Krebs on Security

‘Top 10 Spammer’ Indicted for Wire Fraud

February 8, 2017

Michael A. Persaud, a California man profiled in a Nov. 2014 KrebsOnSecurity story about a junk email purveyor tagged as one of the World’s Top 10 Worst Spammers, was indicted this week on federal wire fraud charges tied to an alleged spamming operation.

According to an indictment returned in federal court in Chicago, Persaud used multiple Internet addresses and domains – a technique known as “snowshoe spamming” – to transmit spam emails over at least nine networks.

persaud-fb

The Justice Department says Persaud sent well over a million spam emails to recipients in the United States and abroad. Prosecutors charge that Persaud often used false names to register the domains, and he created fraudulent “From:” address fields to conceal that he was the true sender of the emails. The government also accuses Persaud of “illegally transferring and selling millions of email addresses for the purpose of transmitting spam.”

Persaud is currently listed as #8 on the World’s 10 Worst Spammers list maintained by Spamhaus, an anti-spam organization. In 1998, Persaud was sued by AOL, which charged that he committed fraud by using various names to send millions of get-rich-quick spam messages to America Online customers. Persaud did not contest the charges and was ordered to pay more than a half-million dollars in restitution and damages. Continue reading →

House Passes Long-Sought Email Privacy Bill

February 7, 2017

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The U.S. House of Representatives on Monday approved a bill that would update the nation’s email surveillance laws so that federal investigators are required to obtain a court-ordered warrant for access to older stored emails. Under the current law, U.S. authorities can legally obtain stored emails older than 180 days using only a subpoena issued by a prosecutor or FBI agent without the approval of a judge.

cloudprivacy The House passed by a voice vote The Email Privacy Act (HR 387). The bill amends the Electronic Communications Privacy Act (ECPA), a 1986 statute that was originally designed to protect Americans from Big Brother and from government overreach. Unfortunately, the law is now so outdated that it actually provides legal cover for the very sort of overreach it was designed to prevent.

Online messaging was something of a novelty when lawmakers were crafting ECPA, which gave email moving over the network essentially the same protection as a phone call or postal letter. In short, it required the government to obtain a court-approved warrant to gain access to that information.

But the U.S. Justice Department wanted different treatment for stored electronic communications. Congress struck a compromise, decreeing that after 180 days email would no longer be protected by the warrant standard and instead would be available to the government with an administrative subpoena and without requiring the approval of a judge. Continue reading →

InterContinental Confirms Breach at 12 Hotels

February 6, 2017

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InterContinental Hotels Group (IHG), the parent company for thousands of hotels worldwide including Holiday Inn, acknowledged Friday that a credit card breach impacted at least a dozen properties. News of the breach was first reported by KrebsOnSecurity more than a month ago.

Top of the Mark, San Francisco, one of the bars impacted by the IHG card breach.

In a statement issued late Friday, IHG said it found malicious software installed on point of sale servers at restaurants and bars of 12 IHG-managed properties between August and December 2016. The stolen data included information stored on the magnetic stripe on the backs of customer credit and debit cards — the cardholder name, card number, expiration date, and internal verification code.

A list of the known breached locations is here. IHG said cards used at the front desk of these properties were not affected.

According to IHG, we may not yet know the full scope of this breach: The company advised that its investigation into other properties in the Americas region is ongoing.

Card-stealing cyber thieves have broken into some of the largest hotel chains over the past few years. Hotel brands that have acknowledged card breaches over the last year after prompting by KrebsOnSecurity include Kimpton Hotels, Trump Hotels (twice), Hilton, Mandarin Oriental, and White Lodging (twice). Card breaches also have hit hospitality chains Starwood Hotels and Hyatt. Continue reading →

How Google Took on Mirai, KrebsOnSecurity

February 3, 2017

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The third week of September 2016 was a dark and stormy one for KrebsOnSecurity. Wave after wave of huge denial-of-service attacks flooded this site, forcing me to pull the plug on it until I could secure protection from further assault. The site resurfaced three days later under the aegis of Google’s Project Shield, an initiative which seeks to protect journalists and news sites from being censored by these crippling digital sieges.

Damian Menscher, a Google security engineer with whom I worked very closely on the migration to Project Shield, spoke this week about the unique challenges involved in protecting a small site like this one from very large, sustained and constantly morphing attacks.

Google Security Reliability Engineer Damian Menscher speaking at the Enigma conference this week. Photo: @mrisher

Addressing the Enigma 2017 security conference in Oakland, Calif., Menscher said his team only briefly considered whether it was such a good idea to invite a news site that takes frequent swings at the DDoS-for-hire industry.

“What happens if this botnet actually takes down google.com and we lose all of our revenue?” Menscher recalled. “But we considered [that] if the botnet can take us down, we’re probably already at risk anyway. There’s nothing stopping them from attacking us at any time. So we really had nothing to lose here.” Continue reading →

IRS: Scam Blends CEO Fraud, W-2 Phishing

February 2, 2017

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Most regular readers here are familiar with CEO fraud — e-mail scams in which the attacker spoofs the boss and tricks an employee at the organization into wiring funds to the fraudster. Loyal readers also have heard an earful about W-2 phishing, in which crooks impersonate the boss and request a copy of all employee tax forms. According to a new “urgent alert” issued by the U.S. Internal Revenue Service, scammers are now combining both schemes and targeting a far broader range of organizations than ever before.

athook The IRS said phishers are off to a much earlier start this year than in tax years past, trying to siphon W-2 data that can be used to file fraudulent refund requests on behalf of taxpayers. The agency warned that thieves also appear to be targeting a wider range of organizations in these W-2 phishing schemes, including school districts, healthcare organizations, chain restaurants, temporary staffing agencies, tribal organizations and nonprofits.

Perhaps because they are already impersonating the boss, the W-2 phishers feel like they’re leaving money on the table if they don’t also try to loot the victim organization’s treasury: According to the IRS, W-2 phishers very often now follow up with an “executive” email to the payroll or comptroller requesting that a wire transfer be made to a certain account.

“This is one of the most dangerous email phishing scams we’ve seen in a long time,” IRS Commissioner John Koskinen said. “Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars.”

The Federal Bureau of Investigation (FBI) has been keeping a running tally of the financial devastation visited on companies via CEO fraud scams. In June 2016, the FBI estimated that crooks had stolen nearly $3.1 billion from more than 22,000 victims of these wire fraud schemes.

First surfacing in February 2016, the W-2 phishing scams also have netted thieves plenty of victims. At one point last year I was hearing from almost one new W-2 phishing victim each day. Some of the more prominent companies victimized by W-2 scams last year included Seagate Technology, Moneytree, Sprouts Farmer’s Market, and EWTN Global Catholic Network. Continue reading →

Shopping for W2s, Tax Data on the Dark Web

January 31, 2017

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The 2016 tax season is now in full swing in the United States, which means scammers are once again assembling vast dossiers of personal data and preparing to file fraudulent tax refund requests on behalf of millions of Americans. But for those lazy identity thieves who can’t be bothered to phish or steal the needed data, there is now another option: Buying stolen W-2 tax forms from other crooks who have phished the documents wholesale from corporations.

A cybercriminal shop selling 2016 W-2 tax data.

Pictured in the screenshot above is a cybercriminal shop which sells the usual goods — stolen credit card data, PayPal account logins, and access to hacked computers. But hidden beneath the “other” category of goods for sale by this fraud bazaar is an option I’ve not previously encountered on these ubiquitous, cookie-cutter stores: A menu item advertising “W-2 2016.”

This particular shop — the name of which is being withheld so as not to provide it with free advertising — currently includes raw W-2 tax form data on more than 3,600 Americans, virtually all of whom apparently reside in Florida. The data in each record includes the taxpayer’s employer name, employer ID, address, taxpayer address, Social Security number and information about 2016 wages and taxes withheld.

Each W-2 record costs the Bitcoin equivalent of between $4 and $20. W-2 records for employees with higher-than-average wages in the 2016 tax year cost more, ostensibly because thieves stand to reap a higher tax refund from those W-2’s if they successfully trick the Internal Revenue Service and/or the states into approving a fraudulent refund in the victim’s name.

Tax refund fraud affects hundreds of thousands, if not millions, of U.S. citizens annually. Victims usually first learn of the crime after having their returns rejected because scammers beat them to it. Even those who are not required to file a return can be victims of refund fraud, as can those who are not actually due a refund from the IRS.

Tax data can be phished directly from consumers via phony emails spoofing the IRS or employers. But more often, the information is stolen in bulk from employers. In a typical scenario, the thieves target people who work in HR and payroll departments at corporations, and spoof an email from a higher-up in the company asking for all employee W-2 data to be included in a single file and emailed immediately.

Incredibly, this scam tricks countless organizations into giving away all employee W-2 data directly to identity thieves who use it (or, in this case, sell it) for tax refund fraud. Earlier this month, solar panel maker Sunrun disclosed that a spear phishing attack exposed W-2 tax form data on more than 3,400 employees.

In this case, however, it does not appear the cybercrime shop obtained the W-2’s through phishing employers. It cost roughly $25 worth of Bitcoin to reveal the likely common thread among all 3,600+ Floridians being exploited by this shop: A local tax preparation firm that got hacked or phished. Continue reading →

A Shakeup in Russia’s Top Cybercrime Unit

January 28, 2017

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A chief criticism I heard from readers of my book, Spam Nation: The Inside Story of Organized Cybercrime, was that it dealt primarily with petty crooks involved in petty crimes, while ignoring more substantive security issues like government surveillance and cyber war. But now it appears that the chief antagonist of Spam Nation is at the dead center of an international scandal involving the hacking of U.S. state electoral boards in Arizona and Illinois, the sacking of Russia’s top cybercrime investigators, and the slow but steady leak of unflattering data on some of Russia’s most powerful politicians.

Sergey Mikhaylov

In a major shakeup that could have lasting implications for transnational cybercrime investigations, it’s emerged that Russian authorities last month arrested Sergey Mikhaylov — the deputy chief of the country’s top anti-cybercrime unit — as well as Ruslan Stoyanov, a senior employee at Russian security firm Kaspersky Lab.

In a statement released to media, Kaspersky said the charges against Stoyanov predate his employment at the company beginning in 2012. Prior to Kaspersky, Stoyanov served as deputy director at a cybercrime investigation firm called Indrik, and before that as a major in the Russian Ministry of Interior’s Moscow Cyber Crime Unit.

In a move straight out of a Russian spy novel, Mikhaylov reportedly was arrested while in the middle of a meeting, escorted out of the room with a bag thrown over his head. Both men are being tried for treason. As a result, the government’s case against them is classified, and it’s unclear exactly what they are alleged to have done.

However, many Russian media outlets now report that the men are suspected of leaking information to Western investigators about investigations, and of funneling personal and often embarrassing data on Russia’s political elite to a popular blog called Humpty Dumpty (Шалтай-Болтай). Continue reading →

ATM ‘Shimmers’ Target Chip-Based Cards

January 27, 2017

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Several readers have called attention to warnings coming out of Canada about a supposedly new form of card skimming called “shimming” that targets chip-based credit and debit cards. Shimming attacks are not new (KrebsOnSecurity first wrote about them in August 2015), but they are likely to become more common as a greater number of banks in the United States shift to issuing chip-based cards. Here’s a brief primer on shimming attacks, and why they succeed.

Several shimmers recently found inside Canadian ATMs. Source: RCMP.

Several shimmers recently found inside Canadian point-of-sale devices. Source: RCMP.

Most skimming devices made to steal credit card data do so by recording the data stored in plain text on the magnetic stripe on the backs of cards. A shimmer, on the other hand, is so named because it acts a shim that sits between the chip on the card and the chip reader in the ATM or point-of-sale device — recording the data on the chip as it is read by the underlying machine.

Data collected by shimmers cannot be used to fabricate a chip-based card, but it could be used to clone a magnetic stripe card. Although the data that is typically stored on a card’s magnetic stripe is replicated inside the chip on chip-enabled cards, the chip contains an additional security components not found on a magnetic stripe.

One of those is a component known as an integrated circuit card verification value or “iCVV” for short — also known as a “dynamic CVV.” The iCVV differs from the card verification value (CVV) stored on the physical magnetic stripe, and protects against the copying of magnetic-stripe data from the chip and using that data to create counterfeit magnetic stripe cards.

A close-up of a shimmer found on a Canadian ATM. Source: RCMP.

A close-up of a shimmer found inside a point-of-sale device in Canada. Source: RCMP.

The reason shimmers exist at all is that some banks have apparently not correctly implemented the chip card standard, known as EMV (short for Europay, Mastercard and Visa).

“The only way for this attack to be successful is if a [bank card] issuer neglects to check the CVV when authorizing a transaction,” ATM giant NCR Corp. wrote in a 2016 alert to customers. “All issuers MUST make these basic checks to prevent this category of fraud. Card Shimming is not a vulnerability with a chip card, nor with an ATM, and therefore it is not necessary to add protection mechanisms against this form of attack to the ATM.” Continue reading →

Who is Anna-Senpai, the Mirai Worm Author?

January 18, 2017

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On September 22, 2016, this site was forced offline for nearly four days after it was hit with “Mirai,” a malware strain that enslaves poorly secured Internet of Things (IoT) devices like wireless routers and security cameras into a botnet for use in large cyberattacks. Roughly a week after that assault, the individual(s) who launched that attack — using the name “Anna-Senpai” — released the source code for Mirai, spawning dozens of copycat attack armies online.

After months of digging, KrebsOnSecurity is now confident to have uncovered Anna-Senpai’s real-life identity, and the identity of at least one co-conspirator who helped to write and modify the malware.

Mirai co-author Anna-Senpai leaked the source code for Mirai on Sept. 30, 2016.

Before we go further, a few disclosures are probably in order. First, this is easily the longest story I’ve ever written on this blog. It’s lengthy because I wanted to walk readers through my process of discovery, which has taken months to unravel. The details help in understanding the financial motivations behind Mirai and the botnet wars that preceded it. Also, I realize there are a great many names to keep track of as you read this post, so I’ve included a glossary.

The story you’re reading now is the result of hundreds of hours of research. At times, I was desperately seeking the missing link between seemingly unrelated people and events; sometimes I was inundated with huge amounts of information — much of it intentionally false or misleading — and left to search for kernels of truth hidden among the dross. If you’ve ever wondered why it seems that so few Internet criminals are brought to justice, I can tell you that the sheer amount of persistence and investigative resources required to piece together who’s done what to whom (and why) in the online era is tremendous.

As noted in previous KrebsOnSecurity articles, botnets like Mirai are used to knock individuals, businesses, governmental agencies, and non-profits offline on a daily basis. These so-called “distributed denial-of-service (DDoS) attacks are digital sieges in which an attacker causes thousands of hacked systems to hit a target with so much junk traffic that it falls over and remains unreachable by legitimate visitors. While DDoS attacks typically target a single Web site or Internet host, they often result in widespread collateral Internet disruption.

A great deal of DDoS activity on the Internet originates from so-called ‘booter/stresser’ services, which are essentially DDoS-for-hire services which allow even unsophisticated users to launch high-impact attacks. And as we will see, the incessant competition for profits in the blatantly illegal DDoS-for-hire industry can lead those involved down some very strange paths, indeed.

THE FIRST CLUES

The first clues to Anna-Senpai’s identity didn’t become clear until I understood that Mirai was just the latest incarnation of an IoT botnet family that has been in development and relatively broad use for nearly three years.

Earlier this summer, my site was hit with several huge attacks from a collection of hacked IoT systems compromised by a family of botnet code that served as a precursor to Mirai. The malware went by several names, including “Bashlite,” “Gafgyt,” “Qbot,” “Remaiten,” and “Torlus.”

All of these related IoT botnet varieties infect new systems in a fashion similar to other well-known Internet worms — propagating from one infected host to another. And like those earlier Internet worms, sometimes the Internet scanning these systems perform to identify other candidates for inclusion into the botnet is so aggressive that it constitutes an unintended DDoS on the very home routers, Web cameras and DVRs that the bot code is trying to subvert and recruit into the botnet. This kind of self-defeating behavior will be familiar to those who recall the original Morris Worm, NIMDA, CODE RED, Welchia, Blaster and SQL Slammer disruptions of yesteryear.

Infected IoT devices constantly scan the Web for other IoT things to compromise, wriggling into devices that are protected by little more than insecure factory-default settings and passwords. The infected devices are then forced to participate in DDoS attacks (ironically, many of the devices most commonly infected by Mirai and similar IoT worms are security cameras).

Mirai’s ancestors had so many names because each name corresponded to a variant that included new improvements over time. In 2014, a group of Internet hooligans operating under the banner “lelddos” very publicly used the code to launch large, sustained attacks that knocked many Web sites offline.

The most frequent target of the lelddos gang were Web servers used to host Minecraft, a wildly popular computer game sold by Microsoft that can be played from any device and on any Internet connection.

The object of Minecraft is to run around and build stuff, block by large pixelated block. That may sound simplistic and boring, but an impressive number of people positively adore this game – particularly pre-teen males. Microsoft has sold more than a 100 million copies of Minecraft, and at any given time there are over a million people playing it online. Players can build their own worlds, or visit a myriad other blocky realms by logging on to their favorite Minecraft server to play with friends.

Image: Minecraft.net

A large, successful Minecraft server with more than a thousand players logging on each day can easily earn the server’s owners upwards of $50,000 per month, mainly from players renting space on the server to build their Minecraft worlds, and purchasing in-game items and special abilities.

Perhaps unsurprisingly, the top-earning Minecraft servers eventually attracted the attention of ne’er-do-wells and extortionists like the lelddos gang. Lelddos would launch a huge DDoS attack against a Minecraft server, knowing that the targeted Minecraft server owner was likely losing thousands of dollars for each day his gaming channel remained offline.

Adding urgency to the ordeal, many of the targeted server’s loyal customers would soon find other Minecraft servers to patronize if they could not get their Minecraft fix at the usual online spot.

Robert Coelho is vice president of ProxyPipe, Inc., a San Francisco company that specializes in protecting Minecraft servers from attacks.

“The Minecraft industry is so competitive,” Coelho said. “If you’re a player, and your favorite Minecraft server gets knocked offline, you can switch to another server. But for the server operators, it’s all about maximizing the number of players and running a large, powerful server. The more players you can hold on the server, the more money you make. But if you go down, you start to lose Minecraft players very fast — maybe for good.”

In June 2014, ProxyPipe was hit with a 300 gigabit per second DDoS attack launched by lelddos, which had a penchant for publicly taunting its victims on Twitter just as it began launching DDoS assaults at the taunted.

The hacker group “lelddos” tweeted at its victims before launching huge DDoS attacks against them.

At the time, ProxyPipe was buying DDoS protection from Reston, Va. -based security giant Verisign. In a quarterly report published in 2014, Verisign called the attack the largest it had ever seen, although it didn’t name ProxyPipe in the report – referring to it only as a customer in the media and entertainment business.

Verisign said the 2014 attack was launched by a botnet of more than 100,000 servers running on SuperMicro IPMI boards. Days before the huge attack on ProxyPipe, a security researcher published information about a vulnerability in the SuperMicro devices that could allow them to be remotely hacked and commandeered for these sorts of attacks.

THE CENTRALITY OF PROTRAF

Coelho recalled that in mid-2015 his company’s Minecraft customers began coming under attack from a botnet made up of IoT devices infected with Qbot. He said the attacks were directly preceded by a threat made by a then-17-year-old Christopher “CJ” Sculti, Jr., the owner and sole employee of a competing DDoS protection company called Datawagon.

Datawagon also courted Minecraft servers as customers, and its servers were hosted on Internet space claimed by yet another Minecraft-focused DDoS protection provider — ProTraf Solutions.

Christopher “CJ” Sculti, Jr.

According to Coelho, ProTraf was trying to woo many of his biggest Minecraft server customers away from ProxyPipe. Coelho said in mid-2015, Sculti reached out to him on Skype and said he was getting ready to disable Coelho’s Skype account. At the time, an exploit for a software weakness in Skype was being traded online, and this exploit could be used to remotely and instantaneously disable any Skype account.

Sure enough, Coelho recalled, his Skype account and two others used by co-workers were shut off just minutes after that threat, effectively severing a main artery of support for ProxyPipe’s customers – many of whom were accustomed to communicating with ProxyPipe via Skype.

“CJ messaged me about five minutes before the DDoS started, saying he was going to disable my skype,” Coelho said. “The scary thing about when this happens is you don’t know if your Skype account has been hacked and under control of someone else or if it just got disabled.”

Once ProxyPipe’s Skype accounts were disabled, the company’s servers were hit with a massive, constantly changing DDoS attack that disrupted ProxyPipe’s service to its Minecraft server customers. Coelho said within a few days of the attack, many of ProxyPipe’s most lucrative Minecraft servers had moved over to servers protected by ProTraf Solutions.

“In 2015, the ProTraf guys hit us offline tons, so a lot of our customers moved over to them,” Coelho said. “We told our customers that we knew [ProTraf] were the ones doing it, but some of the customers didn’t care and moved over to ProTraf anyway because they were losing money from being down.”

I found Coelho’s story fascinating because it eerily echoed the events leading up to my Sept. 2016 record 620 Gbps attack. I, too, was contacted via Skype by Sculti — on two occasions. The first was on July 7, 2015, when Sculti reached out apropos of nothing to brag about scanning the Internet for IoT devices running default usernames and passwords, saying he had uploaded some kind of program to more than a quarter-million systems that his scans found.

Here’s a snippet of that conversation:

July 7, 2015:

21:37 CJ: http://krebsonsecurity.com/2015/06/crooks-use-hacked-routers-to-aid-cyberheists/
21:37 CJ: vulnerable routers are a HUGE issue
21:37 CJ: a few months ago
21:37 CJ: I scanned the internet with a few sets of defualt logins
21:37 CJ: for telnet
21:37 CJ: and I was able to upload and execute a binary
21:38 CJ: on 250k devices
21:38 CJ: most of which were routers
21:38 Brian Krebs: o_0

The second time I heard from Sculti on Skype was Sept. 20, 2016 — the day of my 620 Gbps attack. Sculti was angry over a story I’d just published that mentioned his name, and he began rather saltily maligning the reputation of a source and friend who had helped me with that story.

Indignant on behalf of my source and annoyed at Sculti’s rant, I simply blocked his Skype account from communicating with mine and went on with my day. Just minutes after that conversation, however, my Skype account was flooded with thousands of contact requests from compromised or junk Skype accounts, making it virtually impossible to use the software for making phone calls or instant messaging.

Six hours after that Sept. 20 conversation with Sculti, the huge 620 Gbps DDoS attack commenced on this site. Continue reading →

Adobe, Microsoft Push Critical Security Fixes

January 11, 2017

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Adobe and Microsoft on Tuesday each released security updates for software installed on hundreds of millions of devices. Adobe issued an update for Flash Player and for Acrobat/Reader. Microsoft released just four updates to plug some 15 security holes in Windows and related software.

brokenwindows Microsoft’s batch includes updates for Windows, Office and Microsoft Edge (Redmond’s replacement for Internet Explorer). Also interesting is that January 2017 is the last month Microsoft plans to publish individual bulletins for each patch. From now on, some of the data points currently in the individual updates will be lumped into a “Security Updates Guide” published with each Patch Tuesday.

This change mirrors a shift in the way Microsoft is deploying updates. Last year Microsoft stopped making individual security updates available for home users, giving those users instead a single monthly security rollup that includes all available security updates.

Windows users and anyone else with Flash installed will need to make sure that Adobe Flash Player is updated (or suitably bludgeoned, more on that in a bit). Adobe’s Flash update addresses 13 flaws in the widely-installed browser plugin. The patch brings Flash to v. 24.0.0.194 for Windows, Mac and Linux users alike. Continue reading →

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