SMS text messaging is the most prevalent form of cybercrime on mobile phones today, a scam that charges premium SMS messages to the unwitting victim. Researchers from mobile security firm Lookout Security presented a rare inside look at a major chunk of these operations out of Russia, which mainly target Russian and Eastern European Android users and account for more than 60 percent of all mobile malware in that region. The ten main organizations rely on affiliates to market and distribute the malware and provide them with the point-and-click tools to set up the scams.
The ten organizations have thousands of websites and affiliate marketers who distribute their scams. They write the Android malware and offer online tools and support for affiliates to configure the scams that lure victims and to track the success of the scams, says Ryan Smith, senior research and response engineer with Lookout, which has been investigating these attacks since December 2012.
They also manage the business relationships between the affiliates and the SMS short-code registrars, he says.
"They are a service provider," Smith says. "They create the business relationships with these resellers of short codes and they'll handle the finances ... The commoditization of this and how there's such an industry around this [shows] they're building a business model."
Smith says Lookout doesn't have specific evidence of a connection between the SMS scam organizations and traditional Russian cybercriminal syndicates, but it's likely that some of them have other types of cybercrime scams as well based on the sophistication and commoditization of their approach, he says.
"With the sophistication just on the Android code alone, you can see they are spending time and effort trying to add new features and obfuscation techniques, and new distribution channels and themes," he says. "SMS fraud is hot now, but say banking fraud turns out to be [profitable] tomorrow, maybe they shift gears and try to make their money on that.
"These guys are in it for the long-haul," Smith says.
[Using the ability to inject malicious code into applications on Android devices, a researcher demonstrates how to create the infrastructure to spy on mobile users . See Researcher To Demo Spy-Phone At Black Hat .]
The attacks lure mobile users with Tweets and mobile ads for free Angry Birds, Skype and other apps, games, pornography, or MP3s, and once the victim clicks on the link or a mobile ad for the goods, he or she unknowingly gets malware on the device. That malware then allows the bad guys to secretly charge premium SMS text messages to their mobile account.
The researchers found some 50,000 Twitter handles being used for these operations. The malware associated with Russian-based toll fraud made up more than half of all malware detected by Lookout in the first half of this year.
Lookout found that the SMS malware has evolved and become more complex and sophisticated over time, and the organizations behind it release new versions every one- to two weeks. They also employ obfuscation and encrypt their configuration files to evade detection.
The full Lookout report on the scams is available here for download.
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