Krebs’s Immutable Truths About Data Breaches

January 9, 2017

I’ve had several requests for a fresh blog post to excerpt something that got crammed into the corner of a lengthy story published here Sunday: A list of immutable truths about data breaches, cybersecurity and the consequences of inaction.

Here’s the excerpt requested from yesterday’s story:

coecopy“There are some fairly simple, immutable truths that each of us should keep in mind, truths that apply equally to political parties, organizations and corporations alike:

-If you connect it to the Internet, someone will try to hack it.

-If what you put on the Internet has value, someone will invest time and effort to steal it.

-Even if what is stolen does not have immediate value to the thief, he can easily find buyers for it.

-The price he secures for it will almost certainly be a tiny slice of its true worth to the victim.

-Organizations and individuals unwilling to spend a small fraction of what those assets are worth to secure them against cybercrooks can expect to eventually be relieved of said assets.”

They may not be complete, but as a set of truisms these tenets probably will age pretty well. After all, taken as a whole they are practically a model Cybercriminal Code of Ethics, or a cybercrook’s social contract. Continue reading

DNI: Putin Led Cyber, Propaganda Effort to Elect Trump, Denigrate Clinton

January 8, 2017

Russian President Vladimir Putin directed a massive propaganda and cyber operation aimed at discrediting Hillary Clinton and getting Donald Trump elected, the top U.S. intelligence agencies said in a remarkable yet unshocking report released on Friday.

Russian President Vladimir Putin tours RT facilities. Image: DNI

Russian President Vladimir Putin tours RT facilities. Image: DNI

The 25-page dossier from the Office of the Director of National Intelligence stopped short of saying the Russians succeeded at influencing the outcome of the election, noting that the report did not attempt to make an assessment on that front. But it makes the case that “Russia’s intelligence services conducted cyber operations against targets associated with the 2016 US presidential election, including targets associated with both major US political parties.”

“We assess with high confidence that Russian military intelligence (General Staff Main Intelligence Directorate or GRU) used the Guccifer 2.0 persona and DCLeaks.com to release US victim data obtained in cyber operations publicly and in exclusives to media outlets and relayed material to WikiLeaks,” the DNI report reads.

The report is a quick and fascinating read. One example: It includes a fairly detailed appendix which concludes that the U.S.-based but Kremlin-financed media outlet RT (formerly Russia Today) is little more than a propaganda machine controlled by Russian intelligence agencies.

“Moscow’s influence campaign followed a Russian messaging strategy that blends covert intelligence operations—such as cyber activity—with overt efforts by Russian Government agencies, state-funded media, third-party intermediaries, and paid social media users or ‘trolls,'” reads the report.

The DNI report is remarkable for several reasons. First, it publicly accuses Russia’s President of trying to meddle with the U.S. election and to hack both political parties. Also, as The New York Times observed, it offers “a virtually unheard-of, real-time revelation by the American intelligence agencies that undermined the legitimacy of the president who is about to direct them.”

However, those who’ve been clamoring for more technical evidence to support a conclusion that Russian intelligence agencies were behind the phishing, malware attacks and email leaks at The Democratic National Committee (DNC) and Clinton campaign likely will be unmoved by this report. Those details will remain safely hidden from public view in the classified version of the report.

Last week, the FBI and Department of Homeland Security issued a joint report (PDF) on some of the malware and Internet resources used in the DNC intrusion. But many experts criticized it as a poorly-written, jumbled collection of threat indicators and digital clues that didn’t all quite lead where they should.

Others were perplexed by the high confidence level the agencies assigned to the findings in their unclassified report, noting that neither the FBI nor DHS examined the DNC hard drives that were compromised in the break-in (that work was done by private security firm Crowdstrike).

Former black-hat hacker turned Wired and Daily Beast contributing editor Kevin Poulsen slammed the FBI/DHS report as “so aimless that it muddies the clear public evidence that Russia hacked the Democratic Party to affect the election, and so wrong it enables the Trump-friendly conspiracy theorists trying to explain away that evidence.”

Granted, trying to reconstruct a digital crime scene absent some of the most important pieces of evidence is a bit like attempting to assemble a jigsaw puzzle with only half of the pieces. But as digital forensics and security expert Jonanthan Zdziarksi noted via Twitter last night, good old fashioned spying and human intelligence seems to have played a bigger role in pinning the DNC hack on the Russians.

“The DNI report subtly implied that more weight was put on our intelligence coming from espionage operations than on cyber warfare,” Zdziarski wrote. “As someone who’s publicly called out the FBI over misleading the public and the court system, I believe the DNI report to be reliable. I also believe @CrowdStrike’s findings to be reliable based on the people there and their experience with threat intelligence.”

Key findings from the DNI report.

Key findings from the DNI report.

Continue reading

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Stolen Passwords Fuel Cardless ATM Fraud

January 5, 2017

Some financial institutions are now offering so-called “cardless ATM” transactions that allow customers to withdraw cash using nothing more than their mobile phones. But as the following story illustrates, this new technology also creates an avenue for thieves to quickly and quietly convert stolen customer bank account usernames and passwords into cold hard cash. Worse still, fraudulent cardless ATM withdrawals may prove more difficult for customers to dispute because they place the victim at the scene of the crime.

A portion of the third rejection letter that Markula received from Chase about her $2,900 fraud claim. The bank ultimately reversed itself and refunded the money after being contacted by KrebsOnsecurity, stating that Markula's account was one of several that were pilfered by a crime gang that has since been arrested by authorities.

A portion of the third rejection letter that Markula received from Chase about her $2,900 fraud claim.

San Francisco resident Kristina Markula told KrebsOnSecurity that it wasn’t until shortly after a vacation in Cancun, Mexico in early November 2016 that she first learned that Chase Bank even offered cardless ATM access. Markula said that while she was still in Mexico she tried to view her bank balance using a Chase app on her smartphone, but that the app blocked her from accessing her account.

Markula said she thought at the time that Chase had blocked her from using the app because the request came from an unusual location. After all, she didn’t have an international calling or data plan and was trying to access the account via Wi-Fi at her hotel in Mexico.

Upon returning to the United States, Markula called the number on the back of her card and was told she needed to visit the nearest Chase bank branch and present two forms of identification. At a Chase branch in San Francisco, she handed the teller a California driver’s license and her passport. The branch manager told her that someone had used her Chase online banking username and password to add a new mobile phone number to her account, and then move $2,900 from her savings to her checking account.

The manager told Markula that whoever made the change then requested that a new mobile device be added to the account, and changed the contact email address for the account. Very soon after, that same new mobile device was used to withdraw $2,900 in cash from her checking account at the Chase Bank ATM in Pembroke Pines, Fla.

A handful of U.S. banks, including Chase, have deployed ATMs that are capable of dispensing cash without requiring an ATM card. In the case of Chase ATMs, the customer approaches the cash machine with a smart phone that is already associated with a Chase account. Associating an account with the mobile app merely requires the customer to supply the app with their online banking username and password.

Users then tell the Chase app how much they want to withdraw, and the app creates a unique 7-digit code that needs to be entered at the Chase ATM (instead of numeric code, some banks offering cardless ATM withdrawals will have the app display a QR code that needs to be read by a scanner on the ATM). Assuming the code checks out, the machine dispenses the requested cash and the transaction is complete. At no time is the Chase customer asked to enter his or her 4-digit ATM card PIN.

Most financial institutions will limit traditional ATM customers to withdrawing $300-$600 per transaction, but some banks have set cardless transaction limits at much higher amounts under certain circumstances. For example, at the time Markula’s fraud occurred, the limit was set at $3,000 for withdrawals during normal bank business hours and made at Chase ATMs located at Chase branches.

Markula said the bank employees helped her close the account and file a claim to dispute the withdrawal. She said the teller and the bank manager reviewed her passport and confirmed that the disputed transaction took place during the time between which her passport was stamped by U.S. and Mexican immigration authorities. However, Markula said Chase repeatedly denied her claims.

“We wanted to thank you for providing your information while we thoroughly researched your dispute,” Chase’s customer claims department wrote in the third rejection letter sent to Markula, dated January 5, 2017. “We confirmed that the disputed charges were correct and we will not be making an adjustment to your account.”

Markula said she was dumbfounded by the rejection letter because the last time she spoke with a fraud claims manager at Chase, the manager told her that the transaction had all of the hallmarks of an account takeover.

“I’m pretty frustrated at the process so far,” said Markula, who shared with this author a detailed timeline of events before and after the disputed transaction. “Not captured in this timeline are the countless phone calls to the fraud department which is routed overseas. The time it takes to reach someone and poor communication seems designed to make one want to give up.”

KrebsOnSecurity contacted Chase today about Markula’s case. Chase spokesman Mike Fusco said Markula’s rejection letter was incorrect, and that further investigation revealed she had been victimized by a group of a half-dozen fraudsters who were caught using the above-described technique to empty out Chase bank accounts.

Fusco forwarded this author a link to a Fox28 story about six men from Miami, Fla. who were arrested late last year in Columbus, Ohio in connection with what authorities there called a “multi-state crime spree” targeting Chase accounts. Continue reading

The FTC’s Internet of Things (IoT) Challenge

January 4, 2017

One of the biggest cybersecurity stories of 2016 was the surge in online attacks caused by poorly-secured “Internet of Things” (IoT) devices such as Internet routers, security cameras, digital video recorders (DVRs) and smart appliances. Many readers here have commented with ideas about how to counter vulnerabilities caused by out-of-date software in IoT devices, so why not pitch your idea for money? Who knows, you could win up to $25,000 in a new contest put on by the U.S. Federal Trade Commission (FTC).

Electronics giant LG said at the Consumer Electronics Show (CES) today that all of its devices from now on will have Wi-Fi built in. Image: @Karissabe

Electronics giant LG said today at the Consumer Electronics Show (CES) that all of its appliances from now on will have Wi-Fi built in and be connected to the cloud. Image: Mashable

The FTC’s IoT Home Inspector Challenge is seeking ideas for a tool of some sort that would address the burgeoning IoT mess. The agency says it’s offering a cash prize of up to $25,000 for the best technical solution, with up to $3,000 available for as many as three honorable mention winner(s). Continue reading

The Download on the DNC Hack

January 3, 2017

Over the past few days, several longtime readers have asked why I haven’t written about two stories that have consumed the news media of late: The alleged Russian hacking attacks against the U.S. Democratic National Committee (DNC) and, more recently, the discovery of malware on a laptop at a Vermont power utility that has been attributed to Russian hacker groups.

I’ve avoided covering these stories mainly because I don’t have any original reporting to add to them, and because I generally avoid chasing the story of the day — preferring instead to focus on producing original journalism on cybercrime and computer security.

dncBut there is another reason for my reticence: Both of these stories are so politically fraught that to write about them means signing up for gobs of vitriolic hate mail from readers who assume I have some political axe to grind no matter what I publish on the matter.

An article in Rolling Stone over the weekend aptly captures my unease with reporting on both of these stories in the absence of new, useful information (the following quote refers specifically to the Obama administration’s sanctions against Russia related to the DNC incident).

“The problem with this story is that, like the Iraq-WMD mess, it takes place in the middle of a highly politicized environment during which the motives of all the relevant actors are suspect,” Rolling Stone political reporter Matt Taibbi wrote. “Absent independent verification, reporters will have to rely upon the secret assessments of intelligence agencies to cover the story at all. Many reporters I know are quietly freaking out about having to go through that again.”

Alas, one can only nurse a New Year’s holiday vacation for so long. Here are some of the things I’ve been ruminating about over the past few days regarding each of these topics. Please be kind.

Gaining sufficient public support for a conclusion that other countries are responsible for hacking important U.S. assets can be difficult – even when the alleged aggressor is already despised and denounced by the entire civilized world.

The remarkable hacking of Sony Pictures Entertainment in late 2014 and the Obama administration’s quick fingering of hackers in North Korea as the culprits is a prime example: When the Obama administration released its findings that North Korean hackers were responsible for breaking into SPE, few security experts I spoke to about the incident were convinced by the intelligence data coming from the White House.

That seemed to change somewhat following the leak of a National Security Agency document which suggested the United States had planted malware capable of tracking the inner workings of the computers and networks used by the North’s hackers. Nevertheless, I’d wager that if we took a scientific poll among computer security experts today, a fair percentage of them probably still strongly doubt the administration’s conclusions.

If you were to ask those doubting experts to explain why they persist in their unbelief, my guess is you would find these folks break down largely into two camps: Those who believe the administration will never release any really detailed (and likely classified) information needed to draw a more definitive conclusion, and those who because of their political leanings tend to disbelieve virtually everything that comes out of the current administration.

Now, the American public is being asked to accept the White House’s technical assessment of another international hacking incident, only this time the apparent intention of said hacking is nothing less than to influence the outcome of a historically divisive presidential election in which the sitting party lost.

It probably doesn’t matter how many indicators of compromise and digital fingerprints the Obama administration releases on this incident: Chances are decent that if you asked a panel of security experts a year from now whether the march of time and additional data points released or leaked in the interim have influenced their opinion, you’ll find them just as evenly divided as they are today.

The mixed messages coming from the camp of President-elect Trump haven’t added any clarity to the matter, either. Trump has publicly mocked American intelligence assessments that Russia meddled with the U.S. election on his behalf, and said recently that he doubts the U.S. government can be certain it was hackers backed by the Russian government who hacked and leaked emails from the DNC.

However, one of Trump’s top advisers — former CIA Director James Woolseynow says he believes the Russians (and possibly others) were in fact involved in the DNC hack.

It’s worth noting that the U.S. government has offered some additional perspective on why it is so confident in its conclusion that Russian military intelligence services were involved in the DNC hack. A White House fact sheet published alongside the FBI/DHS Joint Analysis Report (PDF) says the report “includes information on computers around the world that Russian intelligence services have co-opted without the knowledge of their owners in order conduct their malicious activity in a way that makes it difficult to trace back to Russia. In some cases, the cybersecurity community was aware of this infrastructure, in other cases, this information is newly declassified by the U.S. government.” Continue reading

Happy Seventh Birthday, KrebsOnSecurity!

December 29, 2016

Hard to believe it’s time to celebrate another go ’round the Sun for KrebsOnSecurity! Today marks exactly seven years since I left The Washington Post and started this here solo thing. And what a remarkable year 2016 has been!

7-2016

The word cloud above includes a sampling of tags used in stories on KrebsOnSecurity throughout the past year. It’s been a wild one, riddled with huge attacks, big cybercriminal busts and of course a whole mess of data breaches.

The biggest attack of all — the 620 Gbps distributed denial-of-service (DDoS) assault against this site on Sept. 22 — resulted in KrebsOnSecurity being unplugged for several days. The silver lining? I now have a stronger site and readership. Through it all, the community that has grown up around this site was extremely supportive and encouraging. I couldn’t be prouder of this community, so a huge THANK YOU to all of my readers, both new and old.

It’s fair to say that many of the subjects in the word cloud above are going to continue to haunt us in 2017, particularly ransomware, CEO fraud and DDoS attacks. I am hopeful to have more on the “who” behind the September attacks against this site in the New Year. I promise it’s going to be a story worth waiting for. Stay tuned. Continue reading

Holiday Inn Parent IHG Probes Breach Claims

December 28, 2016

InterContinental Hotels Group (IHG), the parent company for more than 5,000 hotels worldwide including Holiday Inn, says it is investigating claims of a possible credit card breach at some U.S. locations.

An Intercontinental hotel in New York City. Image: IHG

An Intercontinental hotel in New York City. Photo: IHG.

Last week, KrebsOnSecurity began hearing from sources who work in fraud prevention at different financial institutions. Those sources said they were seeing a pattern of fraud on customer credit and debit cards that suggested a breach at some IHG properties — particularly Holiday Inn and Holiday Inn Express locations.

Asked about the fraud patterns reported by my sources, a spokesperson for IHG said the company had received similar reports, and that it has hired an outside security firm to help investigate. IHG also issued the following statement:

“IHG takes the protection of payment card data very seriously. We were made aware of a report of unauthorized charges occurring on some payment cards that were recently used at a small number of U.S.-based hotel locations.  We immediately launched an investigation, which includes retaining a leading computer security firm to provide us with additional support.  We continue to work with the payment card networks.”

“We are committed to swiftly resolving this matter. In the meantime, and in line with best practice, we recommend that individuals closely monitor their payment card account statements.  If there are unauthorized charges, individuals should immediately notify their bank. Payment card network rules generally state that cardholders are not responsible for such charges.”

Headquartered in Denham, U.K., IHG operates more than 5,000 hotels across nearly 100 countries. The company’s dozen brands include Holiday Inn, Holiday Inn Express, InterContinental, Kimpton Hotels, and Crowne Plaza. Continue reading

Before You Pay that Ransomware Demand…

December 22, 2016

A decade ago, if a desktop computer got infected with malware the chief symptom probably was an intrusive browser toolbar of some kind. Five years ago you were more likely to get whacked by a banking trojan that stole all your passwords and credit card numbers. These days if your mobile or desktop computer is infected what gets installed is likely to be “ransomware” — malicious software that locks your most prized documents, songs and pictures with strong encryption and then requires you to pay for a key to unlock the files.

Here’s some basic advice about where to go, what to do — and what not to do — when you or someone you know gets hit with ransomware.

Image: nomoreransom.org

Image: nomoreransom.org

First off — breathe deep and try not to panic. And don’t pay the ransom.

True, this may be easier said than done: In many cases the ransom note that hijacks the victim’s screen is accompanied by a digital clock ominously ticking down the minutes and seconds from 72 hours. When the timer expires, the ransom demand usually goes up or even doubles. Continue to ignore the demands and your files will be gone, kaput, nil, nyet, zilch, done forever, warns the extortion message.

See, the key objective of ransomware is a psychological one — to instill fear, uncertainty and dread in the victim — and to sow the conclusion in the victim’s mind that any solution for restoring full access to all his files involves paying up. Indeed, paying the ransom is often the easiest, fastest and most complete way of reversing a security mistake, such as failing to patch, opening a random emailed document e.g., or clicking a link that showed up unbidden in instant message. Some of the more advanced and professional ransomware operations have included helpful 24/7 web-based tech support.

The ransom note from a recent version of the "Locky" ransomware variant. Image: Bleepingcomputer.com.

The ransom note from a recent version of the “Locky” ransomware variant. Image: Bleepingcomputer.com.

Paying up is certainly not the cheapest option. The average ransom demanded is approximately $722, according to an analysis published in September by Trend Micro. Interestingly, Trend found the majority of organizations that get infected by ransomware end up paying the ransom. They also found three-quarters of companies which had not suffered a ransomware infection reported they would not pay up when presented with a data ransom demand. Clearly, people tend to see things differently when they’re the ones in the hot seat.

And for those not yet quite confident in the ways of Bitcoin (i.e. most victims), paying up means a crash course in acquiring the virtual currency known as Bitcoin. Some ransomware attackers are friendlier than others in helping victims wade through the process of setting up an account to handle Bitcoin, getting it funded, and figuring out how to pay other people with it. Others just let you figure it all out. The entire ordeal is a trial by fire for sure, but it can also be a very expensive, humbling and aggravating experience.

In the end the extortionist may bargain with you if they’re in a good mood, or if you have a great sob story. But they still want you to know that your choice is a binary one: Pay up, or kiss your sweet files goodbye forever.

This scenario reminds me of the classic short play/silent movie about the villainous landlord and the poor young lady who can’t pay the rent. I imagine the modern version of this play might go something like…

mustpaytherentVillain: You MUST pay the ransom!

Victim: I CAN’T pay the ransom!

Villain: You MUST pay the ransom!

Victim: I CAN’T pay the ransom!

Hero: I’ll pay the ransom!

Victim: Oh! My hero!

Villain: Curses! Foiled again!

Okay, nobody’s going to pay the ransomware demand for you (that’s only in Hollywood!). But just like the hero in the silent movie, there are quite a few people out there who are in fact working hard to help victims avoid paying the ransom (AND get their files back to boot).

Assuming you don’t have a recent backup you can restore, fear not: With at least some strains of ransomware, the good guys have already worked out a way to break or sidestep the encryption, and they’ve posted the keys needed to unlock these malware variants free of charge online.

But is the strain that hit your device one that experts already know how to crack?  Continue reading

Report: $3-5M in Ad Fraud Daily from ‘Methbot’

December 20, 2016

New research suggests that an elaborate cybercrime ring is responsible for stealing between $3 million and $5 million worth of revenue from online publishers and video advertising networks each day. Experts say the scam relies on a vast network of cloaked Internet addresses, rented data centers, phony Web sites and fake users made to look like real people watching short ad segments online.

Online advertising fraud is a $7 billion a year problem, according to AdWeek. Much of this fraud comes from hacked computers and servers that are infected with malicious software which forces the computers to participate in ad fraud. Malware-based ad fraud networks are cheap to acquire and to run, but they’re also notoriously unstable and unreliable because they are constantly being discovered and cleaned up by anti-malware companies.

Now researchers say they’ve uncovered a new class of ad robot or “bot” fraud that was designed from the ground up to keep its nose clean — running not on infected hosts but instead distributed across a vast, rented network of dedicated Web servers and computers.

The Methbot ad fraud infrastructure. Image: White Ops.

The Methbot ad fraud infrastructure. Image: White Ops.

According to White Ops, a digital advertising security company based in New York City, those rented computers are connected to a network of more than 570,000 Internet addresses apparently leased or hijacked from various sources.

White Ops dubbed the video ad fraud network “Methbot,” and says the individuals at the helm of this network are spending upwards of $200,000 a month just maintaining a fully automated fraud network that imitates real Web site publishers showing real viewers video-based advertisements.

Ryan Castellucci, principal security researcher at White Ops, said Methbot’s coders built many of the fraud network’s tools from scratch — including the Web browser that each rented computer in the network uses to mimic Web sites displaying video ads. Spoofing actual news Web sites and other popular video-rich destinations, Methbot requests video ads from ad networks, and serves the ads to a vast array of bots that “watch” the videos.

To make each Web browsing session appear more like one generated by a human, Methbot simulates cursor clicks and mouse movements, and even forges social network login information so that it appears the user who viewed the ad was logged in to a social network at the time.

“They’ve written their own browser from scratch in Javascript, and this allows them to arbitrarily control the information that gets fed back to the ad networks and to companies like us who try to detect this stuff,” Castellucci said. “This has allowed Methbot to scale to beyond anything the industry has seen before, putting it in a new class of ad fraud.”

Interestingly, the registration records for virtually all of those Internet addresses have been forged so they appear to be controlled by some of the world’s largest Internet service providers (ISPs).

For instance, one of the many Internet addresses White Ops says was used by Methbot — 196.62.126*117 — is registered in October 2015 to AT&T Services Inc., but the contact address is “adw0rd.yandex.ru@gmail.com” (the letter “o” is a zero). Adw0rd is no doubt a play on Google Adwords, an online advertising service where advertisers pay to display brief advertising copy to Web users.

Another address tied to Methbot — 196.62.3*117 — is registered to the same adw0rd.yandex.ru@gmail.com account but also to “Comcast Cable Communications, Inc.” Records for another Methbot IP — 161.8.252.* — says the address is owned by “Verizon Trademark Services LLC.

Whoever dreamed up Methbot clearly spent a great deal of time and money building the fraud machine. For example, White Ops says the address space alone used by this ad fraud operation has a current market value of approximately $4 million. A full list of the 570,000+ Internet addresses used by Methbot is published in the White Ops report page.

“Methbot operators invested significant time, research, development, and resources to build infrastructure designed to remove these limitations and provide them with unlimited scale,” White Ops said in its report. “They created dedicated data centers to support proxy networks in order to hide the single origin source of their operation. This is the first time we’ve seen data centers impersonating residential internet connections. This makes the scale of this operation virtually unlimited, with none of the typical durability issues of maintaining a constant base of infected user machines.”

Methbot is thought to have made quite a bit more than malware-based ad bots that came before it. Source: White Ops.

Methbot is thought to have helped steal quite a bit more ad revenue than malware-based ad bots that came before it. Source: White Ops.

White Ops said it estimated the earning potential of Methbot by looking at the number of phony video ad impressions it could serve up and the average cost to advertisers for displaying those ads. Assuming an average CPM (cost per mille, or per thousand number of impressions) of $13, the company estimates Methbot has the ability to serve between more than 300 million impressions each day, with a daily revenue ranging from $2.6 million to $5.2 million. Continue reading