Twin Reports Suggest We are Losing the Cybercrime War

According to Symantec, malicious activity in 2008 amounted to 60 percent of all the activity they have recorded since they started keeping records. Last year, they recorded 1.6 million new malicious code signatures and blocked 245 million malware attacks from their users every month.

Many of these attacks – when the words malware or malicious code are used – are designed to steal information (preferably financial) or take command and control of a computer. Once command and control of a computer is accomplished – it’s called a zombie and networked into a botnet. A botnet works as a super computer and is used to spam the electronic universe. Some of these spam e-mails contain even more malware, which infects more unprotected systems.

In 2008, Symantec saw a 31 percent increase in the number of zombie computers. In 2008, Symantec observed an average of more than 75,000 active bot-infected computers each day, a 31 percent increase from 2007. Symantec's latest report, which covers January to December of 2008, suggests that 90 percent of these attacks are designed to steal information. Attacks using key loggers – which log a computer's keystrokes and send them to the criminals who installed the malicious code – grew from 72 to 76 percent of the activity observed by Symantec's security lab.

Many of these attacks use a technique known as phishing, which is normally delivered in a spam e-mail. Phishing either tricks people into giving up their information (social engineering) or gets them to download malicious code, which makes the process automatic. Last year, Symantec detected 55,389 phishing website hosts, which is where you are sent if you click on a link in a phish-mail. Spoofed financial services companies accounted for 76 percent of these lures compared to 52 percent in 2007.

Spam, which delivers most of this activity, continued to grow, too. This equated to 349.6 billion spam messages in 2008 compared to 119.6 billion spam messages in 2007, which is a 192 percent increase. According to the monthly spam report from Symantec, last month's spam social engineering themes included mortgage rescue, tax season, terror and scareware (fake antivirus solutions) for the much anticipated Conficker worm that was designed to hit on April Fool's Day. Please note that Conficker a.k.a. Downdaup is still a problem, but it didn't spread it's gloom and doom on April 1st to the degree it was expected to.

Cybercriminals have always been quick to exploit the headlines and with the sour economy in the news have been targeting the financial industry. Here also, Symantec saw an increase of personal and financial information being stolen by using financial institutions as bait. In 2008, this amounted to 29 percent of the activity compared to 10 percent in 2007.

In their latest report, Symantec leveraged information from their recent Report on the Underground Economy which points to an organized criminal community that specializes in the sale of stolen personal and financial information. They noted that the economic principle of supply and demand has come into play with this underground economy due to a glut of stolen data – causing prices to go down.

Most of this stolen information is sold in electronic forums, such as websites and Internet Relay Chat (IRC) channels. These forums enable information to be sold worldwide and make the activity anonymous. Because the activity is anonymous, it is very difficult to investigate or shut-down. Credit cards go anywhere from less than a dollar to about $30 and bank account credentials sell for anywhere from $10 to $100. Much of the cost depends on the perceived value of information and the amount of it, which is purchased.



Symantec isn't the only one releasing a report showing an alarming increase information theft. Verizon just released a report showing that 285 million information records were compromised in 2008, alone. While the Symantec report focuses more on individual attacks, the Verizon report studies the impact large scale attacks on businesses and organizations. When combined, the information in these reports is pretty revealing.

According to the Verizon report, the 285 million records stolen are greater than what was known to be stolen in 2004 to 2007. I say "greater" because I've often speculated that the most valuable information stolen is the data no one knows has been stolen. After information is known to have been stolen, measures are taken to protect it. This makes it useless or at least a lot harder to use.

Recently, underground services have also popped up in these underground forums, which allow information thieves to see if the information they are buying hasn't been compromised (pun intended).

Verizon, who investigated 90 data breaches last year, noted that malware is now being designed to steal debit card and PIN information. The report also breaks down the point of compromise by industry and how the data was breached. For instance, in the past year 93 percent of the activity compromised was at financial institutions. Also cited was that most attacks were accomplished by external entities (73 percent) taking advantage of procedural flaws, but that when the breach was assisted by an insider (20 percent) more data was stolen.

The trend towards compromising debit cards and PINS is likely because these instruments are the quickest route to obtaining cash. Obtaining cash is normally the ultimate goal of an information thief and stolen debit card information accomplishes this with a minimum of effort.

Also covered are breaches caused by partners (32 percent), which are external entities providing services to a business. Please note these percentages add up to more than 100 percent, which means that multiple points of compromise can be attributed to any one incident in some cases.

Both reports are an excellent read and point to the fact that there is a glut of stolen information for sale on the black market, which isn't good news. The fact that more information is being stolen than ever before – even when security procedures are ramped up on a regular basis – is not good news, either.

Perhaps both of these reports suggest the obvious, which is we are not winning the war against cybercrime and the problem is getting worse. Historically, these losses have been written off and the cost is passed to the consumer. With the sour economy and the fact that a lot of the financial industry is already on the brink of bankruptcy, writing off these losses might no longer be a realistic solution.

The reason criminals can easily exploit this information is that we are storing it in too many places that are too easy to access. The reason this has happened is because a lot of people are making a lot of money by using and selling this information. Making the information easy to access makes it easier to make money from it. I'm all for making money, but at what point does it prove to be irresponsible?

No security fix is going to solve this problem without a healthy dose of common sense being infused into the scheme of things!

After all, the economy is already in a lot of trouble because of some of same people making a lot of money, irresponsibly. My guess is we are getting to the point, where we will no longer be able to write-off the cost of being irresponsible to the consumer, as well as, the taxpaying public.

Downadup/Conficker Worm Disables Computer Security

If you were a hacker or a e-scam artist with malicious intent, would it be valuable to disable a machine's security system? Most of them find it relatively easy to take command and control of unprotected machines, but fully patched and protected machines pose more of a challenge.

Since late last year, hackers have developed a new tool that attacks protected machines, known as the Downadup/Conficker worm. This worm is being called a complex piece of malicious code that is able jump network hurdles, hide in the shadows and even defend itself against security measures, according to a recent report by Symantec.

Symantec has documented its blog posts on this subject in this report, which are available on their site. They also have a blog post by Ben Nahorney that attempts to put this complex threat into terms that can be understood by the general public.

Just this month, Symantec identified the third version of Downadup/Conficker, which has an even more powerful punch designed to take down computer security systems. This version has been dubbed the W32.Downadup.C variant and is still under analysis. The payload from W32.Downadup.C is set is to be triggered on April 1st, and if it is, the damage from it could be huge. SC Magazine aptly summed this up in an article called, "No Joke — Conficker Worm set to explode on April Fool's Day."

Since Downadup/Conficker has the ability to replicate itself — even on USB drives and network shares — by cracking passwords, it can spread like wildfire and wreak havoc on systems.
The report concludes that this is only the beginning of the Downadup/Conficker threat. If you take the time to read through the report, it shows how this malware is evolving and changing to avoid attempts to stop the spread of it.

It is being reported that Downadup Conficker has enabled one of the largest botnets to be formed on the Internet because of the number of systems that aren't protected from it. Of course, it appears that once infected, the worm itself might prevent the patches from be downloaded on a machine.

Botnets generate all the spam we see in our in boxes and are the vehicle of most fraud, phishing and financial misdeeds seen on the Internet. They consist of infected computers that have been taken over and form a super computer capable of spreading a lot of garbage. Of course, becoming infected can also mean that all your personal and financial information will be data-mined and used by less than honest people to steal money or commit other types of crimes.

Information can be stolen to commit espionage or even provide a fake identities, which are then used to support other more serious criminal activity. Although a lot of espionage is industrial, it is on record already that Downadup/Conficker infected computers at the U.K. Ministry of Defence and the Houston Municipal Courts which suggest a more sinister intent than merely committing financial crimes.

Since the beginning of the year, there are different estimates of how many computers are infected, but all them seem to agree it's somewhere around nine million.

Microsoft has announced a $250,000 reward for information leading to the arrest of the authors of this code. It has also announced an industry-wide coalition to fix the threat that Downadup/Conficker poses. Included in this coalition are ICANN, NeuStar, Symantec, CNNIC, Afilias, Public Internet Registry, Global Domains International Inc., M1D Global, AOL, Verisign, F-Secure, ISC, researchers from Georgia Tech, the Shadowserver Foundation, Arbor Networks and Support Intelligence.

Microsoft also provides information on patches and the latest developments on Conficker/Downadup on its site. It also has another page where you can learn more about these types of threats and how to stay safe online.

Spammers Love to Hurt Internet Users

Love is a many splendored social engineering tool and spammers are busy sending out a whole lot of their particular brand of love across the electronic universe.

An interesting blog post (Love Hurts) by Kevin Haley at Symantec points out that malicious code writers are busy spreading their work in attachments hidden in the millions of spam messages being spewed out by zombies (compromised computers). If you click on one of these attachments — and your machine isn't bulletproof — it also can become a zombie and used as part of a botnet to send out more spam. Botnets are groups of compromised computers used to form a super computer. Of course, downloading malware can also mean that all your personal and financial information will be stolen, too. Please note (as you will see below) that some forms of malware currently being sent out can do both.

Kevin's blog post came out at almost the same time Symantec issued it's monthly Spam Landscape Report. With Valentine's Day coming up, love is a predictable lure and it's probably a good idea to make sure you know who loves you before clicking on any links in an e-mail.

Another predictable finding in the report is that spam levels are continuing to rise to normal levels after they fell when McColo was shut-down. McColo (a Web service hosting provider) was shut down in November after it was discovered they were the source of a large number of botnets, which are used to send out spam. Last month, 79 percent of all e-mail was spam. The report also notes that the point of origin for spam is shifting a little. Although the United States is still number one, the number of active zombies in other countries is rising. While some of this is being attributed to McColo, the report points out that this might point to the fact that some of these countries have an increasing number of users accessing the Internet.

From a spam-commerce point of view, the report indicates weight loss products, counterfeit drugs, cheap watches and porn top the list of items available at super-cheap prices as Valentine's Day approaches.

Besides Valentine's Day, President Obama also continues to be used as a spam lure, according to the report. A lot of this spam contains malware with files names such as usa.exe, obamanew.exe, statement.exe, barackblog.exe and barackspeech.exe. The malware being spread in these spam e-mails is called the W32.Waledac, which is capable of both stealing sensitive personal and financial information and turning a machine into a zombie. It also establishes a backdoor to a machine so it can be remotely accessed.

Current events (and holidays) have been and probably will continue to be used as social engineering lures to snare the unwary.

Also noted was a rise in Russian spam hawking goods and services. With cheap long distance services using VoIP, the Russians have actually set up telephone numbers for their intended victims to call. My guess is that they will entice someone to send money, which can't be recovered when the person sending it discovers they've been scammed.

Chinese gambling spam is also mentioned as a new phenomenon in the report. It appears to be patterned after English language gambling spam, but is written in Chinese.

Last, but not least, Nigerian spam is mentioned. Nigerian or 419 spam is named after the section of the Nigerian penal code dealing with fraud. It normally is a come-on for lost riches or winning a lottery and has a lot of spelling and grammatical errors. Typically known as advance fee fraud, the victim is enticed in sending money across a border (wire transfer is preferred) to secure their fortune. Of course in the end, the victim never receives anything and is often left in financial ruin.

There are many twists to advance fee and one of them is to send a bogus financial instrument to a person with instructions to cash it. If the person doesn't get arrested for presenting it, they are instructed to send the money back to the scammer. Of course, the cashing institution eventually figures out the instrument is bogus and the victim is held liable for it.

A lot of people think that advance fee all comes from Nigeria, which isn't true. I've personally traced it to a lot of other places and called some of the telephone numbers. The person answering didn't sound Nigerian and I've spoken to a few people from Nigeria in my time. Naturally, this doesn't mean that scam activity is not coming from Nigeria and just that not all of it does.

Pam Dixon, of the World Privacy Forum, went on record recently that the spelling and grammatical errors aren't being seen as much in advance fee lures anymore. Obviously, advance fee scammers, wherever they hail from, are being more careful and have discovered spell check?

To close, the Anti-Phishing Working Group's recent report on phishing, which is delivered via spam, has noted that the number of crimeware-spreading URLs out there has increased 258 percent versus the same time period last year. It also noted a record high in the amount of hijacked and victimized brand names. Last but not least, it noted another record in the amount of malicious application variants being seen in the wild (on the Internet).

This would suggest that spam is getting more dangerous and the people sending it are becoming more sophisticated. The smartest thing to do with all spam is to delete it. Making sure your computer's security is updated with a known and reliable vendor is also a smart thing to do. After all, as I've speculated many times before, most fraud, phishing and financial misdeeds on the Internet start with spam.

Will Heartland Become the Largest Data Breach in History?

According to a press release from Heartland Systems, a payment card processor, their data has been being compromised since sometime last year. On the site, Heartland set up to cover the incident, it says they promptly notified the Secret Service and hired two teams of forensic computer investigators to look into the case after they discovered their systems had been compromised.

Heartland was initially notified by Visa/Mastercard of suspicious activity, which led to malicious software being discovered in their system. The malware in question was harvesting and (obviously) transmitting data. In the press release, they state they believe the breach has been contained. Heartland claims no merchant data, social security numbers or unencrypted PINs were compromised. They were also quick to add that their check management systems, Canadian payroll, campus solutions, micropayments operations and recently acquired Network Services and Chockstone processing platforms had not been compromised, either.

It should be noted that in previous breaches, additional items were later discovered to have been compromised as the investigation progressed.

Brian Krebs at the Washington Post interviewed Robert Baldwin, Heartland's president and chief financial officer, who stated they don't know how many transactions were compromised. In the interview, Baldwin pointed out that since the card numbers compromised didn't have address information; it would be hard for fraudsters to use them in card-not-present (e-commmerce) transactions. Most e-commerce platforms validate the address tied to the card as a security measure. I thought about this for a second and remembered that Visa/Mastercard had warned Heartland about suspicious transactions. If there were suspicious transactions, I would deduct someone is using this data to commit fraud. Besides that, I doubt anyone sophisticated enough to pull this off would go to all this trouble (and potential legal exposure) if they couldn't use the information to make money. This is another thing that might suggest additional information will be discovered as the investigation progresses.

In the interview, Baldwin declined to name any of their customers, who were compromised. Heartland processes payments for about 250,000 customers and processes about 100 million transactions per month. He also said they will not be offering identity theft protection since not enough information was stolen to commit identity theft.

On the Truston blog, Tom Fragala, aptly pointed out that this equates to four billion transactions a year. Many are speculating that this will turn out to be the largest known data breach in history. Tom's company, which offers a privacy-friendly identity theft prevention and recovery service, offers a 45 day free-trial of their services. Even after the 45 days, the prevention part of the service is free.

Tom blogs on matters like this and wrote an interesting article pointing out the consumer protection features of debit and credit cards. Please note, debit cards offer less protection. The point is that if a card owner doesn't discover the fraud in a specified time period, they can be held liable for the financial loss. It's probably a good time for everyone to pay attention to their statements, carefully.

Given the mandatory notification laws, which have been passed in almost all 50 states, this is going to equate a lot of people that have to be notified. Simply stated, it's going to be a "notification nightmare." It should be noted that shutting down all the compromised cards and notifying victims is a substantial cost in any data breach.

SC Magazine also covered the story and got a quote from Rich Mogull, founder of IT security consultancy Securosis, who pointed out there is a trend of malicious software being planted somewhere in the processing system in all the high-profile data breaches seen in recent history. TJX (94 million cards compromised), Hannaford and CardSystems (40 million cards compromised) are all being cited as examples.

According to Visa, Heartland was validated as Payment Card Industry Data Security Standard (PCI DSS) compliant on April 30, 2008. They then stated this status was being reviewed. Trustwave is Heartland's PCI assessor. Hannaford was PCI compliant at the time they were compromised, also. According to the article in SC magazine, TrustWave wouldn't return calls to comment on this.

On the Heartland site, it mentions they are a founding supporter of the Merchant Bill of Rights, which advocates for and educates merchants on fair practices when they accept payment cards. Two of the biggest heartaches for merchants accepting payment cards are the interchange fees and becoming PCI compliant, which is considered an expensive process. Interchange fees are a tariff charged by the credit card companies on every transaction and according to the critics are not very equitable. Estimates have been made in the past that they equate to $30 billion in extra fees added to the cost-of-goods sold with payment cards, yearly. Ultimately, these are costs are often passed on to the consumer.

So far as PCI compliance — which now seems to have been proven ineffective in at least two instances — the National Retail Federation has responded by going on record to challenge the card issuers on their requirements to store data. Because of the cost, a lot of merchants have been slow to adopt PCI data-security standards and the merchants who are not in compliance face fines by the payment card industry.

Storing this data is required to prevent the third headache merchants face when accepting payment cards, or what is known as chargebacks. Chargebacks are when transactions are charged back to a merchant account because of alleged fraud. The NRF contends that being forced to maintain the data to protect themselves makes it easier to compromise.

Heartland is being challenged for releasing this information during the inauguration, when it was less likely to be a hot story. Although this seems to be the case, we need to realize the stakes in data-breaches are high. In the last breach involving a card processor (CardSystems), the card-issuers stopped doing business with the company and the end-result was the company is no longer in existence. Also, it should be pointed out that Heartland wouldn't be the only company that seemed to be very cautious when disclosing the fact that their data was compromised. Once disclosed, there is little doubt that the company in question faces some extremely unfavorable public exposure.

On a closing note, data breaches continue to occur at alarming rates. All sides of the equation need to come together and figure out solutions that work. One of them might be to upgrade the plastic to chip and PIN technology, which has become the standard in other countries. Nigeria was the most recent country to mandate this technology. While this might not directly stop data breaches, it would make it a lot harder to counterfeit the plastic, which is what the criminals use to cash-out the proceeds of data breaches with.

The other problem is that credit card fraud has been made too easy to commit. Card data and the tools to produce counterfeit cards are easy to obtain and even sold in chat rooms. A lot of this technology can also be bought on (what I consider) questionable sites, including eBay. Very few of these fraudsters get caught and because of this; it appears that the activity is getting more and more organized. Historically, the cost of all this seems to have been written off as a cost of doing business. In reality, a lot of these "costs" are passed on to the consumer in the form of higher interest rates and fees.

My prediction is that with the state credit is currently in with the sour economy, coupled with the increase in criminal activity, we are getting to the point where it is going to be hard to simply write-off all the financial costs. Until we start punishing the criminals effectively for this type of activity, it is going to continue to grow and probably prosper.

Update 2/13/09: It appears that the first arrests in the Heartland Data Breach have been made in Leon County, Florida. Three men (Tony Acreus, Jeremy Frazier and Timothy Johns) were encoding numbers stolen in the breach on gift cards and using them at Walmart.

The official press release from the authorities credits Walmart for supporting the investigation.

While it's great a few people got caught -- this probably only accounts for a small amount of the stolen data. My guess is that our three fraudsters bought the numbers via anonymous sources (probably on the Internet).

Fake Obama Site is a Malware Booby-Trap

Over the weekend, I got an e-mail from my Mom warning me not to open any e-mail with the title "Obama Acceptance Speech" because it contained a trojan. It even cited Snopes as stating that the threat wasn't a hoax. I sent her a reply referencing the last post on spam I did, which had a paragraph about Obama spam on it. My point was anyone who thinks there is only one e-mail of this type is out there is probably sadly mistaken.

On Sunday, with the inauguration less than 24 hours away, I got a hot tip that the Symantec Lab had detected another round of Obama spam with malicious intent being sent across the electronic universe. Zuftikar Ramzan announced on the Symantec Security Blog that this latest round of Obama spam uses lures with titles like "Our new president has gone," "Obama refused to be the president of the United States of America," and "There is no president in the USA anymore and Obama has gone."

Zuftikar also mentioned a link in these e-mails (removed for safety reasons) leading to a faux website that looks amazingly similar to the official Obama-Biden site. The fake site can be seen below:



This fake site attempts to exploit weaknesses in a Web browser to install malicious software without the owner's knowledge. According to Zuftikar, the page and its links all have malicious software on them. In other words, the entire site is literally a virtual booby trap.

The files are titled usa.exe, obamanew.exe, pdf.exe, statement.exe, barackblog.exe and barackspeech.exe. While the titles might be different, they lead to the same variety of malware known as the W32.Waledac. This malicious software is capable of stealing sensitive information, turning your machine into a spam-spewing zombie and leaving a back door for a hacker to gain access to it.

Political themes have been used a lot in recent times to lure people into clicking on links in spam e-mails they shouldn't have. Other common lures include the old fashioned too-good-to-be-true, security and badge-of-authority types (IRS, FBI, CIA, etc.).

With tax season upon us, expect the IRS to be a common one used in the near future.Symantec does provide removal instructions for this malware on their site, but most of us are far better off by not clicking on this type of stuff in the first place. These e-mails are sent out by the millions and the best thing to do is hit delete before opening them up.

Spam Levels on the Rise, Again

With the shutdown of McColo by Internet Service Providers in November, global spam volumes dropped over 50 percent. Sadly, this appears to have been a short-term fix. According to a new Symantec report, the spammers have moved to new locations and the volumes are back up to 80 percent of pre-McColo levels.

While spam originates from a lot of places, the United States is still in the number one spot, with 27 percent of the spam observed originating from there. China and Brazil tied for second place with 7 percent of spam originating from these countries.

The report indicates that URLs in Canadian Pharmacy spam messages were noted as being top-level Chinese domains (.cn TLD). Could this mean that Chinese knock-off (counterfeit) prescriptions are trying to make it appear as if they are coming from Canada? Given the recent concerns of tainted and poisonous merchandise being exported from China, this might be a concern. Of course, I would think that buying prescription meds over the Internet should be a concern to most people, anyway.

In another variation of recently observed spam, a user is invited to join a social networking site. The link goes to a real group, which was created on the social networking site by the spammer. The group then links to a free blogging site, which redirects the victim to the ultimate destination URL. At the destination URL, personal information is requested, which is probably used to sell to marketing companies or used in other spam campaigns. Please note, although not mentioned in the report, that some of these campaigns might have malicious intent or be scams.

Also noted during the holiday season was a lot of e-Card spam. This spam sometimes comes with malware (malicious software) designed to steal personal and financial information or turn your machine in to a spam spewing zombie computer using your credentials.

A partcularly deceptive spam delivery method noted recently is spammers inserting their messages into legitimate newsletters. This method seems to get past spam filters pretty effectively. If the recipient clicks on the message, they are taken to a spammer site. Here again, it might be a site selling junk, but also could be a site with more malicious intent.

Another spam trend in vogue these days is to use the recession as a social engineering lure designed to get people to click on a spam link. Messages are being sent out in the millions touting easy bail-out money to be had and an assortment of the normal get-rich- quick schemes. If it's too good to be true and doesn't make sense, it's normally a scam, and I suspect that most of this type of spam is one.

Last but not least, the spammers are still using President-elect Barack Obama's name to market coin offers, a "Barackumentary DVD" and a free Visa card for helping the Obama clan pick their dog.

Shutting down McColo by reaching out to the ISPs — which was done largely through the work of Brian Krebs at Security Fix (Washington Post) -- showed that a significant impact can be made on spam when ISPs are held accountable. Given that Brian is one person and a journalist, this was an admirable piece of work. The fact that spam is approaching pre-McColo levels tells us that there are more ISPs that need to be held accountable. Maybe in the end, government and international agencies need to follow Brian's example and and make an impact on spam levels that will last a little longer.

Spam is a dangerous pain for everyone who uses e-mail. Most scams, questionable goods and services and cyber-attacks using malicious software start with a spam e-mail. Shutting down the spam operators can only make everyone's experience on the Internet a little more safe and sane.

Twitter Users (Including Barack and Britney) Hacked and Phished

The Phishermen (and probably a few women) are always looking for fresh waters to hook some unsuspecting phish — so it should be no surprise that Twitter is their latest target. After all, e-mail, cell phones, and Facebook have already been phished, along with countless desktops and laptops.

According to a Symantec blog post, Twitter users are receiving warning messages from Twitter command and control about this matter. The blog post by Marian Meritt, the Internet Safety Guru at Symantec, gives blogger Chris Pirillo credit for breaking the story on Saturday. According to the blog post at Symantec, the messages appear to come from someone you know at Twitter with a link to a malicious website designed to steal information.

Twitter also put up a warning on their blog. It starts with a Wikipedia definition of phishing and then details how the phishing attack will come in the form of an e-mail message notifying a person they have a Twitter Direct Message. Thus far, the social engineering lures being used in the e-mail go something like this: "Hey! check out this funny blog about you..." and direct the user to click on a link to a fake website.

They also point out that if you look at the URL you'll see that it is not the same as the URL for the normal landing page for Twitter. A trick to do this (without clicking on the link) is to hover your mouse pointer over the link. If you look at the bottom left portion of your page it will display the URL the link goes to. With all the malware people can get nowadays by just visiting (driving-by) a malicious page — this is a much safer way to go about it rather instead of actually clicking on the link to find it.



Twitter blog picture showing where to look for a suspicious URL

Authentic looking phishing sites aren't hard to create. Often the hacker merely copies the pictures of a legitimate site and puts them on a compromised (hacked) site so the activity can't be traced back to them. Hackers frequently seek out sites with poor security to compromise and put up their own (malicious) site.

Also contained in the blog entry are instructions on what to do if you've been phished. Basically, they direct you to their password reset tool and a legitimate e-mail will be sent to you so you can change your password.

Interestingly enough, Twitter also reported this morning that 33 prominent Twitter-ers were hacked over the weekend. Apparently, the notables included President-elect Obama, Rick Sanchez, and Britney Spears. According to Twitter, this attack has nothing to do with the phishing expedition into their waters. Apparently, someone hacked into some of the tools their support team uses to help people with their e-mail.

They also pointed out that Mr. Obama hasn't been twittering lately due to issues with the transition.

Most Internet Scams Start with Spam

I'm sure we've all noticed spam levels are slightly down, or that our spam filters seem to be working a little better. Nevertheless, spam continues to get through filters and for the next few weeks, a lot of it will have a holiday theme. Due to the sour economic situation, it's also likely going to take advantage of financial fears or the promise of a rescue from an already bad situation.

Since most unfortunate situations involving fraud, phishing, and financial misdeeds on the Internet start with a spam e-mail, it pays to use a little common sense and caution before falling for a too good to be true, or sometimes scary e-mail from an unknown source.

Last week, Symantec issued its December 2008 State of Spam Report. It predicts that although spam volumes are down after a lot of providers blocked access to sites hosted by McColo.com, we will likely see them rise again. Spam levels dropped a reported 65 percent after this happened. "McColo.com was allegedly hosting a significant number of botnet command-and-control systems'" according to the report. The bad news is that the report indicates the bad guys are moving elsewhere and that a number of them are hosting their efforts from IP addresses in (where else) China.

Getting back to the holiday season, the report notes that spammers are mimicking marketing come-ons from legitimate retailers offering holiday shopping deals. This makes it hard to distinguish exactly who is behind the e-mail. Sometimes the line between legitimate and illegitimate becomes a little blurry, which is something spammers have always taken advantage of.

The report also reveals a lot of links leading to malware infected sites in spam e-mails are using political themes to draw in their victims. Items related to Barack Obama are especially popular with spammers and scammers. In another twist to using Obama's good name, one spam campaign offered a Barack Obama coin, "a piece of history for only $9.95 plus shipping." This was an attempt to steal debit and credit card information.

Hot news stories were also used as lures to download malicious software. In particular, the recent Mumbai terrorist attacks pointed to links designed to infect machines. Ironically, a lot of this malware is designed to turn a computer into what is referred to as a "zombie," which when used in a botnet is used to send out even more spam.

While we haven't seen the holiday season pass, spammers of the scammer type are already using the IRS name to steal personal and financial information. The pre-tax season phishing scheme mentioned in the Symantec Report involved a come-on designed to snare people by telling them they had a tax refund or economic stimulus payment due to them. The link in these e-mails went to fake IRS site(s) — complete with offical logos — designed to steal personal and financial information.

The IRS isn't alone when it comes to having their good name spoofed. Just this week the FBI reported that their name was being used (yet again) in a campaign involving a typical Nigerian 419 scam. If an intended victim got leery after initially responding — they were threatened with "official consequences" should they fail to turn over the required personal and financial information.

Fear or scaring a victim into submitting to a scam is nothing new. In fact, some of it is now being referred to as Scareware. Scareware most frequently surfaces as a fake message claiming your computer is infected. In then offers to fix the problem for a nominal amount of money. My guess is that malware might actually be downloaded on a system by clicking on one of these come-ons.

Since it's hard to pay in cash over the Internet, anyone who pays on this form of extortion might have their method of payment stolen, also. Symantec recently released another report showing how many personal and financial details are for sale (super-cheap) on the Internet.

Alex Eckelberry of Sunbelt Software and the popular Sunbelt Blog just posted a visual presentation of scareware examples on his Flickr account.

There is little doubt that spam and its intended purposes have made the electronic world somewhat of a "virtual minefield" at times. It pays to make your computer bullet-proof by using good state of the art software from a legitimate vendor, but even if you are protected in this manner, you also need to protect yourself from social engineering schemes designed to lure a person into doing something they are going to regret later.

The Anti Phishing Working Group offers sage advice (from a variety of reputable sources) to the average person on how to avoid becoming a victim. Interestingly enough, they also recently released a report that is rather ominous stating the the number of crimeware spreading URLs are at an all-time high. Crimeware is another name for malware when it has a pure criminal intent.

To close this post, I'll point to a amusing video Symantec did on the 12 Days of Christmas Spam. It's probably best to end on a lighter note on what has become a serious problem.

E-Cards with a Dangerous Twist Spotted on the Internet

(Courtesy of Websense)

With the holiday season upon us, spam campaigns of a malicious nature will start springing up bearing yuletide greetings.

Just the other day, Websense sent out an alert that malicious software authors already are using social engineering techniques with a Christmas theme to compromise your home machine. The instance they are reporting uses spam e-mails offering free animated postcards.

Those unfortunate enough to attempt to get free e-cards will download a Trojan. The spam e-mails are spoofed to appear as if they come from postcard.org. The fact that malware (postcard.exe) is being installed on a machine is covered up with a xmas.jpg image.

Quite simply, once installed it allows cyber-scrooges to control your machine and or steal all the personal and financial information off it. The information is then normally used to steal money.

This type of attack is nothing new and seems to surface every year at this time. The next step in these campaigns normally are more personalized spam e-mails designed to do the same thing (download malware). Please note these e-mails are normally spoofed to appear as if they come from a legitimate e-card retailer.

Last year, American Greetings put up a page on their site to educate people how to spot and avoid falling victim to this type of attack. First and foremost, they recommend that if you are suspicious at all to go to the company site and try to pick up the greeting from there. Most (if not all) of the legitimate sites offer this service. The page on their site contains additional ways to identify "e-card garbage" and is well worth a look if you are unfamiliar with how to spot malware attacks using spam e-mails.

American Greeting put up this page after an attack on their brand. In this attack, some of the e-mails appeared to come from a known (trusted) person. My guess is this happened from an already compromised machine, where a spammer gained access to an address book and sent the e-mails out. Some forms of malware do this without any human interface.

I went to the Postcards.org site and thus far they have no warnings about this that I could find.

While the best thing to do is to avoid clicking on spam e-mail containing malware, the second best thing is to employ solid anti-virus software and a firewall from a reputable vendor like Websense, Sunbelt, or Symantec. Most of these vendors are on top of malware being issued in the wild (on the Internet) and they even share information with each other.

How Using Pirated Software Turns People into Internet Crime Victims

The Business Software Alliance's October report called Online Software Scams: A Threat to Your Security reveals the dangers of buying or downloading pirated software. Sadly, pirated software doesn't always advertise that it is counterfeit and often appears to be the "real thing" to the untrained eye. This poses a clear and present danger to anyone shopping for software, whether it be on a e-commerce site, peer to peer (P2) site or at a more traditional shopping venue.

In the report's introduction it points to an actual example of how a misguided employee of the Wagner Resource Group of McLean Virginia used his office computer to download video and music files using Limewire and exposed the entire corporation to the dark side of the Internet. "In this case, the Wagner employee’s action set off a terrible chain reaction, opening up the firm’s computers to outsiders and exposing the names, dates of birth, and Social Security numbers of about 2,000 of the firm’s clients, including US Supreme Court Justice Stephen Breyer, according to the report.

Although many view downloading a video or music file as a victimless crime, the consequences can become personal when cyber criminals add a little malicious software (often referred to as crimeware) to the mix. Specifically, it can lead to identity (information) theft or turn a user's machine into a zombie, which is controlled remotely and used to commit other misdeeds on the Internet.

It is estimated that one-third of all software is counterfeit. In 2008, a study was conducted that revealed that if software piracy could be reduced by 10 percent in the United States it would generate 32,000 new jobs, 41 billion in economic growth and 7 billion in tax revenues.

A lot of pirated software is sold via downloads. When this occurs, the normal form of payment is a credit or debit card. This means that the person, who buys pirated software is providing this information to a criminal, who in turn might use it again or sell it to a third party. Like pirated software, credit/debit card information is sold on the Internet in underground chat rooms.

The report also covers another area, where Internet crime is known to flourish, or auction sites. In 2005, a study was done on software sold on eBay and roughly 50 percent of the items purchased had malicious/unwanted elements or had been tampered with.

While auction sites have worked with outside industries on preventing theft and abuse, they generally disclaim any responsibility for what occurs on their site. Additionally, there is little to no protection for the consumer buying these products (my opinion).

Because of this, the BSA is calling for auction sites to assume responsibility, step up the warning process on their sites and slow the process down by eliminating the "buy it now" process, which makes monitoring illegal sales nearly impossible.

The software industry isn't the only industry calling out issues with auction sites. In August, two bills were introduced to combat crime on auction sites, which were largely supported by the National Retail Federation. The sale of stolen or counterfeit goods in general has long been an issue on these sites. A good resource to learn about the danger of counterfeit goods in general is the International Anticounterfeting Coalition.

The BSA offers a lot of tips for consumers on how to avoid becoming a victim in their recently released report. It also offers a more visual means of learning by offering a video on the subject.

Suspected piracy can also be reported at http://www.bsacybersafety.com/ or by calling 1-888-NO-PIRACY.

Improved OnGuardOnLine Site Teaches Cyber Safety to the Average Person

One of the better places for the average person to learn about the sometimes murky waters of the Internet is free and sponsored by the Federal Trade Commission. Although OnGuardOnline.gov and AlertaEnLinea.gov, its Spanish-language counterpart have been around for awhile -- some new and exciting improvements have been made to the site with a just released Web 2.0 redesign.

The new and improved site allows users to grab and embed games and videos, search for topics on the site, take a “show of hands” poll, and have a more interactive experience while learning how to avoid becoming an Internet crime statistic.

Articles and games covering sixteen topics -- including social networking, phishing, email scams and laptop security; plenty of buttons and banners you can post on your blog or website; free publications consumers and organizations can order; and links to the OnGuard Online partners from the public and private sector.

I should add that a lot of good people from both the government and private sectors have given resources and their valuable time to assist the Federal Trade Commission with this site. Industry and government partners -- include the U.S. Department of Justice, Office of Justice Programs, Department of Homeland Security, Internal Revenue Service, United States Postal Inspection Service, Department of Commerce, Technology Administration, Securities and Exchange Commission, National Cyber Security Alliance, Anti-Phishing Working Group, i-SAFE, AARP, National Consumers League, Direct Marketing Association, WiredSafety.org, The SANS Institute, The National Association of Attorneys General, Better Business Bureau, NetFamilyNews, CompTIA, National Crime Prevention Council, Association of College Unions International, and the Latinos in Information Sciences and Technology Association.

In my opinion, this represents a valuable partnership in dealing with the ever growing problem of crime on the Internet. This also represents a very credible collaboration of resources and industry experts (my humble opinion).

There is also a lot of material that businesses and organizations can use to educate their people with. Frequently, I get approached on this subject and I will continue to recommend this site as a valuable resource. Of course, the benefits for the individual person wanting to protect themselves, or become more knowledgeable are there (free for the taking), also.

If you are one of those businesses or organizations wanting additional matertials, you can get free OnGuard Online publications. For 50 or more copies, visit ftc.gov/bulkorder. If you need less than 50 copies, call 1-877-FTC-HELP.

Report Reveals That Internet Fraud Threatens E-Commerce

The Center for American Progress just released a report indicating that not enough is being done to protect the public from fraud on the Internet. It's also warning that the convenience, choices and lower prices enjoyed by Internet users are at risk because of this.

They report reveals that high levels of fraud and abuse may cause more and more consumers to lose trust, a key-component of any successful business. Malicious software, phishing and spam were cited as primary causes for the high levels of fraud and abuse on the Internet.

Studies indicate that over 80 percent of all e-mail is spam. It should be noted that spam is the preferred delivery vehicle of fraud and abuse on the Internet. Malware and phishing normally start with a spam e-mail. In Phishing schemes -- which are designed to steal personal and financial information -- the use of malicious software to automatically steal information is on the rise. In the past, phishing normally relied on a social engineering scheme to accomplish this goal.

The Anti Phishing Working Group, an organization that tracks phishing activity, has noted an increase in the use of malicious software to phish information. They speculate that ability of e-criminals to use automated tools to spread crimeware (a.k.a. malware) could be the reason for the increase.

The report states that although the Federal Trade Commission is stepping up enforcement activity, it's resources are limited and more action by the State attorney generals is desperately needed. It cites as an example that over the past three years, only 11 cases against spyware distributors have been brought forward by the States, which is the same number taken for action by the FTC.

The Center for American Progress and the Center for Democracy and Technology asked States to provide data on the complaints they received 2006 and 2007. Thirty six States responded and most of them had a Internet related category listed in their top-ten complaints. It was also noted that overall Internet related complaints increased from 2006 to 2007. Eight of the States listed Internet related complaints in their top-three and four States listed them as being the number-one complaint.

The FTC, who gathers data on a much wider scale noted an increase of 16,000 Internet related complaints in 2007 versus the number received in 2006. When comparing the numbers to 2005, a 24,000 increase in complaints was noted.

The report points out that many experts speculate that not all cybercrime is reported or even discovered. Additionally, the standard for classifying it varies from State to State, which makes it hard to evaluate current statistical data. Given these factors, many believe the problem is understated.

In looking at the enforcement level by the States, the Center for American Progress and the Center for Democracy and Technology gathered information from annual and biennial reports, websites, news articles, and the bimonthly Cybercrime Newsletter released by the National Association of Attorneys General.

Data from the Cybercrime Newsletter revealed that 60 percent of the cases prosecuted were for the sexual enticement of minors or pornography. Crimes involving the theft of information or identity theft represented 8.9 percent of the total and 15.5 percent involved online sales and services. The majority of the cases involving online sales and services were for false advertising or the quality of a product or service.

The conclusion given by the researchers is that not very many crimes involving phishing, spyware, spam, adware and hacking were being effectively investigated or prosecuted. "Internet crime requires almost no expense to execute, carries potentially high financial rewards, and involves relatively little risk of being caught and punished," according to the report.

The monetary cost of all this activity isn't cheap, either. In 2007, an estimated $7.1 billion was lost due to phishing, viruses and malware in the United States, alone. Given that the estimated losses in 2006 was a mere $2 billion, this would lead a reasonable person to speculate that the problem is a growing one. Worldwide estimates put the losses at about $100 billion.

The report gives a possible reason for the increase in activity. With few overhead or start-up costs a phishing group can net about $250,000 a month and operate anonymously from just about anywhere in the world.

Do it yourself (DIY) phishing kits for sale on the Internet have been cited as a primary cause of more and more activity, also. Some of these DIY kits even come with technical support. The bottom line is that it no longer takes much technical knowledge to become a phisherman.

The report speculates that we shouldn't be surprised that online fraud and abuse are at high levels and calls for stronger deterrents. They believe that stronger action by the state attorneys general is key to this effort.

While more support at the State level is needed, I'm not sure if the States can control Internet crime all by themselves. Internet crime moves across borders with a click of a mouse and it's going to be difficult for Alabama to prosecute a spammer or phisherman living in Moscow, Shanghai, Montreal or London.

Two so-called spam kings were recently prosecuted by the federal government. One later escaped and killed himself and family members in the process. These arrests didn't seem to make much of a dent in the amount of spam being sent. Both of the government press releases on these stories mentioned they were catering to commercial clients. Any solution to crime on the Internet will have to take a long and hard look at what enables the activity to be too easy to facilitate in the first place.

Some blame the Internet Service Providers (which seem to be a dime a dozen) for looking the other way because spam brings in revenue for them. Of course, auction sites like eBay have long been criticized for looking the other way at the the criminal activity on their sites. Since Internet Service Providers and Auction sites operate worldwide with a click of the mouse, it's difficult to prosecute or investigate anything on the Internet.

This list of Internet crime enablers is long and the one's referenced regarding service providers and auction sites are merely two examples of them. But if you were to take a look at all them, they have one thing in common: which is maintaining an environment conducive to making money easily. The question is how long will it take for the financial and social costs of Internet fraud and abuse to inspire a more responsible and practical approach to the problem?

Bills Introduced to Combat Organized Crime on Auction Sites

While stories of individual people getting scammed on auction sites are legendary, individuals aren't only ones victimized on these sites. Large retailers and brand owners are victimized when their stolen or counterfeit merchandise is sold on these sites, also.

In response to this, two bills are being introduced to combat this problem in the halls of Congress.

The reason this has become a growing issue is that criminals can net 70 percent of the value of stolen merchandise on an auction site versus the going 30 percent received on street corners, flea markets and pawn shops. So far as all the knock-off (counterfeit) goods being sold on auction sites, it's hard to put a dollar loss to it, but many believe it's substantial.

According to the International Anticounterfeting Coalition, counterfeiting costs U.S. businesses $200 to $250 billion a year. Counterfeiting and e-fencing pose safety risks to the public-at-large, also. Outdated or merchandise that isn't what it is advertised to be could potentially poison people, or cause bodily harm when it doesn't work like it's supposed to.

Simply stated auction sites, provide an anonymous marketing environment to sell both stolen and counterfeit goods.

“By hiding behind the anonymity of the Internet, they can make more money with less risk of getting caught than selling to a stranger on a street corner who might turn out to be a police officer. This bill would lift that cloak and help law enforcement put on-line criminals where they belong – behind bars,” according to Joe LaRocca, the National Retail Federations Vice President of Loss Prevention.

To address this problem, a federal bill (H.R. 6713, the E-Fencing Enforcement Act of 2008) is being introduced by Representative Bobby Scott, chairman of the House Judiciary Committee’s Subcommittee on Crime, Terrorism and Homeland Security.

The bill will require on-line auction operators to maintain information about high-volume sellers and provide the information to a person with "standing" once a police report is filed. The definition of a person of standing would be a law enforcement officer or a representative from a company, who has an interest in the merchandise being illegally sold on an auction site.

This is the second bill introduced recently to combat organized retail crime, which costs retailers anywhere from $15 to 30 billion a year. On July 15th, H.R. 6491, the Organized Retail Crime Act of 2008, was introduced by Representative Brad Ellsworth, a former county sheriff, along Representative Jim Jordan, as the lead co-sponsor. The bill establishes that unless auction site owners can show specific steps to prove goods being sold were not being obtained by theft or fraud, they could be viewed as "facilitating" the activity. This bill will also require site operators to cooperate with the police and organizations with a stake in stopping the activity. In certain instances, it will also allow merchants to initiate civil actions over stolen merchandise being sold on an auction site.

In the past, auction operators have been criticized for not effectively cooperating with companies and law enforcement when they made an inquiry into suspected criminal activity on their sites. It has also been established that smaller (individual) victims and merchants often receive little to no assistance after being victimized in an Internet auction deal.

E-fencing, phishing, counterfeit goods and the use of fraudulent financial instruments to buy merchandise from unsuspecting customers have all victimized countless people and organizations on auction sites.

Criminals often lure people to do their dirty work, also. Recruits are normally harvested off the Internet, sometimes from job sites, and offered work to reship stolen merchandise and or launder money from fraudulent transactions. Much of this activity involves sending money, or hot merchandise across an International border --making it extremely difficult to track.

A lot of criminal activity is facilitated on auction sites by what is known as phishing. Phishing is where an account owner is tricked into giving up their account details, either via social engineering, or more and more often, after downloading some malicious sofware. The stolen account details are then used to take-over the account and use it for illicit purposes.

In fact, eBay and PayPal accounts are frequently the most phished brands out there.

Phishing, normally facilitated by spam e-mails, is another ever-growing criminal activity on the Internet. Recent studies by the Anti Phishing Working Group show that it is becoming more automated and malicious software (crimeware) used to automatically steal information is becoming more prevalent.

There is little doubt that a lot of the criminal activity on auction sites is sophisticated and reeks of organized crime.

For anyone investigating fraud on an auction site, the only way to effectively do so, is to have access to information quickly and with as little red tape as possible. A lot of these crimes cross over borders quickly and by the time and investigator gets what they need, the trail is often pretty cold.

When auction site owners -- who suffer no financial liability and collect a lot of revenue in fees from this activity -- don't cooperate or move too slowly, it only ensures that criminals will be laughing all the way to the bank.

Even the government has had their stolen inventory sold on eBay and Craigslist. In April, the GAO issued a report that military items, including F-14 components, were being sold on auction sites. In August of last year, a U.S. Attorney was quoted as saying that stamps being stolen from self service vending machines with cloned payment cards were being sold on auction sites. At the time, I ran a simple search query and found some pretty good deals on stamps. As of today, these great deals still exist. Many of them are being sold below cost and the last I checked the Postal Service still offers credit. Why would someone sell stamps below cost?

In my opinion, both of the bills don't only serve the large merchants out there, but have the potential to protect everybody from fraud on auction sites. While both of these bills are being driven by the National Retail Federation, I see a lot of benefits to passing them for everyone concerned with fraud on auction sites.

I highly recommend that these other people, join in with the NRF and the Congressmen involved, and support getting these bills passed.

Will One Spam King's Conviction and Another's Escape Mean Less E-Trash on the Internet?

Robert Soloway dubbed the "Spam King" was sentenced in Washington yesterday, according to an article in the Seattle Intelligencer.

For his misdeeds, Soloway was sentenced to just under four years. Notably, Soloway was the second person to be prosecuted under the Can-Spam Act. It should also be noted that the prosecutors asked for about twice the time in prison and with good behavior, Soloway will probably only serve about half of the sentence he received.

Like most of the many "Spam Kings" out there, Soloway allegedly used a botnet (army of zombie computers) to saturate the electronic universe with e-trash, including advertisements from commercial clients. To give everybody an idea of the scope of Soloway's activity, he allegedly sent out 90 million e-mails in a three-month period.

The made me wonder if anyone is looking at the commercial clients? Of course, everyone knows that "Spam Kings" send out a lot more than commercial advertisements, including a variety of scams designed to steal from unwary people. They also tout knock-off drugs, merchandise, software and porn.

Spam is also used to deliver malicious software, which can steal all your personal and financial information. Ironically, spam also delivers malware designed to turn a system (part of a botnet), which is then used to send out even more spam.

In fact, spam designed to send out even more spam best describes Soloway's operation. Using a company, Newport Internet Marketing Corporation (NIM), he offered a broadcast e-mail software product and broadcast e-mail services. His website promised a full refund if a customer wasn't satisfied, however in reality, if anyone ever complained they were threatened with financial charges and collection agencies.

According to the Department of Justice press release, one customer tried to complain about the amount of spam he was getting and Soloway's response was to send him even more spam.

The press release also mentions that he willfully failed to pay his taxes after earning more than $300,000 in 2005.

Interestingly, enough another "Spam King," Edward "Eddie" Davidson simply walked out of a minimum security facility in Colorado about the same time Soloway was sentenced. Davis allegedly made $3.5 million spamming for about 20 commercial clients. Like Soloway, he failed to pay any taxes on the proceeds of his misdeeds.

Unfortunately, Soloway's conviction or Davidson's escape is unlikely to make much of a dent in spam anytime in the near future. Earlier this month, Symantec reported blocking 3.5 million spam messages over the 4th of July holiday. Their monthly spam report reported that over 80 percent of all e-mail sent is spam. The 80 percent statistic (and greater) has been a sad fact for several months now.

Notable trends on the last report included using the China earthquake to spread viruses and the use of fake new flashes (like U.S.A. attacks Iran) to net Internet crime victims.

We probably shouldn't be too quick to celebrate Soloway's conviction. He is obviously just one of many "Spam Kings" operating out there. Hopefully, as time goes on, we will see more of these so-called spam superstars put behind bars. After all, just about anything that is distasteful or illegal on the Internet normally starts with a spam e-mail.

On a final note, both Soloway and Davidson seemed to be servicing a lot of commercial clients. Maybe if the legal emphasis shifted towards the people paying spammers, there would be less incentive (money) for spammers to pollute the Internet!

Update (7/25/08): In a horrifying twist to Eddie Davidson's escape, it has now been reported by the AFP that he killed himself after killing his wife and their three month old daughter. Davidson's seven month old son was left in the car unharmed and his sixteen year old daughter was shot in the neck before escaping.

Given these circumstances, I wonder if anyone is going to question why Davidson was locked up in a minumum security facility that he was able to walk away from?

Send Dad a "Phishy" E-Card for Father's Day

In case you forgot to send a Father's Day card, here are some free ones courtesy of the fine folks at the Federal Trade Commission designed to educate him about phishing, which is a leading cause of identity theft on the Internet.

These were sent to me courtesy of Alvaro Puig from the Federal Trade Commission’s Division of Consumer and Business Education in Washington , D.C.

Please note that most of the consumer awareness materials from the FTC are available in both English and Espanol.

Avaro wrote:

With Father’s Day right around the corner, I wanted to let you know about our Father’s Day phishing e-card. This e-card, which is available at www.ftc.gov/dad (and www.ftc.gov/padre in Spanish) gives “Dear Old Dad” some useful tips on how to recognize and avoid phishing emails and protect his personal information. The e-card also links to our newly released “Phishy” videos that are designed to create awareness of phishing in a humorous way.

The FTC and their government agency partners provide a lot of free educational resources about fraud, phishing and financial misdeeds on the Internet at OnGuardOnline.gov. A lot of these presentations are visual and great tools to learn, or spread the word!

In the war against fraud, there is no more powerful tool than communication. The reason for this is that no matter how good a scam is -- human beings are less likely to fall for it if they are aware of the consequences.

More consumer awareness information can be obtained on the FTC's website and it is available in both English and Espanol.

We are a long way to full disclosure in data breaches - even if we wanted to be!

I saw an article on PCWorld, written by Robert McMillan (IDG News), that according to the research firm Gartner -- not all data breaches are being reported by retailers.

I thought to myself ... here we go again ... burying our heads in the sand that all personal and financial information is hacked from retailers. Of course, that isn't to say that none of the stolen information is coming from retailers, either.

The conclusion was based on 50 retailers being interviewed and 21 of them saying they had been breached. Of these 21, allegedly only 3 had reported a data breach.

This led me to wonder if any of these retailers do business in an area, where disclosing data breaches is a matter of law?

My humble guess is that in the litigation happy society we live in today, no one is going to report anything unless they have to. As long as no one is certain (or they can get away with saying that) the information is probably buried, or someone comes up with a rationalization that it really didn't happen.

Going a little further, there has to be a lot of information being stolen that no one is even aware has been compromised. The fact that no one is aware it was compromised makes it easier to be used by the criminal element, effectively.

The sad truth is even if you could make computer systems bulletproof, human beings will continue to compromise information, either via social engineering techniques or to obtain financial compensation. We've made some of this information worth a lot of money.

Of course, information thieves often combine technology and social engineering, also. In the mysterious world of information crime, one shoe rarely fits all.

Right after reading the PCWorld article, I happened upon more research from Finjan, which might provide evidence that there must be a lot of computer systems out there that are NOT very "bulletproof."

As stated on Finjan's MCRC blog:

In our recent MPOM report, we reported on a Crimeserver hosting 1.4G of unprotected stolen data, including passwords, medical data, emails etc.

Many people asked us how we found the data. Was the data secure or not?

Although we cannot disclose all information to the public (for obvious reasons), I can say that the data on that Crimeserver was unprotected, meaning anyone could access it.

Today we came across another Crimeserver - it seems that we are finding one every other day...

Additionally, Finjan reported:

As we disclosed in our Q3/2006 Trend report, malicious code is hosted on caching servers of leading Search Engine Providers. This time we reported in our recent MPOM that stolen end-user data is also stored on these caching servers. Yes, your passwords, Social Security numbers, Online banking information …. no data is safe, as the examples below illustrate.

Even more alarming, it didn't take a lot of know-how to access all this information. The people at Finjan were able to do it, using simple Google searches.

I highly recommend taking a look at the entire blog post from Finjan (link provided at the bottom of this page) -- there are some alarming visual presentations indicating how much information is out there.

I'll include one, which shows a compromised (actual info blocked out) SSN:



The blog post also has visual presentations (screenshots) of user names and passwords to internal company sites, porn sites and online banking sites.

Now let me see ... if stolen information is being hosted on unprotected (anyone can access) crimeservers ... and it is being indexed (cached) by search engines ... it's probably safe to assume we don't have any real idea how much stolen information there is out there.

Also, please note it's safe to say not all this information came from retailers.

Last, but not least, I've seen commentary that we should blame Google for all this. First of all, I doubt that Google is the only place this information can be found. Another thing to contemplate is that thinking like this is as narrowly focused as thinking that retailers are to blame for most of the stolen information out there.

Unless we stop blaming each other -- we are going to be a long way from achieving transparency in data breaches. Exposing problems often is the first step in correcting them.

Until we embrace transparency, the people to blame (criminals) are going to be laughing all the to the bank.

Finjan post from their MCRC blog, here.

Oregon case reveals the tie between software piracy and identity theft!

(Photo courtesy of naveenium at Flickr)

Software Piracy is a multi-billion dollar issue. Whether it's hawked in a spam e-mail, a flea market or on a auction site -- it might not work as well as advertised -- and could even lead to identity theft.

You never know what might be installed in pirated software. The person selling it to you might add a little malicious software (containing a keylogger) and steal all your personal and financial information.

A recent case showing how pirated software leads to identity theft was announced by the Department of Justice:

An Oregon man pleaded guilty today to selling counterfeit computer software with a retail value of more than $1 million, in addition to aggravated identity theft and mail fraud, announced Assistant Attorney General of the Criminal Division Alice S. Fisher and Karin J. Immergut, U.S. Attorney for the District of Oregon. This case is part of the Justice Department’s initiative to combat online auction piracy.

Jeremiah Joseph Mondello, 23, of Eugene, Ore., pleaded guilty to one count each of criminal copyright infringement, aggravated identity theft and mail fraud before U.S. District Court Judge Ann L. Aiken in Eugene. Mondello faces up to 27 years in prison, a maximum fine of $500,000 and three years of supervised release. Sentencing has been set for July 23, 2008.

Although this only appears to be a small win in the overall problem, it illustrates the danger of installing unauthorized software on your system. You might get more than you bargained for:

Mondello admitted to stealing individuals’ identifying information to establish online payment accounts in their names. Mondello acquired victims’ names, bank account numbers and passwords by using a computer keystroke logger program to surreptitiously obtain this information. The keystroke logger program installed itself on the victim’s computer and then recorded the victim’s name and bank account information as the information was being typed. The program then electronically sent the information back to Mondello, and he used this stolen information to establish the online payment accounts.

In other words, the moral of the story is that the money you save buying knock-off software can easily be lost when the seller returns to clean out your financial assets.

Trust me, criminals are not honorable and they could care less, if you get left holding the bag.

Last, but not least, most victims of identity theft are able to get their financial institutions to write-off their losses. However, if they discover you used illegal software -- which happened to contain malicious capabilities -- my guess is they are going to deny your fraud claim.

DOJ credited the Software & Information Industry Association for their assistance in this conviction. This association represents the software industry and goes after software and content piracy. They provide a means to report instances of piracy and offer up to a million dollar reward for doing so.

Full press release on this matter, here.

China earthquake and Burma (Myanmar) cyclone inspire another round of charity fraud!

(Photo courtesy of IslamicReliefUSA at Flickr)

Last weekend, I lamented that the Western media wasn't reporting the expected fraud activity in the wake of the China earthquake and the Burma (Myanmar) cyclone.

Most of the scam activity, associated with the earthquake, was being reported out of China.

Having been extremely busy in my day job, I didn't get the chance to follow-up and see if this trend would continue. It did not and as expected, inboxes are being targeted with come-ons designed to take away from those, who would really benefit from our charitable impulses.

As expected, we are now seeing fraudsters, using their favorite technique (spam) to trick people out of their hard-earned money and (possibly) their personal and financial details.

The reason, I mention personal and financial details being stolen (identity theft) is because malware is being dropped on systems when unsuspecting people click on a link regarding a plea for financial assistance. Sadly, this more technical means of stealing information is becoming more and more commonplace. Not very intelligent criminals (my opinion) can easily buy all the software necessary to do it -- which sometimes comes with technical support -- right over the Internet.

Of course, identity theft, might not be the only intent in dropping the malware. Frequently, the intent is to take over your system and turn it into a member of a botnet so it can be used as a spam spewing zombie. Most of the time, the owner isn't aware their computer (zombie) is being used to flood cyberspace with spam e-mails.

Internet security firms are reporting suspicious e-mails asking for help and marketable domain names are fetching premium prices.

Sophos went on record that they had detected malicious software attached to some of these spam mails. McAfee also reported malware attached to electronic documents referencing the earthquake. The FBI issued an alert on this subject, also.

As a discaimer, at first sight, it can be hard to determine if a request for a donation is legitimate or not. Charity is a often practiced social-engineering ploy used by fraudsters and associated internet ghouls to steal money.

Besides using the Internet, charity fraudsters also use the telephone, snail mail, or even go door to door. Text messaging is another tool being used to commit charity fraud, also. This surfaced in the activity reported in China last week.

The best thing to do -- before handing over your hard earned money for an honorable cause -- is to make sure the entity receiving it is legitimate. Taking the time to check things out will help ensure the money goes where it is supposed to.

It might also be wise to give directly to an organization. Besides fraudsters, a lot of telemarketing types sell their services to charities and take a cut of the action. Simply stated, this means that less money will reach the people you are trying to help.

Listed below are some places, where you can cut out the middle-man, or avoid handing over your money to a scam artist. Please note, these organizations, might or might not be involved in the current earthquake and cyclone efforts. Current events often dictate the disaster come-on currently being used by fraudsters.

The United Way, http://national.unitedway.org/, 800 272-4630.

American Red Cross, http://www.redcross.org/, 800-HELP-NOW

Salvation Army, http://www.salvationarmyusa.org/, 800-SAL-ARMY

Network for Good, http://www.networkforgood.org/.

Habitat for Humanity, http://www.habitat.org/, 800-HABITAT.

Samaritan’s Purse, http://www.samaritanspurse.org/, 800 665-2843.

Save the Children, http://www.savethechildren.org/, 800 728-3843.

Humane Society of America, http://www.hsus.org/, 888 259-5431.

Feed the Children, http://www.feedthechildren.org/, 800-525-7575.

America’s Second Harvest, http://www.secondharvest.org/, 800 771-2303.

Additionally, if you are interested in charities that do a lot of work in Asia, here is another list:

Doctors without Borders
Mobilizing to provide medical assistance, blankets, water, sleeping mats and tents.

International Federation of Red Cross and Red Crescent Societies
Dispatching teams to assess damages and the needs of victims.

International Rescue Committee
Assessing immediate needs on the ground and preparing emergency response.

Mercy Corps
On the ground providing emergency relief, including water and tents.

Oxfam
On the ground assessing the response effort and responding to victims.

UNICEF
Sending emergency staff to distribute aid and make further assessments of the damage.

In more general terms, there are some excellent sites to check out, whether a charity is legitimate or not:

Better Business Bureau Wise Giving Alliance, http://www.bbb.org/charity/.

Charity Navigator, http://www.charitywatch.org/.

American Institute for Philanthropy, http://www.guidestar.org/.

Last, but not least - I would like to provide some resources to report suspected fraud activity.

If it is cyber related, report it to the Internet Crime Complaint Center.

For more general complaints, fraud can be reported to the Federal Trade Commisssion, here.