Technologically savvy criminals have begun creating fraudulent advertising networks as a mechanism to spread malware, potentially escaping the detection of sentinel programs, such as Google's Bouncer and Apple's App Store vetting process, aimed at detecting malicious code, security researchers say.

Researchers at network security firm Palo Alto Networks identified an advertising network -- apparently operated from Asia -- that has been stealthily infecting Android-based mobile devices with malicious software, the company stated in a blog post published on Monday. The attack is unrecognized by current mobile-security software and runs quietly in memory until the user attempts to install an application, at which point the program attempts to hitchhike on the installation process.

"We have all these attacks slipping through an Asian ad network, and all the malware coming out of that network is essentially is unknown," says Wade Williamson, a senior security analyst at Palo Alto. "It both doesn't have a signature with any of the mobile antivirus apps ... it's a delivery mechanism that is proving very successful."

Advertising has taken off as the dominant form of revenue for mobile application makers. Facebook's financial results released in late July highlights the trend. Mobile advertising accounted for 41 percent of revenue in the second quarter, up from 14 percent a year earlier, according to the firm.

Smaller players have been reliant on advertising as well. More than half of all free mobile applications -- and 28 percent of all paid applications -- include code from advertising frameworks, according to Appthority, which rates mobile applications based on their security and privacy.

While advertising networks that have failed to vet their clientele have caused some security problems for PC users in the past, the security issue has spread to mobile devices as well. Earlier this year, mobile-security firm Lookout found that a Russian ad network appeared to have been created with the express purpose of infecting users. The ad network, dubbed BadNews, had been built into nearly three dozen apps with at least 2.2 millions downloads, the firm stated. "BadNews is spun to look like an ordinary advertising network SDK and is hosted in a number of innocuous applications that range from Russian dictionary apps to popular games."

[Researchers demonstrate how ads invoking JavaScript on viewers' browsers en masse could create untraceable networks to wreak DDoS damage. See Creating Browser-Based Botnets Through Online Ad Networks.]

The problem with ad frameworks on mobile devices is that, unlike Flash ads in browsers that can be blocked, the advertising software development kit is built into the mobile application, Palo Alto's Williamson says. The infrastructure of an advertising network is not much different than a home-grown botnet, he says.

"The most intriguing part is that these ad networks are essentially botnets that are sending approved content, and the only difference between a good one and a bad one is the content that it sends," he says.

For the most part, there is little that end users can do unless their network security software or appliance catches the suspicious traffic from malicious applications that make it onto mobile devices. Instead, developers of mobile applications should be cautious with the advertising networks that they incorporate into their applications, says Domingo Guerra, president and co-founder of Appthority.

"Advertising networks have been great to help monetize developers' apps, but they have also added security issues," he says. "They have, in many cases, lowered the overall security profile of the application."

In its recent study of the top-100 paid and free applications on both Android and iOS devices, Appthority found that 83 percent of the top mobile applications had risky behaviors that compromised the user's security or privacy. In many cases, the risky behavior may not have been explicitly programmed into the application, but into the advertising network's software development kit.

Lookout has seen the same problem and advises developers to beware of less reputable advertising networks and any other code libraries.

"Developers need to pay very close attention to any third-party libraries they include in their applications," Lookout stated in its blog post. "Unsafe libraries can put their users and reputation at risk."

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