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

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

October 31, 2008 12:00 PM ET

Computerworld - 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% 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 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."

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."

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