than 800,000 consumers who purchased knockoff prescription drugs between May 2007 and June 2010.

Despduck first proffered the Glavmed data through a mutual source in the anti-spam community, and claimed that the alleged owner of the pharmacy program, a Russian businessman named Igor Gusev, would soon be charged with illegal business activities. Sure enough, near the end of September 2010, Russian officials announced a criminal investigation into Gusev and his businesses. Shortly after those charges were brought, SpamIt.com was closed down. Consequently, the volume of spam flowing into inboxes around the world fell precipitously, likely because SpamIt.com affiliates fell into a period of transitioning to other pharmacy networks.

Gusev is now in exile from Russia; he blames his current predicament– and the leak of the Glavmed data — on his former business partner, fellow Muscovite Pavel Vrublevsky. The latter is a founder of Russian e-payment giant ChronoPay, a company Gusev also helped to co-found almost eight years ago (according to incorporation documents I obtained from the Netherlands Chamber of Commerce — where ChronoPay was established — for a time Gusev and Vrublevsky were 50/50 partners in ChronoPay).

As reported in my story earlier this week, tens of thousands of internal documents and emails stolen from ChronoPay and leaked to key individuals suggest that Vrublevsky is managing a competing online pharmacy network called Rx-Promotion. It turns out that the Glavmed database was stolen at about the same time as ChronoPay’s breach.

Vrublevsky denies being the source of the purloined Glavmed/SpamIt database, but the bounty of leaked ChronoPay documents suggests otherwise. Included in the email records are messages sent to and from an inbox that used the display name “Kill Glavmed.” What was the email address tied to that name? “Despduck@gmail.com,” the very same address used to communicate with my anti-spam source.

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SpamIt, Glavmed Pharmacy Networks Exposed

February 24, 2011
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An organized crime group thought to include individuals responsible for the notorious Storm and Waledac worms generated more than $150 million promoting rogue online pharmacies via spam and hacking, according to data obtained by KrebsOnSecurity.com.

In June 2010, an anonymous source using the assumed name “Despduck” began an e-mail correspondence with a key anti-spam source of mine, claiming he had access to the back-end database for Glavmed, a.k.a. “SpamIt”, until recently the biggest black market distributor of generic pharmaceuticals on the Internet.

Source: M86 Security Labs

If you received an unsolicited email in the past few years pimping male enhancement or erectile dysfunction pills, chances are extremely good that it was sent compliments of a Glavmed/Spamit contractor or “affiliate.” According to M86 Security Labs, the sites advertised in those Glavmed/Spamit emails — best known by their “Canadian Pharmacy” brand name — were by far the most prevalent affiliate brands promoted by spam as of June 2010.

Despduck said he could deliver data on hundreds of thousands of consumers who purchased pills through Glavmed’s sizable stable of online pharma shops, as well as detailed financial records of Glavmed/SpamIt affiliates who earned thousands of dollars of month promoting pharmacy sites using spam and hacked Web sites.

After many months of promising the information, Despduck finally came through with a 9-gigabyte database file that contained three years worth of financial books for the massive illicit pharmacy network. My source shared the data with several U.S. law enforcement agencies, and ultimately agreed to share it with me.

The database reads like a veritable rogues gallery of the Underweb; In it are the nicknames, ICQ numbers, email addresses and bank account information on some of the Internet’s most notorious hackers and spammers. This huge cache of information shows that over the course of three years, more than 2,500 “affiliates” earned hefty commissions promoting Glavmed’s pharmacy sites.

In total, these promoters would help Glavmed process in excess of 1.5 million orders from more than 800,000 consumers who purchased knockoff prescription drugs between May 2007 and June 2010. All told, Glavmed generated revenues of at least $150 million.

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Sold a Lemon in Internet Banking

February 23, 2011
157 Comments

An online bank robbery in which computer crooks stole $63,000 from a Kansas car dealership illustrates the deftness with which cyber thieves are flouting the meager security measures protecting commercial accounts at many banks.

At 7:45 a..m. Monday, Nov. 1, 2010, the controller for Abilene, Kansas based Green Ford Sales, Inc. logged into his account at First Bank Kansas to check the company’s accounts. Seven hours later, he logged back in and submitted a payroll batch for company employees totaling $51,970. The bank’s authentication system sent him an e-mail to confirm the batch details, and the controller approved it.

The controller didn’t know it at the time, but thieves had already compromised his Microsoft Windows PC with a copy of the ZeuS trojan, which allowed them to monitor his computer and log in to the company’s bank account using his machine. Less than an hour after the bookkeeper approved the payroll batch, bank records show, the thieves logged in to Green Ford’s account from the same Internet address normally used by the dealership, using the controller’s correct user name and password.

The attackers cased the joint a bit — checking the transaction history, account summary and balance — and then logged out. They waited until 1:04 p.m. the next day to begin creating their own $63,000 payroll batch, by adding nine new “employees” to the company’s books. The employees added were in fact money mules, willing or unwitting individuals recruited through work-at-home job scams to help crooks launder stolen funds.

Green Ford’s controller never received the confirmation email sent by the bank to verify the second payroll batch initiated by the fraudsters, because the crooks also had control over the controller’s e-mail account.

“They went through and deleted it,” said Green Ford owner Lease Duckwall. “If they had control over his machine, they’d have certainly had control over his email and the password for that, too.”

To me, this attack gets to the heart of why these e-banking thefts continue unabated at banks all over the country every week: An attacker who has compromised an account holder’s PC can control every aspect of what the victim sees or does not see, because that bad guy can then intercept, delete, modify or re-route all communications to and from the infected PC. If a bank’s system of authenticating a transaction depends solely on the customer’s PC being infection-free, then that system is trivially vulnerable to compromise in the face of today’s more stealthy banking trojans.

It is difficult to believe that there are still banks that are using nothing more than passwords for online authentication on commercial accounts. Then again, some of the techniques being folded into today’s banking trojans can defeat many of the most advanced client-side authentication mechanisms in use today.

Banks often complain that commercial account takeover victims might have spotted thefts had the customer merely reconciled its accounts at day’s end. But several new malware strains allow attackers to manipulate the balance displayed when the victim logs in to his or her account.

Perhaps the most elegant fraud techniques being built into trojans involve an approach known as “session riding,” where the fraudster in control of a victim PC simply waits until the user logs in, and then silently hijacks that session to move money out of the account.

Amit Klein, chief technology officer at Trusteer, blogged this week about a relatively new strain of malware dubbed OddJob, which hijacks customers’ online banking sessions in real time using their session ID tokens. According to Klein, OddJob keeps online banking sessions open after customers think they have “logged off,” enabling criminals to extract money and commit fraud unnoticed.

All of these developments illustrate the need for some kind of mechanism on the bank’s end for detecting fraudulent transactions, such as building profiles of what constitutes normal customer activity and looking for activity that appears to deviate from that profile. For example, in almost every case I’ve written about, the victim was robbed after thieves logged in and added multiple new names to the payroll. There are most certainly other such markers that are common to victims of commercial account fraud, and banks should be looking out for them. Unfortunately, far too many small to mid-sized banks outsource much of their visibility at the transaction level to third-party service providers, most of whom have been extremely slow to develop and implement solutions that would enable partner banks to flag many warning signs of account takeovers.

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Russian Cops Crash Pill Pusher Party

February 21, 2011
65 Comments

I recently returned from a trip to Russia, where I traveled partly to interview a few characters involved in running the world’s biggest illicit online pharmacies. I arrived just days after the real fireworks, when several truckloads of masked officers from Russian drug enforcement bureaus raided a party thrown exclusively for the top moneymakers of Rx-Promotion, a major e-pharmacy program co-owned by one of the men I went to meet.

Chronopay founder Pavel Vrublevsky, at his office in Moscow

Within a few hours of my arrival in Moscow, I called Pavel Vrublevsky, the founder of ChronoPay, Russia’s largest processor of online payments. For years, I had heard that Vrublevsky was known online as “RedEye,” and that Rx-Promotion was using ChronoPay as the core credit card processor. Unlike other rogue Internet pharmacies, Rx-Promotion’s claim to fame is that it is one of the few that sells controlled substances, such as addictive painkillers like Oxycontin, Oxycodone and Codeine over the Internet without requiring a prescription.

Late last summer I came into possession of a mountain of evidence showing that not only is ChronoPay the core credit card processor for Rx-Promotion, but that Vrublevsky also is co-owner of the pharmacy program and  that ChronoPay executives have steered the pharmacy’s activities for some time.

In mid-2010, ChronoPay was hacked, and many of the company’s internal documents were posted on random LiveJournal blogs and other places that were mostly shut down shortly thereafter. But a much larger cache of tens of thousands of ChronoPay e-mails, and thousands of recorded phone calls and documents were siphoned from the company and distributed to a handful of people, including me.

Among the few others who have these documents is Igor Gusev, an early co-founder of ChronoPay and the man now charged by Russian officials as the owner of a competing online pharmacy affiliate program called Glavmed. Gusev is currently trickling out the leaked ChronoPay documents in a Russian language blog about Vrublevsky called Redeye-blog.com, mainly because he believes Vrublevsky was responsible for helping to bring the charges against him.

I told Vrublevsky that I’d also received the cache of stolen data, and as a result he has been calling me almost daily for the past eight months. His goals: To keep tabs on my activities and to learn tidbits about others in his industry. But most of all, Vrublevsky has acknowledged he’s been hoping to feed me tips that would lead to other stories that aren’t about him or what’s in those documents.

Some of what he’s told me has checked out and has indeed been useful. Yet, now that I’ve had time to pore over these documents and emails in detail (almost all of them are in Russian), a much clearer picture of Vrublevsky and his businesses is beginning to emerge.

My analysis indicates that in 2010 alone, Rx-Promotion sold tens of millions of dollars worth of generic prescription drugs (mostly to Americans), including millions of controlled pills that have high resale value on the street, such as Valium, Percocet, Tramadol, and Oxycodone. And yes, buyers are getting more or less what they’re seeking from this program, contrary to popular perception (more soon on how I know that).

I hadn’t told Vrublevsky that I was coming to Russia before I arrived on Feb. 8. But I wasted no time in phoning him via Skype, using the line he normally calls me on several times a week.

“Duuuuuuuudddde!,” he answers. “It’s 7 a.m. where you are, who died?”

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