Krebs on Security

Are Megabreaches Out? E-Thefts Downsized in 2010

April 19, 2011

The number of financial and confidential records compromised as a result of data breaches in 2010 fell dramatically compared to previous years, a decrease that cybercrime investigators attribute to a sea-change in the motives and tactics used by criminals to steal information. At the same time, organizations of all sizes are dealing with more frequent and smaller breaches than ever before, and most data thefts continue to result from security weaknesses that are relatively unsophisticated and easy to prevent.

These are some of the conclusions drawn from Verizon‘s fourth annual Data Breach Investigations Report. The report measures data breaches based on compromised records, including the theft of Social Security numbers, intellectual property, and credit card numbers, among other things.

It’s important to note at the outset that Verizon’s report only measures loss in terms of records breached. Many businesses hit by cyber crooks last year lost hundreds of thousands of dollars apiece when thieves stole one set of records, such as their online banking credentials.

The data-rich 74-page study is based on information gleaned from Verizon and U.S. Secret Service investigations into about 800 new data compromise incidents since last year’s report (the study also includes an appendix detailing 30 cybercrime cases investigated by the Dutch National High Tech Crime Unit).

Although the report examines the data from more breaches in a single year than ever before (the total Verizon/US Secret Service dataset from all previous years included just over 900 breaches), Verizon found that the total number of breached records fell from 361 million in 2008 to 144 million in 2009 to just 4 million last year.

A good portion of the report is dedicated to positing what might be responsible for this startling decline, but its authors seem unwilling to let the security industry take any credit for it.

“An optimist may interpret these results as a sign that the security industry is WINNING! Sorry, Charlie”, the report says. “While we’d really like that to be the case, one year just isn’t enough time for such a wholesale improvement in security practices necessary to cut data loss so drastically.”

The study suggests a number of possible explanations. For example:

-There were relatively few huge data heists. Those which had been responsible for the majority of the breached records in the past few years were breaches involving tens of millions of stolen credit and debit cards. Those high profile attacks may have achieved fame and fortune for the attackers, but they also attracted a lot of unwanted attention. Many of the past megabreaches ended in the capture and arrest of those responsible, such the case of Albert Gonzales, the former Secret Service informant who was sentenced last year to 20 years in prison for his role in the theft of 130 million credit and debit card numbers from card processing giant Heartland Payment Systems. “Those that wish to stay out of jail may have changed their goals and tactics to stay under the radar,” the report notes. “This could be one of the chief reasons behind the rash of ‘mini breaches’ involving smaller organizations.”

-Megabreaches of years past flooded criminal underground markets with so many stolen card numbers that their value plummeted. Criminals’ attention may have turned to stealing other lower profile data types, such as bank account credentials, personal information and intellectual property. In other words, criminals might opt to let the markets clear before stealing more huge quantities or selling what they already had purloined. “It’s worth noting that a lot of the cards that were stolen over the last few years in these megabreaches probably are going to start expiring soon,” said Bryan Sartin, director of investigative response at Verizon Business. “So we could be in a holding pattern right now.”

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Time to Patch Your Flash

April 15, 2011

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If it seems like you just updated your Flash Player software to plug a security hole that attackers were using to break into computers, you’re probably not imagining things: Three weeks ago, Adobe rushed out a new version to sew up a critical new security flaw. Today, Adobe issued a critical Flash update to eliminate another dangerous security hole that criminals are actively exploiting.

This new update addresses a vulnerability first detailed here at KrebsOnSecurity.com on Tuesday, and Adobe deserves credit for responding quickly with a patch. But there are few things that are simple about updating Flash, which ships in a dizzying array of version numbers and for many users must be deployed at least twice to cover all browsers. In addition, users may have to uninstall the existing version before updating to guarantee a trouble-free install. Also, Adobe Air will need to be updated if that software also is already installed. Finally, fixing this same vulnerability in Adobe Reader and Acrobat will require installing another patch, which won’t be out for at least another 10 days.

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U.S. Government Takes Down Coreflood Botnet

April 14, 2011

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The U.S. Justice Department and the FBI were granted unprecedented authority this week to seize control over a criminal botnet that enslaved millions of computers and to use that power to disable the malicious software on infected PCs.

Sample network diagram of Coreflood, Source:FBI

The target of the takedown was “Coreflood,” an infamous botnet that emerged almost a decade ago as a high-powered virtual weapon designed to knock targeted Web sites offline. Over the years, the crooks running the botnet began to use it to defraud owners of the victim PCs by stealing bank account information and draining balances.

Coreflood has morphed into a menacing crime machine since its emergence in 2002. As I noted in a 2008 story for The Washington Post, this is the same botnet that was used to steal more than $90,000 from Joe Lopez in 2005, kicking off the first of many high profile lawsuits that would be brought against banks by victims of commercial account takeovers. According to the Justice Department, Coreflood also was implicated in the theft of $241,866 from a defense contractor in Tennessee; $115,771 from a real estate company in Michigan; and $151,201 from an investment firm in North Carolina.

By 2008, Coreflood had infected some 378,000 PCs, including computers at hospitals and government agencies. According to research done by Joe Stewart, senior malware researcher for Dell SecureWorks, the thieves in charge of Coreflood had stolen more than 500 gigabytes of banking credentials and other sensitive data, enough data to fill 500 pickup trucks if printed on paper.

On April 11, 2011, the U.S. Attorney’s Office for the District of Connecticut filed a civil complaint against 13 unknown (“John Doe”) defendants responsible for running Coreflood, and was granted authority to seize 29 domain names used to control the daily operations of the botnet. The government also was awarded a temporary restraining order (TRO) allowing it to send individual PCs infected with Coreflood a command telling the machines to stop the bot software from running.

The government was able to do this because it also won the right to have the Coreflood control servers redirected to networks run by the nonprofit Internet Systems Consortium (ISC). When bots reported to the control servers – as they were programmed to do periodically – the ISC servers would reply with commands telling the bot program to quit.

ISC President Barry Greene said the government was wary of removing the bot software from infected machines.

“They didn’t want to do the uninstall, just exit,” Greene said. “Baby steps. But this was significant for the DOJ to be able to do this. People have been saying we should be able to do this for a long time, and nobody has done what we’re doing until now.”

No U.S. law enforcement authority has ever sought to commandeer a botnet using such an approach. Last year, Dutch authorities took down the Bredolab botnet using a similar method that directed affected users to a Web page warning of the infection. Last month, Microsoft took down the Rustock spam botnet by convincing a court to grant it control over both the botnet’s control domains and the hard drives used by those control servers.

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Microsoft Issues Monster Patch Update

April 13, 2011

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Microsoft released a record number of software updates yesterday to fix at least 64 security vulnerabilities in its Windows operating systems and Office products, including at least one that attackers are actively exploiting.

Updates are available for all versions of Windows via Windows Update or Automatic Update. Nine of the patches earned Microsoft’s “critical” rating, which means the vulnerabilities they fix could be exploited to compromise PCs with little or no action on the part of the user, apart from visiting a booby-trapped Web site or opening a tainted file.

Redmond said three of patches should be top priorities. Two of them fix critical vulnerabilities in the “server message block” or SMB service, which handles Windows networking. Attackers could exploit the flaw addressed by MS11-020 by sending a single, specially crafted evil data packet to a targeted system. This is the type of flaw that should concern any network administrator, because it has high potential to be used to power an automated computer worm.

Microsoft also called attention to MS11-018, which is a cumulative security update for Internet Explorer that fixes critical flaws in all versions of the browser except the latest IE9, which is not affected. One of the IE vulnerabilities — the MHTML flaw I wrote about in January — is currently being exploited; another was discovered at the Pwn2Own hacking competition earlier this year.

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New Adobe Flash Zero Day Being Exploited?

April 11, 2011

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Attackers are exploiting a previously unknown security flaw in Adobe’s ubiquitous Flash Player software to launch targeted attacks, according to several reliable sources. The attacks come less than three weeks after Adobe issued a critical update to fix a different Flash flaw that crooks were similarly exploiting to install malicious software.

According to sources, the attacks exploit a vulnerability in fully-patched versions of Flash, and are being leveraged in targeted spear-phishing campaigns launched against select organizations and individuals that work with or for the U.S. government. Sources say the attacks so far have embedded the Flash exploit inside of Microsoft Word files made to look like important government documents.

Adobe spokesperson Wiebke Lips said the company is currently investigating reports of a new Flash vulnerability, and that Adobe may issue an advisory later today if it is confirmed.

On March 11, Adobe issued a critical update to fix a security hole in Flash that it had earlier said was being attacked via malicious Flash content embedded in Microsoft Excel files. It’s not clear how long attackers have been exploiting this newest Flash flaw, but its exploitation in such a similar manner as the last flaw suggests the attackers may have a ready supply of unknown, unpatched security holes in Flash at their disposal.

Update, 3:57 p.m. ET: Ever wonder what anti-virus detection looks like in the early hours of a zero day outbreak like this? A scan of one tainted file used in this attack that was submitted to Virustotal.com indicates that just one out of 42 anti-virus products used to scan malware at the service detected this thing as malicious.

Update, 4:10 p.m. ET: Removed advice about deleting or renaming authplay.dll, which several readers (and now Adobe) have pointed out is specific to Adobe Reader and Acrobat.

Update, 5:05 p.m. ET: Adobe just released an advisory about this that confirms the above information.

ATM Skimmers: Hacking the Cash Machine

April 10, 2011

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Most of the ATM skimmers I’ve profiled in this blog are comprised of parts designed to mimic and to fit on top of existing cash machine components, such as card acceptance slots or PIN pads. But sometimes, skimmer thieves find success by swapping out ATM parts with compromised look-alikes.

ATM Card skimmer, using modified ATM component

On May 16, 2009, a company representative from ATM maker Diebold was servicing an ATM at a Bank of America branch in Sun Valley, Calif., when he discovered a skimming device and a camera that were attached to the machine. The technician took pictures of the camera and card skimmer (click picture at right for larger image), and then went into the branch to contact his supervisor.

But when the Diebold employee returned, the camera had been removed from the ATM, suggesting that the skimmer scammer was lurking somewhere nearby and had swooped in to salvage his remaining equipment. This is similar to what happened when an ATM technician discovered a compromised ATM a year ago.

Investigators of the present scam learned that the thief had somehow pried off the plastic cover of the ATM’s card acceptance slot and replaced it with an identical, compromised version that included a modified magnetic stripe reader and a flash storage device. The new card slot came with its own clear plastic face that was situated in front of the plastic one that was already attached to the ATM’s internal card reader (see picture below). The entire fraudulent device was glued onto the ATM with silicon.

Below are a few close-ups of the silicon-based magnetic stripe reader attached to the compromised card acceptance slot overlay.

A close-up of an ATM card reader

Here’s a closer look at the electronics inside this handmade reader:

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Is Your Computer Listed “For Rent”?

April 8, 2011

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When it’s time to book a vacation or a quick getaway, many of us turn to travel reservation sites like Expedia, Travelocity and other comparison services. But there’s a cybercrime-friendly booking service that is not well-known. When cyber crooks want to get away — with a crime — increasingly they are turning to underground online booking services that make it easy for crooks to rent hacked PCs that can help them ply their trade anonymously.

We often hear about hacked, remote-controlled PCs or “bots” being used to send spam or to host malicious Web sites, but seldom do security researchers delve into the mechanics behind one of the most basic uses for a bot: To serve as a node in an anonymization service that allows paying customers to proxy their Internet connections through one or more compromised systems.

As I noted in a Washington Post column in 2008, “this type of service is especially appealing to criminals looking to fleece bank accounts at institutions that conduct rudimentary Internet address checks to ensure that the person accessing an account is indeed logged on from the legitimate customer’s geographic region, as opposed to say, Odessa, Ukraine.” Scammers have been using proxies forever it seems, but it’s interesting that it is so easy to find victims, once you are a user of the anonymization service.

Here’s an overview of one of the more advanced anonymity networks on the market, an invite-only subscription service marketed on several key underground cyber crime forums.

When I tested this service, it had more than 4,100 bot proxies available in 75 countries, although the bulk of the hacked PCs being sold or rented were in the United States and the United Kingdom. Also, the number of available proxies fluctuates daily, peaking during normal business hours in the United States. Drilling down into the U.S. map (see image above), users can select proxies by state, or use the “advanced search” box, which allows customers to select bots based on city, IP range, Internet provider, and connection speed. This service also includes a fairly active Russian-language customer support forum. Customers can use the service after paying a one-time $150 registration fee (security deposit?) via a virtual currency such as WebMoney or Liberty Reserve. After that, individual botted systems can be rented for about a dollar a day, or “purchased” for exclusive use for slightly more.

I tried to locate some owners of the hacked machines being rented via this service. Initially this presented a challenge because the majority of the proxies listed are compromised PCs hooked up to home or small business cable modem or DSL connections. As you can see from the screenshot below, the only identifying information for these systems was the IP address and host name. And although so-called “geo-location” services can plot the approximate location of an Internet address, these services are not exact and are sometimes way off.

I started poking through the listings for proxies that had meaningful host names, such as the domain name of a business. It wasn’t long before I stumbled upon the Web site for The Securities Group LLC, a Memphis, Tenn. based privately held broker/dealer firm specializing in healthcare partnerships with physicians. According to the company’s site, “TSG has raised over $100,000,000 having syndicated over 200 healthcare projects including whole hospital exemptions, ambulatory surgery centers, surgical hospitals, PET Imaging facilities, CATH labs and a prostate cancer supplement LLC with up to 400 physician investors.” The proxy being sold by the anonymization service was tied to the Internet address of TSG’s email server, and to the Web site for the Kirby Pines Retirement Community, also in Memphis.

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After Epsilon: Avoiding Phishing Scams & Malware

April 6, 2011

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The recent massive data leak from email services provider Epsilon means that it is likely that many consumers will be exposed to an unusually high number of email-based scams in the coming weeks and months. So this is an excellent time to point out some useful resources and tips that can help readers defend against phishing attacks and other nastygrams.

Don’t take the bait: Many people are familiar with the traditional phishing attack, which arrives in an email that appears to have been sent from your bank or ISP, warning that your account will be suspended unless you take some action immediately, usually clicking a link and “verifying” your account information, user name, password, etc. at a fake site. Commercial emails that emphasize urgency should be always considered extremely suspect, and under no circumstances should you do anything suggested in the email. Phishers count on spooking people into acting rashly because they know their scam sites have a finite lifetime; they may be shuttered at any moment (most phishing scams are hosted on hacked, legitimate Web sites). If you’re really concerned, pick up the phone (gasp!) and call the company to find out if there really is anything for you to be concerned about.

Links Lie: You’re a sucker if you take links at face value. For example, this might look like a link to Bank of America, but I assure you it is not. To get an idea of where a link goes, hover over it with your mouse and then look in the bottom left corner of the browser window. Yet, even this information often tells only part of the story, and some links can be trickier to decipher. For instance, many banks like to send links that include ridiculously long URLs which stretch far beyond the browser’s ability to show the entire thing when you hover over the link. The most important part of a link is the “root” domain. To find that, look for the first slash (/) after the “http://” part, and then work backwards through the link until you reach the second dot; the part immediately to the right is the real domain to which that link will take you. Want to learn more cool stuff about links? Check out this guy’s site and you’ll be a link ninja in no time.

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Epsilon Breach Raises Specter of Spear Phishing

April 4, 2011

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Security experts are warning consumers to be especially alert for targeted email scams in the coming weeks and months, following a breach at a major email marketing firm that exposed names and email addresses for customers of some of the nation’s largest banks and corporate brand names.

Late last week, Irving, Texas based Epsilon issued a brief statement warning that hackers had stolen customer email addresses and names belonging to a “subset of its clients.” Epsilon didn’t name the clients that had customer data lost in the breach; that information would come trickling out over the weekend, as dozens of major corporations began warning customers to be wary of unsolicited email scams that may impersonate their brands as a result.

Among Epsilon’s clients affected are three of the top ten U.S. banks – JP Morgan Chase, Citibank and U.S. Bank — as well as Barclays Bank and Capital One. More than two dozen other brands have alerted customers to data lost in the Epsilon breach (a list of companies known to have been impacted is at the bottom of this post).

Rod Rasmussen, chief technology officer at Internet Identity and the industry liaison for the Anti-Phishing Working Group, believes that the Epsilon breach will lead to an increase in “spear phishing” attacks, those that take advantage of known trust relationships between corporations and customers by crafting personalized messages that address recipients by name, thereby increasing the apparent authenticity of the email.

“I think this is going to make a big difference in spear phishing, where you may not be targeting an individual, but you know that that person has a bank account with US Bank and recently stayed at Disney,” Rasmussen said. “You now can automate spam based on things people have actually done, so your missive that they need to log into your phishing site is much more affective. You can also correlate across your data to see all the services someone is using, phish them for a user/password on something innocuous, and then re-use the same password for the bank they use, since there’s such rampant password re-use out there.”

Crooks used very similar spear phishing methods to steal customer contact information from dozens of email marketing firms late last year, as KrebsOnSecurity.com first reported in detail. In the wake of that assault, data spills at other email marketing firms like SilverPop have prompted disclosures from clients such as TripAdvisor and Play.com.

Neil Schwartzman, executive director of the Coalition Against Unsolicited Commercial Email (CAUCE) and a former executive at email service provider ReturnPath, said his organization plans to release a document later today spelling out security measures that providers should be taking, such as encrypting customer data.

“There are best practices that the major of the industry should have implemented a year ago, but never did, and it’s just disgusting and reprehensible that they haven’t done this stuff yet,” Schwartzman said. “I’ve talked to people in other industrial sectors who said if my external auditors found out we were treating customer data this way, we’d be in serious trouble.”

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Spammers Target Kroger Customers

April 1, 2011

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Supermarket giant Kroger Co. is the latest major business to disclose that its customer email list has fallen into into the hands of spammers and scam artists.

In a communication sent to customers today, Kroger said its database of customer names and email addresses had been breached by someone outside the company. A call to the 1-800 number included in the missive connects to a lengthy recorded message warning customers about an increase in phishing attacks and spam targeting Kroger customers. Kroger’s media relations folks have not yet returned calls seeking comment.

The disclosure comes close on the heels of similar acknowledgments from McDonalds, Walgreens, Honda, deviantART, and most recently TripAdvisor and play.com. They appear to be the lingering fallout from a series of sophisticated, targeted attacks against dozens of email service providers (ESPs) that manage communications between some of the world’s top brands and customers that have opted-in to receive messages from these companies.

In most cases, the spam sent to customers of these companies pushed recipients to buy dodgy services and software. It’s not clear which email service provider may have leaked the Kroger customer information, but it seems that few — if any — ESPs have escaped injury.

According to the CEO of play.com, that breach involved an attack against marketing firm SilverPop Systems. SilverPop did not respond to requests for comment.

I called SilverPop today because a source forwarded a junk email message to me that appears to have been sent directly from SilverPop’s internal email systems (the text and headers from that email are here). The missive is an offer to download Adobe Reader, and recipients who click the included link are brought to a page that tries to charge them for the free software. This approach is almost identical to the scam emails sent out directly after the successful attacks against email services providers in November of last year.

My initial reporting on this attack against the email service provider industry indicates that most of the providers in the industry had client customer data stolen. I’m left wondering how long we have to keep watching this stream of disclosures trickle out, and how long it might take for email service providers like SilverPop to get their houses in order?

Update, 6:55 p.m. ET: A story in the Cincinnati Business Courier says the breach occurred at Epsilon, an email service provider headquartered in Dallas.

Update, 9:45 p.m. ET: Several readers have reported receiving similar disclosures today from gift store Brookstone.

Update, Apr. 2, 9:35 a.m. ET: Another reader wrote in to say he’d received a notification (PDF) from U.S. bank, which said the financial institution’s customer email list was stolen due to a breach at Epsilon.

Update, Apr. 2, 5:41 p.m. ET: The Epsilon breach extends to JP Morgan Chase, McKinsey Quarterly, and apparel chain New York & Co, according to new disclosures from those companies.

Update, Apr. 2, 8:45 p.m. ET: And the list of disclosures continues: The Home Shopping Network just issued a release (PDF) saying its customer list was compromised via the Epsilon breach.

Update, Apr. 2, 9:00 p.m. ET: Looks like we can add TiVo to the list, although the company’s disclosure doesn’t say which email service provider was responsible.

Update, Apr. 3, 9:11 a.m. ET: According to SecurityWeek.com, the brands impacted by the Epsilon breach include Capital One, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry’s, King Soopers, Marriott Rewards, QFC, Ralphs, Ritz Carlton, and Smith Brands and Walgreens.

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