Schneier on Security

Future of Malware

Excellent three–part series on trends in criminal malware:

When Jackson logged in, the genius of 76service became immediately clear. 76service customers weren’t weren’t paying for already-stolen credentials. Instead, 76service sold subscriptions or “projects” to Gozi-infected machines. Usually, projects were sold in 30-day increments because that’s a billing cycle, enough time to guarantee that the person who owns the machine with Gozi on it will have logged in to manage their finances, entering data into forms that could be grabbed.

Subscribers could log in with their assigned user name and password any time during the 30-day project. They’d be met with a screen that told them which of their bots was currently active, and a side bar of management options. For example, they could pull down the latest drops—data deposits that the Gozi-infected machines they subscribed to sent to the servers, like the 3.3 GB one Jackson had found.

A project was like an investment portfolio. Individual Gozi-infected machines were like stocks and subscribers bought a group of them, betting they could gain enough personal information from their portfolio of infected machines to make a profit, mostly by turning around and selling credentials on the black market. (In some cases, subscribers would use a few of the credentials themselves).

Some machines, like some stocks, would under perform and provide little private information. But others would land the subscriber a windfall of private data. The point was to subscribe to several infected machines to balance that risk, the way Wall Street fund managers invest in many stocks to offset losses in one company with gains in another.

[…]

That’s why the subscription prices were steep. “Prices started at $1,000 per machine per project,” says Jackson. With some tinkering and thanks to some loose database configuration, Jackson gained a view into other people’s accounts. He mostly saw subscriptions that bought access to only a handful of machines, rarely more than a dozen.

The $1K figure was for “fresh bots”—new infections that hadn’t been part of a project yet. Used bots that were coming off an expired project were available, but worth less (and thus, cost less) because of the increased likelihood that personal information gained from that machine had already been sold. Customers were urged to act quickly to get the freshest bots available.

This was another advantage for the seller. Providing the self-service interface freed up the sellers to create ancillary services. 76service was extremely customer-focused. “They were there to give you services that made it a good experience,” Jackson says. You want us to clean up the reports for you? Sure, for a small fee. You want a report on all the credentials from one bank in your drop? Hundred bucks, please. For another $150 a month, we’ll create secure remote drops for you. Alternative packaging and delivery options? We can do that. Nickel and dime. Nickel and dime.

And about banks not caring:

As much as the HangUp Team has relied on distributed pain for its success, financial institutions have relied on transferred risk to keep the Internet crime problem from becoming a consumer cause and damaging their businesses. So far, it has been cheaper to follow regulations enough to pass audits and then pay for the fraud rather than implement more serious security. “If you look at the volume of loss versus revenue, it’s not horribly bad yet,” says Chris Hoff, with a nod to the criminal hacker’s strategy of distributed pain. “The banks say, ‘Regulations say I need to do these seven things, so I do them and let’s hope the technology to defend against this catches up.'”

“John” the security executive at the bank, one of the only security professionals from financial services who agreed to speak for this story, says “If you audited a financial institution, you wouldn’t find many out of compliance. From a legal perspective, banks can spin that around and say there’s nothing else we could do.”

The banks know how much data Lance James at Secure Science is monitoring; some of them are his clients. The researcher with expertise on the HangUp Team calls consumers’ ability to transfer funds online “the dumbest thing I’ve ever seen. You can’t walk into the branch of a bank with a mask on and no ID and make a transfer. So why is it okay online?”

And yet banks push online banking to customers with one hand while the other hand pushes problems like Gozi away, into acceptable loss budgets and insurance—transferred risk.

As long as consumers don’t raise a fuss, and thus far they haven’t in any meaningful way, the banks have little to fear from their strategies.

But perhaps the only reason consumers don’t raise a fuss is because the banks have both overstated the safety and security of online banking and downplayed negative events around it, like the existence of Gozi and 76service.

The whole thing is worth reading.

Tags: banking, compliance, cost-benefit analysis, cybercrime, economics of security, fraud, identity theft, malware, spyware

Posted on October 17, 2007 at 1:07 PM • 27 Comments