Court: Passwords + Secret Questions = ‘Reasonable’ eBanking Security

June 8, 2011
126 Comments

A closely-watched court battle over how far commercial banks need to go to protect their customers from cyber theft is nearing an end. Experts said the decision recommended by a magistrate last week — if adopted by a U.S. district court in Maine — will make it more difficult for other victim businesses to challenge the effectiveness of security measures employed by their banks.

In May 2009, Sanford, Maine based Patco Construction Co. filed suit against Ocean Bank, a division of Bridgeport, Conn. based People’s United Bank. Pacto used online banking primarily to make weekly payroll payments. Patco said cyber thieves used the ZeuS trojan to steal its online banking credentials, and then heisted $588,000 in batches of fraudulent automated clearing house (ACH) transfers over a period of seven days.

In the weeks following the incident, Ocean Bank managed to block or claw back $243,406 of the fraudulent transfers, leaving Patco with a net loss of $345,445. Because the available funds in Patco’s account were less than the total fraudulent withdrawals, the bank drew $223,237 on Patco’s line of credit to cover the transfers. Patco ended up paying interest on that amount to avoid defaulting on its loans.

Patco sued to recover its losses, arguing in part that Ocean Bank failed to live up to the terms of its contract when it allowed customers to log in to accounts using little more than a user name and password. On May 27, a magistrate recommended that the court make Patco the loser by denying Pacto’s motion for summary judgment and granting the bank’s motion.

David Navetta, a founding partner of the Information Law Group, said that Patco has about another week to dispute the magistrate’s recommendations, but that it is unlikely that the judge overseeing the case will overturn the magistrate’s findings.

Navetta said the magistrate considered the legal issues and propounded an analysis of what constitutes “commercially reasonable” security.

“Many security law commentators, myself included, have long held that reasonable security does not mean bullet-proof security, and that companies need not be at the cutting edge of security to avoid liability,” Navetta said. “The court explicitly recognizes this concept, and I think that is a good thing.”

But Avivah Litan, a fraud and bank security analyst at Gartner, took strong exception to the way the magistrate arrived at the recommended decision, calling it “an outrage.”

“In my opinion, this is frankly an egregious injustice against small U.S. businesses,” Litan said. “It is also a complete failure of the bank regulatory system in the United States, which should come as no surprise, given the history of the regulators in the 21st century.”

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Java Patch Plugs 17 Security Holes

June 7, 2011
13 Comments

Oracle today released an update to its ubiquitous Java software that fixes at least 17 security vulnerabilities in the program.

The company is advising users to apply this update as soon as possible; it looks like most — if not all — of the vulnerabilities addressed by this new version may be exploited remotely without authentication.

The latest version is Java 6 Update 26 (v. 1.6.0.26), and is available either through the updater built in to Java (accessible from the Windows control panel) or by visiting java.com. If you’re not sure which version you have or whether you’ve got the program installed at all, click the “Do I have Java” link below the red download button on the Java homepage.

Java’s broad install base has made it a major target for computer crooks. It certainly does not help that so many users fail to keep this very powerful program updated. If you have no use for Java, my advice is to get rid of it. If you can’t bring yourself to do that, consider disabling the Java plug-in(s) in your browser of choice unless and until you need  the program.

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Naming & Shaming Sources of Spam

June 7, 2011
21 Comments

A new resource for spotlighting organizations that are unwittingly contributing to the global spam problem aims to shame junk email havens into taking more aggressive security measures.

Healthcare providers that are top sources of spam.

SpamRankings.net is a project launched by the Center for Research in Electronic Commerce at the University of Texas at Austin. Its goal is to identify and call attention to organizations with networks that have been infiltrated by spammers.

Andrew Whinston, the center’s director, said the group initially is focusing on health care providers that appear to be infected with spam bots. “Nobody wants to do business with a bank or hospital or Internet hosting company that has been hijacked by spammers,” Whinston said. “It’s an environment in which user data can be stolen or compromised.”

It’s not clear whether people pay attention to spam rankings when choosing providers, but it’s nice that another method of measuring badness and reputation on the Web has come online. Unfortunately, one doesn’t have to look very hard to find spambot infections at many health care providers. In April, I wrote about a service that lets crooks proxy their communications through hacked PCs (see: Is Your Computer Listed for Rent?): Within a few hours of poking around that service, I found three health care providers that were hosting spambots.

John Quarterman, senior researcher for Spamrankings.net and chief executive of network monitoring service Internetperils.com, said future versions of the project will focus on organizations in other industry verticals, such as banking and Web hosting.

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Criminal Classifieds: Malware Writers Wanted

June 6, 2011
28 Comments

The global economy may be struggling to create new jobs, but the employment outlook for criminally-inclined computer programmers has never been brighter. I’ve spent some time lurking on shadowy, online underground forums, and lately I’ve seen a proliferation of banner ads apparently placed by criminal gangs looking for talented programmers to help make existing malware stealthier and more feature-rich.

Many of the ads highlight job openings for coders who are skilled in devising custom “crypters,” programs designed to change the appearance of known malware so that it goes undetected by anti-virus software. Anti-virus signatures are based on snippets of code found within known malware samples, and crypters can try to help hide or obfuscate the code. When anti-virus firms update their products with the ability to detect and flag files that are shrouded by this layer of obfuscation, malware writers tweak their creations in a bid to further evade the new detection mechanisms.

The composite banner ad pictured above is a solicitation from a crime gang that offers a base salary of $2,000 per month in exchange for a “long-term partnership” creating crypters that include customer support. The ads lead to a sign-up page (below) where interested coders can leave their résumé and contact information, and state why they think they are qualified for the position.

The Russian text in the above ad translates to:

“We invite you to join our team of crypto-programmers, including programmers with no experience in this field.

We offer:

* Base salary from $2,000 per month, with an increase in salary, depending on the quality and timeliness of your work.
* Payments are made ​​weekly.
* Long-term cooperation (with many programmers, we have been in business for more than two years).

Please fill in your application only if you understand what is at stake. Thank you.”

Other ads, like the one below, seek qualified candidates for similar jobs with a promise of as much as $5,000 per month for creating custom crypters and providing customer support.

There also appears to be a high demand for programmers who can code so-called “Web injects,” plug-ins for malware kits like the ZeuS and SpyEye trojans, and they’re designed to inject custom content into a Web browser when the victim browses to certain sites, such as a specific bank’s login page.

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Flash Player Patch Fixes Zero-Day Flaw

June 5, 2011
16 Comments

Adobe released an emergency security update today to fix a vulnerability that the company warned is being actively exploited in targeted attacks designed to trick the user into clicking on a malicious link delivered in an email message.

The vulnerability — a cross-site scripting bug that could be used to take actions on a user’s behalf on any Web site or Webmail provider, exists in Flash Player version 10.3.181.16 and earlier for Windows, Macintosh, Linux and Solaris. Adobe recommends users update to version 10.3.181.22 (on Internet Explorer, the latest, patched version is 10.3.181.23).  To find out what version of Flash you have, go here.

Google appears to have already pushed out an update that fixes this flaw in Chrome. Adobe says it will ship an update to fix this flaw on Android sometime this week.

Adobe said it is still investigating whether this is exploitable in Adobe Reader and Acrobat X (10.0.2) and earlier 10.x and 9.x versions of Adobe Reader and Acrobat for Windows and Macintosh operating systems, and that it is not aware of any attacks targeting Adobe Reader or Acrobat in the wild.

Remember that if you use Internet Explorer in addition to other browsers, you will need to apply this update twice: Once to install the Flash Active X plugin for IE, and again to update other browsers, such as Firefox and Opera. Updates are available by browsing with the appropriate browser to the Flash Player Download Center. Bear in mind that updating via the Download Center involves installing Adobe’s Download Manager, which may try to foist additional software. If you’d prefer to update manually, the direct installers for Windows are available at this link. If you run into problems installing this update, you’ll want to uninstall previous versions of Flash Player and then try again.

Spotting Web-Based Email Attacks

June 2, 2011
41 Comments

Google warned on Wednesday that hackers were launching targeted phishing attacks against hundreds of Gmail account users, including senior U.S. government officials, Chinese political activists, military personnel and journalists. That story, as related in a post on the Official Google Blog, was retold in hundreds of media outlets today as the latest example of Chinese cyber espionage: The lead story in the print edition of The Wall Street Journal today was, “Google: China Hacked Email.”

The fact that hackers are launching extremely sophisticated email attacks that appear to trace back to China makes for great headlines, but it isn’t exactly news. I’m surprised by how few media outlets took the time to explain the mechanics behind these targeted attacks, because they offer valuable insight into why people who really ought to know better keep falling for them. A more complete accounting of the attacks may give regular Internet users a better sense of the caliber of scams that are likely to target them somewhere down the road.

Google said “the goal of this effort seems to have been to monitor the contents of targeted users’ emails, with the perpetrators apparently using stolen passwords to change peoples’ forwarding and delegation settings. (Gmail enables you to forward your emails automatically, as well as grant others access to your account.)”

This statement freaked me out a little bit. When was the last time you checked whether your email forwarding settings had been modified? If you’re like me, probably never. This might be the most useful aspect of the Google disclosure, and it contains a few helpful pointers about how to check those settings in Gmail. Google also took this opportunity to remind users about the value of enabling 2-step verification, a security precaution I highlighted in a February blog post.

To my mind, the most valuable content in the Google Blog entry is a footnote that points to the Contagio Malware Dump blog, an incredibly detailed and insightful (if slightly dangerous) resource for information on targeted attacks. It’s worth noting that Google relied on Contagio to reconstruct how the attacks took place, and the author –blogger Mila Parkour — first wrote about these attacks almost four months ago.

Most of targeted email attacks chronicled on Parkour’s blog involve poisoned file attachments that exploit zero-day software flaws in programs like Adobe Flash or Microsoft Word.  This campaign also encouraged people to click a link to download a file, but the file was instead an HTML page that mimicked Gmail’s login page. The scam page also was custom-coded to fill in the target’s Gmail username. Contagiodump has a proof-of-concept page available at this link that shows the exact attack, except populated with “JDoe” in the username field.

Parkour also published an informative graphic highlighting the differences between the fake Google login page and the legitimate page at https://mail.google.com.

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Rustock Botnet Suspect Sought Job at Google

June 1, 2011
34 Comments

Microsoft has fingered  a possible author of the late Rustock spam botnet – a self-described software engineer and mathematician who aspired to one day be hired by Google. Microsoft has apparently allocated significant resources to finding the author, but has not been able to locate him.

Rustock remains dead, but Microsoft is still on the hunt for the Rustock author. In its Second Status Report (PDF) filed last week with a district court in Seattle, Microsoft said it inquired with virtual currency provider Webmoney about the owner of an account used to rent Rustock control servers,  and confirmed that the account was affiliated with a man named Vladimir Alexandrovich Shergin. Microsoft also mentioned another suspect, “Cosma2k,” possibly named Dmitri A. Sergeev, Artem Sergeev, or Sergey Vladomirovich Sergeev. Microsoft said it is continuing its investigation of these names, to determine whether additional contact information can be identified and to which notice and service can be effected.

To help in the hunt, I hereby offer some details about him.

Microsoft helped to dismantle Rustock in March after a coordinated and well-timed “stun” targeting the spam botnet’s infrastructure, which was mainly comprised of servers based in U.S. hosting facilities. Two weeks after that takedown, I tracked down a Web hosting reseller in Eastern Europe who acknowledged renting some of those servers to the apparent Rustock author. That reseller shared the Webmoney account number used to purchase access to the servers, and Russian investigators I spoke with confirmed that the account had been registered by a Russian named Vladimir Shergin. By consulting a leaked database I obtained last year of the top earners for Spamit.com — at the time the world’s largest rogue online pharmacy network — I discovered that the same Webmoney account was shared by three of the top ten Spamit affiliates.

The information from the reseller and from the Spamit database traced back to a Spamit affiliate who used the pseudonym “Cosma2k.” The email address tied to that Cosma2K account was “ger-mes@ger-mes.ru”. When I came into possession of the Spamit.com data back in August 2010, the site ger-mes.ru was still responding to requests, and the homepage presented some very interesting information. It included a job résumé, underneath a picture of a young man holding a mug. Above the image was the name “Sergeev, Dmitri A.” At the very top of the page was a simple message: “I want to work in Google.” Beneath the résumé is the author’s email address, followed by the message, “Waiting for your job”!

Here is the complete page and résumé, in case anyone wants a closer look at this Belorussian-educated job seeker. I shared the information with Google in August 2010, to find out if they’d received a job application from this person, or if they’d considered flying him to Mountain View, Calif. for an interview. I still don’t have an answer to either question. I shared this same information with Microsoft in March.

Microsoft seems determined to bring the Rustock malefactors to court. Maybe the mug shot in this résumé will help to identify at least one of them.

Apple Update Targets Mac Malware

May 31, 2011
20 Comments

Apple released a security update today designed to address the recent scourge of scareware targeting Mac users. The update comes as security experts spotted new versions of the rogue application family MacDefender making the rounds via poisoned links on Facebook.

Security Update 2011-003, available for Mac OS X v. 10.6.7 and Mac OS X Server v. 10.6.7, includes a component that checks for the MacDefender malware and its known variants. In its most recent advisory, Apple states: “If MacDefender scareware is found, the system will quit this malware, delete any persistent files, and correct any modifications made to configuration or login files. After MacDefender is identified and removed, the message below will be displayed the next time an administrator account logs in.”

The update also adds malware definitions to warn users away from downloading MacDefender, and sets the computer to check daily for updates to the malware definition list. Mac users who apply this update and later try to download a version of this malware via Safari, iChat or Mail should see a warning similar to the following dialog box: I’m glad that Apple has released this update, although I think they probably waited too long to do so. Some Windows users are no doubt experiencing a twinge of schadenfreude at this development, considering how Apple and many hardcore fans of the Mac platform have held out OS X as an unbreachable fortress. What the defenders of the Myth of Apple Invulnerability have long ignored is that a growing share of their user base is made up of people who are not technically sophisticated, and are just as prone to falling for clever social engineering attacks as their Windows counterparts.

A reader captured this thought nicely in a comment on my post last week about an apparent source of MacDefender scams: “Yes, many Mac users are technically sophisticated. But many others are not. Many bought Macs in hopes of staying safe despite having no computer training, or they may even have been advised to get a Mac by friends and relatives who feared the worse if they were let loose on the internet with a Windows machine. Many users are elementary school children and their teachers, since Mac is strong in educational software. It isn’t necessary for the perpetrators to be able to infect every Mac for this scheme to be profitable.”

As Apple’s share of the marketplace continues to grow, let me remind readers again that the staying-safe advice often posted on KrebsonSecurity applies with equal urgency to the Mac community as it does to users of other OS platforms.

DNS Filtering Bill Riles Tech Experts, Hacktivists

May 31, 2011
33 Comments

A bill moving through the U.S. Senate that would grant the government greater power to shutter Web sites that host copyright-infringing content is under fire from security researchers, who say the legislation raises “serious technical and security concerns.” Meanwhile, hacktivists protested by attacking the Web site of the industry group that most actively supports the proposal.

Earlier this month, the Senate Judiciary Committee passed the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (PDF), a bill offered by committee chairman, Sen. Patrick Leahy (D-Vt.), that would let the Justice Department obtain court orders requiring U.S. Internet service providers to filter customer access to domains found by courts to point to sites that are hosting infringing content. The bill envisions that ISPs would do this by filtering DNS requests for targeted domains. DNS, short for “domain name system,” transforms computer-friendly IP addresses (such as 94.228.133.163) into words that are easier for humans to remember. For example, typing “krebsonsecurity.com” into a browser brings you to 94.228.133.163, and vice versa.

But the idea of blocking piracy by asking ISPs to filter DNS requests has touched a nerve with several prominent security experts, who say it would be “minimally effective and would present technical challenges that could frustrate important security initiatives.” The comments came in a whitepaper sent to Senate leaders this month by DNS experts Steve Crocker, David Dagon, Dan Kaminsky, Danny McPherson and Paul Vixie. For a brief explanation of why these individuals are worth hearing from on this subject, see the “About the Authors” section at the end of their paper.

The Protect IP Act “would promote the development of techniques and software that circumvent use of the DNS,” the experts wrote. “These actions would threaten the DNS’s ability to provide universal naming, a primary source of the Internet’s value as a single, unified, global communications network.”

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ChronoPay Fueling Mac Scareware Scams

May 27, 2011
47 Comments

Some of the recent scams that used bogus security alerts in a bid to frighten Mac users into purchasing worthless security software appear to have been the brainchild of ChronoPay, Russia’s largest online payment processor and something of a pioneer in the rogue anti-virus business.

Since the beginning of May, security firms have been warning Apple users to be aware of new scareware threats like MacDefender and Mac Security. The attacks began on May 2, spreading through poisoned Google Image Search results. Initially, these attacks required users to provide their passwords to install the rogue programs, but recent variants do not, according to Mac security vendor Intego.

A few days after the first attacks surfaced, experienced Mac users on Apple support forums began reporting that new strains of the Mac malware were directing users to pay for the software via a domain called mac-defence.com. Others spotted fake Mac security software coming from macbookprotection.com. When I first took a look at the registration records for those domains, I was unsurprised to find the distinct fingerprint of ChronoPay, a Russian payment processor that I have written about time and again as the source of bogus security software.

The WHOIS information for both domains includes the contact address of fc@mail-eye.com. Last year, ChronoPay suffered a security breach in which tens of thousands of internal documents and emails were leaked. Those documents show that ChronoPay owns the mail-eye.com domain and pays for the virtual servers in Germany that run it. The records also indicate that the fc@mail-eye.com address belongs to ChronoPay’s financial controller Alexandra Volkova.

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