Crooks can make $5M a year shilling fake security software

Scareware affiliate operation may also be a money-laundering front, says researcher

Criminals can make as much as US$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 Friday.

That's the estimate of the annual income a dedicated crook could earn by pumping fake anti-virus software, dubbed "scareware" by some, said Joe Stewart, director of malware research at SecureWorks.

Stewart led an investigation into a Russian-based operation where affiliate members seed PCs with Antivirus XP 2008, recently renamed Antivirus XP 2009, then reap commissions of up to 90 percent on the software's US$40 to $50 price tag. The program is virtually worthless, 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 US$146,000 in just 10 days.

"We were able to convince another affiliate [of our bonafides], 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, there had been little, if any, analysis done on its operation, since the program's site is in Russian and the invitation-only requirement for new memberships meant it was 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 US$75,000 and $158,000 in one week.

NeoN tried to steal from the crooks, said Stewart, but was blocked. Soon after that, however, Bakasoftware's administrator, a user pegged only as "kreb," changed members' access passwords.

Bogus anti-virus 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 joined the attorney general of Washington state to file several lawsuits against suspected scareware distributors.

"This is a huge moneymaker in the underground," Stewart said. "It carries little risk, because they're 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."

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