Epsilon was warned about phishing attack that caused data breach

The massive data breach at email service provider Epsilon may have been caused by a targeted spear-phishing campaign that the company should have known about for at least four months, Australian newspaper ITNews reported today.

According to the Haymarket Media publication, Epsilon and Atlanta-based Silverpop, another email service provider that recently disclosed a breach, were both victims of a series of social-engineering attacks directed specifically against email service providers.

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ITNews reported that Epsilon should have known about the threat at least since last Nov. 24, when Return Path, a company that it uses for services such as tracking email delivery, issued an alert about the phishing attacks.

The alert, issued by Return Path senior director of security strategy Neil Schwartzman, warned of a “serious phishing attack” directed at email service providers, direct mailers and some gaming sites.

According to Schwartzman’s note, phishing emails were targeted “100 per cent at staff responsible for email operations” at more than 100 service providers.

“These targets have received emails typically with content that mentions the staffer by name, and purports to be from a couple, presumably friends or co-workers,” Schwartzman wrote in the alert.

The phishing attacks were sent to the targets from several different systems, including online greeting card sites, and via a botnet, Schwartzman had warned.

The spam email messages contained a link which took users to a malicious site from where particularly nasty malware would be downloaded to the user’s system.

The malware associated with the phishing campaign included Win32.BlkIC.IMG, which disabled anti-virus software, a Trojan keylogger called iStealer, which was used to steal passwords, and an administration tool called CyberGate, which is used to gain gain complete remote control of compromised systems, Schwartzman said in the alert.

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“This is an organized, deliberate, and destructive attack clearly intent on gaining access to industry-grade email deployment systems,” had warned in the note. “Further, the potential consequences should ESP client mailing lists be compromised at this time of the year is unimaginable.”

It’s not clear whether anyone at Epsilon, or Silverpop saw the alert, or how they may have responded if they did.

Neither email service provider responded to a Computerworld request for comment today.

According to ITNews, the breaches at Silverpop and Epsilon in the weeks that followed were caused by spear these phishing attacks.

Laura Atkins, founding partner at Word to the Wise, a Palo Alto, Calif.-based consultant that helps email providers manage mailing risks, said it’s hard to tell if the breach at Epsilon was caused by the phishing attacks that Return Path cited in its security alert.

“There certainly were a series of attacks on different email service providers back in November last year,” Atkins said. “It’s unclear if this was the result of those same attacks. Epsilon has not been very open about the breach.”

Atkins said that some of her company’s clients reported being hit with highly sophisticated spear-phishing attacks even before the Return Path advisory. “There was a very concerted spear phishing campaign going on,” in the weeks before the alert, she said.

Companies like Epsilon are big targets of hackers because they control very large databases containing names and email addresses, she said. Often such companies also hold behavioral data associated with those email addresses, Atkins added.

In recent years, email service providers have ramped up security controls, but there remain a lot of holes, she said

“Email service providers are at least moderately secure,” she said. “But they have not looked at threat trees and attack trees or brought in security experts to lock things down.”

Many providers still routinely let too many people have access to their databases of email information she said.

Meanwhile, in a statement released Wednesday, Epsilon parent company Allied Data said that after a “rigorous assessment” of the breach, it determined that only names and email addresses were compromised.

The company said it is investigating the breach aggressively.

“We will leave no stone unturned and are dealing with this malicious act by highly sophisticated cyber-thieves with the greatest sense of urgency,” Allied Data CEO Ed Heffernan said in a statement.

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan , or subscribe to Jaikumar’s RSS feed . His e-mail address is [email protected] .

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