Criminals can make as much as $5 million a year by planting nearly worthless security software on PCs, then badgering users with so many bogus malware warnings that they fork over their credit card, a noted crimeware researcher said today.
That’s the estimate of the annual income a dedicated crook could earn by pumping fake antivirus software, dubbed “scareware” by some, said Joe Stewart, director of malware research at SecureWorks Inc.
Stewart led an investigation into a Russian-based operation in which affiliate members seed PCs with Antivirus XP 2008, recently renamed Antivirus XP 2009, then reap commissions of up to 90 per cent on the software’s $40 to $50 price tag. The program is virtually worthless and is able to spot only a handful actual threats.
After convincing a real cybercrook to provide a recommendation to an affiliate program dubbed “Bakasoftware,” Stewart accessed records that showed some members pulled in as much as $146,000 in just 10 days.
“We were able to convince another affiliate [of our bona fides], and got an invitation that let us see the back end of the affiliate site and see how the promotion works,” Stewart explained.
Although the Bakasoftware program had been known to researchers, its operations had received little, if any, analysis, since the program’s site is in Russian and the invitation-only requirement for new memberships made it easy for the criminals to keep outsiders at arm’s length.
During SecureWorks’ investigation, Stewart also stumbled across messages posted on Russian forums by a hacker calling himself “NeoN” who claimed to have broken into the Bakasoftware administrative server. NeoN posted evidence that Bakasoftware affiliate members had raked in between $75,000 and $158,000 in one week.
NeoN tried to steal from the crooks but was blocked, said Stewart. Soon after that, however, Bakasoftware’s administrator, a user pegged only as “kreb,” changed members’ access passwords.
Bogus antivirus programs are not a new criminal tactic, but using them to collect money from naive users has been on a major upswing. The increase, in turn, has prompted reactions from some technology companies.
Just last month, for instance, Microsoft’s Internet Safety Enforcement joined the attorney general of Washington state to file several lawsuits against suspected scareware distributors.
The vendors were charged under Washington’s Computer Spyware Act. The attorney general’s office referred to them in a media alert sent as “aggressive marketers of scareware.”
This wasn’t the first time Microsoft(Nasdaq: MSFT) and Washington’s attorney general teamed up to fight scareware.
In early 2006, they jointly sued Secure Computer LLC, a security software company they accused of using fake error messages to scare users into buying its Spyware Cleaner software. Secure Computer eventually paid $1 million to settle the charges.
Washington’s attorney general has also brought lawsuits against companies such as Securelink Networks and High Falls Media, as well as the makers of a product called QuickShield, all of which were accused of marketing their products using deceptive techniques such as fake alert messages.
Fake alert messages can be effective. In September, researchers at North Carolina State University reported that computer users are highly likely to click on fake Windows error messages. In their study, nearly two-thirds of respondents clicked “OK” when presented with a phony Windows pop-up message.
The use of these fake messages is a growing problem on the Internet, said Katherine Tassi, Washington’s assistant attorney general, in an interview earlier this week.
Scammers are “getting more and more creative, and putting more and more effort into making them look like security messages,” she said.
The most prevalent scareware program in circulation today is software called Antivirus XP 2008, according to Alex Eckelberry, president of Sunbelt Software Inc.
Often installed on a PC without proper notification, the software bombards victims with fake security warnings, trying to convince them to buy worthless programs that sometimes even harm their PCs.
Scareware is “a huge moneymaker in the underground,” according to Stewart. “It carries little risk, because the crooks are not out and out stealing credit cards or bank-account details. So even if law enforcement finds out about them, they’re not going to be first on the list.”
The crooks also have a tenuous excuse, said Stewart, because his analysis of Antivirus XP showed that it did, in fact, detect a very small number of threats. “They have some plausible deniability,” he argued.
“They could just say they didn’t know that the program sucked so badly.”
Useless security programs like Antivirus XP rely on their near-constant blizzard of pop-up warnings — all faked — to irritate or worry users enough to pay for the software. Only after paying for the program, then registering it, do the pop-ups stop.
The brazenness of the criminals’ claims are astounding: On a PC running a pristine, just-installed copy of Windows, Stewart said that Antivirus XP “found” and “disinfected” more then 300 nonexistent threats.
But while affiliates can make serious amounts of money, Stewart speculated that Bakasoftware’s operator might be making even more. And not by just taking his cut of the money coming in.
“We think that Bakasoftware might just serve as a way to launder money,” Stewart said, adding that there’s some evidence that stolen credit cards are used by at least one affiliate member to pay for downloaded and installed copies of Antivirus XP.
Even though the bulk of those payments are denied by the credit card companies, enough get through to launder significant sums. “From what we can tell, it looks like [Bakasoftware] may be doing this themselves,” said Stewart, “and hiding a smaller volume of fraudulent money in the larger volume of legitimate credit card payments users are making for the software.”
The Bakasoftware operation continues, Stewart said. “I don’t think they’ve noticed our investigation,” he said. But stopping even one affiliate program, much less the scores that are active, is nearly impossible.
“The best way to make money as a criminal is to set up an affiliate program of some kind, then get someone else to do the dirty work,” said Stewart. “They don’t even need to work hard at it [to make plenty of money].”
