Texas Firm Blames Bank for $50,000 Cyber Heist

August 2, 2010
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A business telephone equipment company in Texas is trying to force its bank to settle a liability claim over an attack by organized cyber thieves last year that cost the company $50,000.

Attorneys for Dallas-based Hi-Line Supply Inc. recently convinced a state court to require depositions from officials at Community Bank, Inc. of Rockwall, Texas. Hi-Line requested the sworn statements to learn more about what the bank knew in the time surrounding Aug. 20, 2009, when crooks broke into the company’s online bank accounts and transferred roughly $50,000 to four individuals across the country who had no prior business with Hi-Line.

While the contents of that deposition remain closed under a confidentiality order, Hi-Line’s lawyers say the information gleaned in the interviews shows serious security missteps by Community Bank, and that they are ready to sue if the bank does not offer a settlement.

“In the event Community Bank refuses to resolve this matter, now that we have uncovered some of the information obtained by virtue of the court’s order, Hi-Line intends to assert claims for misrepresentation, violations of the Texas Deceptive Trade Practices Act, fraud, and breach of warranties, among other things,” said Michael Lyons, a partner with the Dallas law firm Deans Lyons.

Hi-Line president Gary Evans said the fraud began on Thursday, Aug. 20, about the same time the company processes its normal $25,000 payroll. After Hi-Line submitted that batch of payments to its bank, the unknown intruders attempted two more transfers of nearly identical amounts on Friday and the following Monday, Aug. 24.

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Microsoft to Issue Emergency Patch for Critical Windows Bug

July 30, 2010
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Microsoft said Thursday that it will issue an out-of-band security update on Monday to fix a critical, remotely-exploitable security hole present in all versions of Windows, which the software giant says is fueling an increasing number of online attacks.

On July 15, KrebsOnSecurity.com first warned that a flaw in the way Windows processes shortcut files (those ending in “.lnk”) was being exploited by highly targeted malicious software called “Stuxnet”. Researchers learned that Stuxnet was aimed at infiltrating Windows computers running Siemens WinCC SCADA software, or machines responsible for controlling the operations of large, distributed systems, such as manufacturing and power plants.

Since then, experts have found several new variants of Stuxnet, while a growing number of more mainstream attacks have been spotted exploiting the underlying Windows flaw.

“We’re able to confirm that, in the past few days, we’ve seen an increase in attempts to exploit the vulnerability,” wrote Christopher Budd, senior security response communications manager at Microsoft, on one of the company’s TechNet blogs. “We firmly believe that releasing the update out of band is the best thing to do to help protect our customers.”

I’m looking forward to applying this fix: About a week ago, Microsoft provided a stopgap “FixIt” tool that blunts the threat from this vulnerability, but it also changes the appearance of certain icons on the Windows desktop, often making it difficult for users to tell one program from the next. For example, here’s a screen shot of my Windows 7 desktop toolbar after I applied the fix:

I’ve found it fascinating to watch the speculation and hype swirl around this Stuxnet worm: Early on, the news media and pundits fixated on the notion that this was proof that other countries were planning cyber attacks on our power grid and other highly complex networks that rely on the types of SCADA systems targeted by Stuxnet. Then, about a week ago, experts began charting where in the world most victims were based. According to Symantec, roughly 60 percent of the systems infected with this family of malware were based in Iran, while computers in Indonesia and India also were hard-hit.

One equally likely scenario that I haven’t heard suggested much yet is that perhaps we are seeing evidence of our country’s own cyber warriors probing the networks of other nations. It is notable that the first definitions that the major anti-virus firms shipped for the Stuxnet malware were issued on or around the same day as my story, and that this malware was first discovered one month earlier by VirusBlokada, a relatively tiny anti-virus firm in Belarus that said it found the worm on computers belonging to one of its Iranian customers. What’s more, it’s unlikely that a malware threat initially directed at Iran would show up on the radar of U.S.-based anti-virus makers, all of whom are prohibited by U.S. trade sanctions from selling products and services to Iran.

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Alleged Mariposa Botnet Author Nabbed

July 28, 2010
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Police in Slovenia have arrested a 23-year-old man in Maribor believed to be responsible for creating the Mariposa botnet, a collection of hacked PCs that spanned an estimated 12 million computers across the globe, according to reports.

The Associated Press cites FBI officials in Washington, D.C. stating that authorities had arrested “Iserdo,” the nickname used by the hacker alleged to have created Mariposa, a botnet that first surfaced in December 2008 and grew to infect more than half of the Fortune 1,000 companies, as well as at least 40 major banks.

Earlier this year, police in Spain arrested three of Iserdo’s associates, who allegedly used the Mariposa botnet to steal credit card accounts and online banking credentials.

The AP story doesn’t identify Iserdo, saying officials declined to release his name and the exact charges filed against him, but says that the arrest took place about 10 days ago, and that the man has been released on bond.

According to information obtained by KrebsOnSecurity.com, Iserdo’s real name is Dejan Janžekovic. Local Slovenian press reports at the time of his arrest said Iserdo was a former student at the Maribor Faculty of Computer and Information Science, but that information could not be independently confirmed.

Individuals close to the case say Janžekovic charged a few hundred dollars for each copy of the bot kit, and that sales frequently were handled by a former classmate who accepted Western Union transfers on his behalf. According to two sources, one of those who helped with the transactions was a 24-year-old woman named Nuša Čoh, pictured here in her high school photo.

Neither Janžekovic nor Čoh could be immediately reached for comment.

Update, July 29, 4:45 p.m: Janzekovic appears only to have been a person of interest in this investigation, according to a law enforcement official I spoke with today. Also, I heard back from Janzekovic himself, who acknowledged having been investigated by the FBI and Slovenian police in connection with Mariposa, and taken in to the police station for questioning. But he said he is not Iserdo, and that the authorities somehow had him mixed up with someone else. From his e-mail to me:

“I am 23 years old (the picture you found is very outdated). I am single, I work as a senior systems administrator for a telco in Slovenia. Fact is that I love technology, I love life (even though the past two weeks it was hell on earth for me), but most of all – I am innocent. Yes, you read right, innocent. I am smarter than this and such things do interest me only from the technological point, as in how to protect against them.

Oh, not to forget, my net nick was and will never be Iserdo.

It is true, that I had the FBI and Slovenian police investigating me but it is also true, that I had nothing to hide. During the investigation I was very cooperative with authorities – I even gave them password for my encrypted partitions. What was the lead to me? It had to be some kind of mix-up and/or identity theft – the only person known to me in this whole story is the girl who I went to school with (as you have already found out).

Neither of authorities did explain to me how they came to conclusion that I was iserdo. I strongly believe the case was identity theft (obviously someone who knew enough about me, to know that I would easily fit in the case) and/or connection through Nusa. And believe me, it was also to my great surprise, when they woke me up at 6 a.m. to search my home on basis of me selling some ‘nasty code’.

But know this – I do not know any technical details about the botnet, program or anything about the criminal backgrounds as I have never seen it or worked with it.”

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Hacked Companies Hit by the Obvious in 2009

July 28, 2010
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As a rule, I tend to avoid writing about reports and studies unless they offer truly valuable and actionable insights: Too often, reports have preconceived findings that merely serve to increase hype and drum up business for the companies that commission them. But I always make an exception for the annual data breach report issued by the Verizon Business RISK team, which is consistently so chock full of hype-slaying useful data and conclusions that it is often hard to know what not to write about from its contents.

Once again, some of the best stuff is buried deep in this year’s report and is likely to be missed in the mainstream coverage. But let’s get the headline-grabbing findings out of the way first:

-Verizon’s report on 2009 breaches for the first time includes data from the U.S. Secret Service. Yet, the report tracks a sharp decline in the total number of compromised records (143 million compromised records vs.  285 million in 2008).

-85 percent of records last year were compromised by organized criminal groups (this is virtually unchanged from the previous report).

-94 percent of compromised records were the result of breaches at companies in the financial services industry.

-45 percent of breaches were from external sources only, while 27 percent were solely perpetrated from the inside by trusted employees.

Among the most counter-intuitive findings in the report?

There wasn’t a single confirmed intrusion that exploited a patchable vulnerability. Rather, 85 percent of the breaches involved common configuration errors or weaknesses that led to things like SQL database injection attacks, and did not require the exploitation of a flaw that could be fixed with a software patch. In most cases, the breaches were caused by weaknesses that could be picked up by a free Web vulnerability scanner:

“Organizations exert a great deal of effort around the testing and deployment of patches — and well they should. Vulnerability management is a critical aspect of any security program. However, based on evidence collected over the last six years, we have to wonder if we’re going about it in the most efficient and effective manner. Many organizations treat patching as if it were all they had to do to be secure. We’ve observed multiple companies that were hell-bent on getting patch X deployed by week’s end but hadn’t even glanced at their log files in months.”

Speaking of log files, one of the most interesting sections of the 66-page report comes in a sidebar titled “Of Needles and Haystacks,” which states that 86 percent of all breaches last year could have been prevented if victim companies had simply looked for unusual patterns in the log files created by their Web servers.

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Rogue Antivirus Victims Seldom Fight Back

July 27, 2010
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Recently I came into possession of a series of documents showing the financial books of an organization that orchestrates the distribution of rogue anti-virus attacks or “scareware,” programs that hijack victim PCs with misleading security alerts in an effort to frighten the user into purchasing worthless security software. I found many interesting details in this data cache, but one pattern in the data explains why scareware continues to be a major scourge: Relatively few people victimized by it dispute the transaction with their bank.

The documents list the amounts charged to more than 2,000 people around the world (the screen shots show the distribution of victims globally and in the United States). Victims paid anywhere from $50 to $100 for the fake anti-virus software. The file lists the amounts charged, partially obscured credit card numbers, and the names, addresses and e-mails of all victims.

More importantly, they show that only 367 victims — fewer than 20 percent — bothered to contact their bank or the scammers to reverse the fraudulent charges after the fact.

A second wave of attacks apparently conducted by the same malware gang in early April shows that only 163 out of 1,678 victims – fewer than 10 percent — initiated chargebacks or disputed the sales (the geographic distribution of victims of this second wave is not included in the Google Maps graphics shown here).

I interviewed more than a dozen victims of the first scareware attack, which occurred between April 12 and April 15. All said their computers became unusable and that the only way they could figure out how to regain control of the machine was to surrender and purchase the software. In each case, immediately after the victims submitted their payment information, the hijacking program disappeared, leaving no trace of itself, and no hint of any fake security program on the victim’s machine.

Some victims reported receiving a follow-up e-mail thanking them for their purchase, and directing support inquiries to support@browsing-solutions.com. Others never got an e-mail, but only saw a charge on their credit card statement from Browsing Solutions, Moscow. Other victims saw charges from an EBD-Software.com.

None of the victims I was able to track down had successfully reversed the charges with their credit card provider, although a few did have the charges canceled after contacting the phone number listed in the customer support e-mail. Some said they had tried to contact their credit card provider or the scam company but got the runaround and simply gave up; others said they were confused because they were in the process of trying to purchase legitimate anti-virus software when their computers were hijacked.

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Services Let Malware Purveyors Check Their Web Reputation

July 26, 2010
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Virus writers and botmasters increasingly are turning to new subscription services that test when and whether malicious links have been flagged by Web reputation programs like Google Safe Browsing and McAfee SiteAdvisor.

Nothing puts a crimp in the traffic to booby-trapped Web sites like being listed on multiple Internet reputation services that collect and publish information on the location of nasty Web sites. People who maintain the bad sites can stay ahead of such services by moving their malware to new domains once the present hosts start showing up on too many blacklists. But constantly checking these lists can be a time-consuming pain.

Enter sites like check-crypt.com. For a mere 20 cents, subscribers can check to see whether their malicious sites are flagged by any of 18 different blacklists, including Spamhaus, ZeuSTracker, SpamCop, SmartScreen (anti-malware and anti-phishing technology built into IE7/IE8), Norton Safe Web, Phishtank, Malwaredomainlist and MalwareURL.

As we can see from the screen shot here, this service acts as a kind of Virustotal for bad domains, listing the percentage of blacklists that detect any submitted malware sites.

The name and address of the person who registered check-crypt.com is protected by a domain privacy service, but if we dig far enough back in the WHOIS history we see it was registered to someone named Oleg Lojko in Rogatin, Ukraine. A search for the e-mail address attached to that record turns up a domain (vinni-trinni3.net) that a couple of the malware blacklists have flagged for distributing the infamous Zeus Trojan, a powerful password-stealing strain of malicious software.

I wanted to test this service, and so I thought I’d pick on vinni-trinni, because that site was first flagged by Malwaredomainlist and MalwareURL back in March of this year. The results were underwhelming: As we can see from the above screen shot, this service detects that three out of 18 blacklists have flagged it as malicious, but the author’s own service fails to show listings by either Malwaredomainlist or MalwareURL.

Tool Blunts Threat from Windows Shortcut Flaw

July 21, 2010
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Microsoft has released a stopgap fix to help Windows users protect themselves against threats that may try to target a newly discovered, critical security hole that is present in every supported version of Windows.

Last week, KrebsOnSecurity.com reported that security researchers in Belarus had found a sophisticated strain of malware that was exploiting a previously unknown flaw in the way Windows handles shortcut files. Experts determined that the malware exploiting the vulnerability was being used to attack computers that interact with networks responsible for controlling the operations of large, distributed and very sensitive systems, such as manufacturing and power plants.

When Microsoft initially released an advisory acknowledging the security hole last week, it said customers could disable the vulnerable component by editing the Windows registry. Trouble is, editing the registry can be a dicey affair for those less experienced working under the hood in Windows because one errant change can cause system-wide problems.

But in an updated advisory posted Tuesday evening, Microsoft added instructions for using a much simpler, point-and-click “FixIt” tool to disable the flawed Windows features. That tool, available from this link, allows Windows users to nix the vulnerable component by clicking the “FixIt” icon, following the prompts, and then rebooting the system.

Be advised, however, that making this change could make it significantly more difficult for regular users to navigate their computer and desktop, as it removes the graphical representation of icons on the Task bar and Start menu bar and replaces them with plain, white icons.

For instance, most Windows users are familiar with these icons:

According to Microsoft, after applying this fix, those icons will be replaced with nondescript (and frankly ugly) placeholders that look like this:

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Adobe: ‘Sandbox’ Will Stave Off Reader Attacks

July 20, 2010
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Adobe Systems Inc. said today the next release of its free PDF Reader application will include new “sandbox” technology aimed at blocking the exploitation of previously unidentified security holes in its software.

Sandboxing is an established security mechanism that runs the targeted application in a confined environment that blocks specific actions by that app, such as installing or deleting files, or modifying system information. Adobe said that in developing the sandbox technology, it relied on experts from Microsoft and Google (the latter already has incorporated sandboxing into its Chrome Web browser).

“The idea is to run Reader in a lower-privilege mode so that even if an attacker finds an exploit or vulnerability in Reader, it runs in lower rights mode, which should block the installation of [malware], deleting things on the system, or tampering with the [Windows] registry,” said Brad Arkin, director of product security and privacy at Adobe.

Even if only somewhat effective, the new protections would be a major advancement for one of the computing world’s most ubiquitous and oft-targeted software applications. The company is constantly shipping updates to block new attacks: Less than a month ago, Adobe rushed out a patch to plug vulnerabilities that hackers were using to break into vulnerable machines. Security vendor McAfee found that roughly 28 percent of all known software exploits in the first quarter of 2010 targeted Adobe Reader vulnerabilities. According to anti-virus maker F-Secure, Reader is now the most-exploited application for Windows.

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Skimmers Siphoning Card Data at the Pump

July 20, 2010
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Thieves recently attached bank card skimmers to gas pumps at more than 30 service stations along several major highways in and around Denver, Colorado, the latest area to be hit by a scam that allows crooks to siphon credit and debit card account information from motorists filling up their tanks.

Forced to re-issue an unusually high number of bank cards due to fraudulent charges on the accounts, a regional bank serving Colorado and surrounding states recently began searching for commonalities among the victimized accounts. The financial institution, which shared information with KrebsOnSecurity.com on the condition that it not be named, found that virtually all of the compromised cardholders had purchased gas from a string of filling stations along or not far from Interstate 25, a major North-South highway that runs through the heart of Denver.

Several Valero stations along the I-25 corridor reached by phone acknowledged being visited over the past week by local police and U.S. Secret Service agents searching for skimmer devices. The stations declined to comment on the record, but said investigators left a bulletin stating that stations in the area had been targeted and urging them to be on the lookout for suspicious activity around the pumps.

Mark Gallick, a Secret Service agent with the Denver field office, confirmed that a bulletin on skimmers was circulating among gas stations in the area, but refused to comment further.

Similar attacks on gas station pumps recently have hit other parts of the country: Police in Arizona also are dealing with a spike in reports about skimmers showing up at gas pumps, prompting Gov. Janice Brewer this month to urge the Arizona Department of Weights and Measures to increase their inspection efforts in looking for skimmers at gas stations.

Bluetooth-enabled gas pump skimmer. Photo: Alachua County, Fla. Sheriff’s Office

Bluetooth based wireless skimmers have been found attached to a slew of gas station pumps throughout the Southeast, particularly in Florida. Wireless skimmers allow thieves to pull up to the compromised station and download stolen card data with a laptop while sitting in their car. Many wireless skimmers run on rechargeable batteries, but skimmers attached to the insides of a gas pump can easily be made to draw on the pump’s power source in order to continue stealing card data indefinitely.

“Our device is not the traditional skimmer but rather a Bluetooth enabled equivalent of a thumb drive programmed to capture the data as it was transmitted from point A to point B inside the gas pump itself,” said Lt. Stephen Maynard, the public information officer for the Alachua County, Fla. Sheriff’s Office, which dealt with skimmer compromised pumps earlier this year.

The gas pumps compromised in the Denver-area attacks showed no outward signs of having been tampered with or altered, according to several sources. My source at the bank said all of the pumps in question contained a device on the inside of the pumps designed to record data stored on the back of cards inserted into the compromised pumps, but he wasn’t sure whether the skimmers were designed to transmit the stolen data wirelessly.

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Experts Warn of New Windows Shortcut Flaw

July 15, 2010
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Researchers have discovered a sophisticated new strain of malicious software that piggybacks on USB storage devices and leverages what appears to be a previously unknown security vulnerability in the way Microsoft Windows processes shortcut files.

Update, July 16,  7:49 p.m. ET: Microsoft just released an advisory about this flaw, available here. Microsoft said it stems from a vulnerability in the “Windows shell” (Windows Explorer, e.g.) that is present in every supported version of Windows. The advisory includes steps that can mitigate the threat from this flaw.

Original post:

VirusBlokAda, an anti-virus company based in Belarus, said that on June 17 its specialists found two new malware samples that were capable of infecting a fully-patched Windows 7 system if a user were to view the contents of an infected USB drive with a common file manager such as Windows Explorer.

USB-borne malware is extremely common, and most malware that propagates via USB and other removable drives traditionally has taken advantage of the Windows Autorun or Autoplay feature. But according to VirusBlokAda, this strain of malware leverages a vulnerability in the method Windows uses for handling shortcut files.

Shortcut files — or those ending in the “.lnk” extension — are Windows files that link (hence the “lnk” extension) easy-to-recognize icons to specific executable programs, and are typically placed on the user’s Desktop or Start Menu. Ideally, a shortcut doesn’t do anything until a user clicks on its icon. But VirusBlokAda found that these malicious shortcut files are capable of executing automatically if they are written to a USB drive that is later accessed by Windows Explorer.

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