Android malware used to mask online fraud, says expert

Computerworld - Android malware being automatically distributed from hacked websites looks like it's being used to mask online purchases, and could be part of a fraud gang's new push into mobile, researchers said today.

"The malware essentially turns your Android phone into a tunnel that can bounce network traffic off your phone," said Kevin Mahaffrey, co-founder and CTO of Lookout Security, a San Francisco-based firm that focuses on Android.

Lookout first published information about the new malware, dubbed "NotCompatible," on Wednesday. Further analysis, however, has revealed the most likely reason why cyber criminals are spreading the malware.

"There are a couple of ways they can profit from this," said Mahaffrey in an interview. "One is general online fraud, the other is targeted attacks against enterprises. We haven't seen any evidence [of the latter], and have confirmed that it is engaged in online purchasing activity."

Once installed, NotCompatible turns an infected Android device into a proxy, through which hackers can then direct data packets, in essence disguising the real source of that traffic by using the compromised devices as middlemen.

Lookout has monitored traffic through NotCompatible-infected Android devices to purchase tickets via TicketMaster, for example, as well as other goods and services.

It's almost certain that the controllers of NotCompatible are using stolen credit cards to purchase products, said Mahaffrey: There's little reason to divert traffic through a proxy if the purchases are legitimate.

NotCompatible uses a never-seen-on-Android attack vector, Mahaffrey and other security experts said this week. "This is the first time that [attackers] have used legitimate websites to serve Android malware," said Mahaffrey. "That's what caught our eye.... We see Android malware all the time, but it's usually served using social engineering."

Mahaffrey was referring to the tactic of enticing users to download and install Trojan horses posing as legitimate apps.

When Android phones or tablets browse to one of the compromised websites, the devices are shunted to hacker-controlled servers, which then automatically download NotCompatible. The malware poses as a security update and asks the user to approve the installation.

While some media reports have characterized NotCompatible as a "drive-by" attack, that's not entirely accurate, said both Mahaffrey and Liam O Murchu, manager of operations with Symantec's security response team. At least not according to the usual definition of the term.

"Drive-by" typically describes attacks that are automatically triggered as soon as a user browses to an infected website, and rely on unpatched vulnerabilities to install malware.

That's not the case with NotCompatible, which although it's downloaded to an Android phone or tablet automatically, still requires some help from the user to be installed. NotCompatible does not exploit an Android vulnerability.