“This is a Cyber-Stickup”—A CEO Briefing on CyberCrime

A Day in the Life of a Hacker

Although the weather was rainy and bleak in Sofia, Bulgaria, Yevgeny had a spring in his step as he quietly slipped up the stairs to an almost empty room above the Onda coffee shop with its valuable wireless Internet connection. He would have to wait to get his morning “Americano” coffee until he checked on the state of his “import/export” business. Sure enough, his e-mail contained an anonymous order for up to 250,000 “dolls” and an additional order for as many “cribs” as he could obtain.

Yevgeny had spent the last several days improving his software to assure a targeted, automated, consistent flow of inventory that would have a much lower percentage of “damage” as he euphemistically called it. He had developed quite a reputation for delivering reliable goods to buyers who had customers waiting to fully exploit what he sold. Yevgeny always chuckled at the use of dolls and cribs as descriptions of compromised user accounts and servers. It made him feel like the 007 that he had seen in American movies. It certainly didn’t hurt with his friends who viewed him as a very worldly, successful man. Why, this month he was on pace to make $600, three times the income of the average Bulgarian. With his new scripts, he would not only double his income, but he would begin to initiate his plan to advertise for some “entrepreneurial software engineers” to enlarge his one-man shop. Within a year his dream of a 1600 square foot, palatial luxury apartment in the Lozenets district would be realized, making him neighbors with American diplomats and foreign business executives. It would be a nice change from his 350 square foot apartment.

With a sudden lunge for his keyboard, Yevgeny jerked himself from such unprofitable dreaming. Now to check inventory. Indeed, it had been a good night’s work as his newly refined little software servant had performed wonders. Just look at all of those bank account numbers and passwords, too! And the best part was that most of them were from smaller companies without the resources to track him, although as a Bulgarian, he could care less. Not only would he fill all of his standing orders, he also had a bit left over to develop new buyers. Tonight he would have to join his friends at Chervilo for their customary night of celebration. As he lit his imported Marlboro, all he could think was, “God bless America, mother of opportunity!”

Does this read like a dime store novel? Perhaps, but this is the state of cybercrime in 2006.

A short “Hacker History”

The very first “port scanner” was called SATAN, released in 1993 by Dan Farmer. A port scanner is a tool used by network administrators and hackers alike for examining a system or network in depth, reporting on the services being provided by each machine and revealing potential weaknesses. SATAN, short for “Security Administrator Tool for Analyzing Networks”, was widely reviled in the press ostensibly because of its purpose, but also because of the implication its name gave to nefarious use. At the time I was a co-founder of Morning Star Technologies, where we were just beginning to experiment with possible applications of our newly invented Dynamic Firewall technology. In response to the buzz about SATAN, we wrote a rule that would detect port scans, tested it internally, and deployed it on our corporate firewall. Finally, after waiting a couple of weeks, one of our support staff came running into my office saying, “Look at the firewall logs!” Sure enough, the rule had detected and shut down access to someone probing our network.

Eight years later in 2001, I was testing my brand new cable modem connection with my brand new laptop and preparing to install my brand new firewall. Within a few seconds of connecting the cable modem to the laptop’s Ethernet port, my personal firewall displayed a pop-up window telling me that someone was trying to get into my computer. Closing the pop-up, I went back to work, but was interrupted again by another pop-up. And another. And another, every ten or fifteen seconds, until I disconnected the network cable and configured the firewall to ignore all inbound connection attempts.

These two stories illustrate basic differences between Internet security in its early days versus what we’ve seen in recent years. Thirteen years ago the Internet was still a friendly place, where probes against your firewall were probably just a system administrator with time on his hands trying out the latest network diagnostic program. His motivation? Curiosity. That, and the love of seeing a cool tool “work.” Was he a criminal? Probably not, although his ethics could certainly be questioned. The nearly continuous attacks back in 2001 were a completely different story; those probes were probably still individuals, but they had different goals. They wanted to break into my machine, to “own” it, to completely control it.

Were they criminals? Absolutely. But they were still loners, hackers working on their own, using the latest automated tools to search through huge numbers of Internet-attached computers, trying to find the ones that exhibited the specific weakness that they were looking for. Then they’d take the list of vulnerable computers their scanner had harvested and, one by one, they’d apply a specially crafted program called an “exploit” that knew exactly how to turn that weakness into total access.

Once they owned the machines, they’d use them for a variety of purposes. One important use was to help them cover their tracks. Rather than attacking a target directly from their own computer, they’d use one of their “owned” systems as a relay. Or two. Or more likely, twenty-five or fifty. Another use was to express their displeasure with whatever organization they currently had a beef with, be it Microsoft, the White House or their least favorite spammer. Sometimes all they’d do is deface the victim’s web site. But a more satisfyingly destructive strategy was to direct dozens or even hundreds of owned machines to send a continual stream of inquiries to the victim’s web server, flooding it so thoroughly that it would be unable to process legitimate requests.

But nearly every purpose was personal in some way—something that helped them hack other systems, something that made them feel better, or something that allowed them to express themselves or gave them bragging rights among their fellow hackers. There were a few professionals, stealing credit card numbers or transferring money from a victim’s account into theirs, but most were amateurs, doing it for the love of the game.

A Critical Turning Point—Viruses and Worms

Independent of this initial community of vandals that acquired the title “hacker,” certain programmers began developing viruses and worms that they would release into “the wild,” again, just for the sport of seeing them run. An incredible amount of damage was done because their experiments were just too successful, replicating at such prodigious rates that it often took whole teams of IT staffers to extinguish the virtual flame fronts roaring through corporate networks. Again, the authors were motivated almost exclusively by personal pride in having done something “big.” The 1999 Melissa virus appeared to have had no purpose other than propagation and fame. The Code Red worm of 2001 defaced Microsoft IIS web servers and then launched denial of service attacks against the White House and other sites. The Slammer worm of 1993 infected most of its 75,000 victims in a single ten-minute period, but performed no actions other than spreading rapidly. It did that exceptionally well, overwhelming hundreds of major backbone connections and essentially performing a denial of service attack on the entire Internet. These were all criminal activities, to be sure, but they were the work of vandals, not thieves.

But the potential of this new technology did not go unnoticed by the rest of the criminal world.

A Change in the Basic Nature of Attacks

Symantec provides an amazingly valuable service to the entire IT and security world by publishing its Symantec Internet Security Threat Report twice a year. This voluminous document draws from an immense volume of security data Symantec collects, providing analysis of past events and predictions of what to expect in the future. Let’s look at some of the trends:

Financial Services Targeted

Prior to 2005, attack victims appeared to be randomly chosen. Attacked and penetrated systems were more or less evenly distributed over all sites, from business to education to personal systems. But in the first half of 2005, Financial Services organizations leaped to third place, and by the second half of the year held first place by a commanding margin. Why? Because “that’s where the money is.”

The core focus of most profit-based attacks is the acquisition of information. Today’s most popular malware programs are those that allow attackers to record keystrokes, steal passwords, and download files from the compromised host. Theft of account names and passwords leads to theft from on-line financial accounts; theft of credit card information leads to fraudulent charges; theft of client account information leads to identity theft. 2005 saw the percentage of threats that targeted confidential information rise from 54% of all attacks to 80%.

Attack Code Exhibits Greater Maturity

Much of today’s malicious code is purposely designed to be small, with limited functionality. Once entrenched, however, the latest versions of these “bots” (short for robots) download additional modules that enhance their abilities in various ways. These include updating to later versions to overcome defenses recently developed by the security industry, or responding to detected local security software by installing weapons designed to overcome the discovered defenses. Many newer bots are employing a technique referred to by the press as a “rootkit” that allows the malicious software to make itself undetectable by virus scanners or other security software running on the same machine. Bots can also download components that refit the compromised machine to accomplish specific roles, as would be required when the machine’s “owner” sells it to another criminal for a specific purpose such as hosting Denial of Service attacks, Spam forwarding, keystroke logging, adware installation, or stealing confidential data. Over the course of 2005, this type of exploit rose from 63% to 88% of all malicious code.

Attack Code Gains Commercial Status

Increasingly, information on discovered vulnerabilities is now being sold, often to the highest bidder on E-Bay-like black market sites. In 2003, only a small handful of vulnerabilities were sold privately instead of being released to the public. In 2005, that number had increased to well over 100. As organized crime increasingly recognizes the economic value of unpublished vulnerabilities, they will exploit those weaknesses and sell the know-how to others who will do the same. Meanwhile software publishers are increasingly left in the dark about security flaws in their products, discovering them only when security companies catch viruses and worms in the act of penetrating customer systems. This time gap between hacker discovery and software vendor (e.g. MicroSoft) discovery creates a huge window of opportunity available for exploitation and makes it increasingly difficult for businesses to defend against newly developed attacks.

In the End It Is About One Simple Thing

Just imagine, in the past 20-25 years the act of hacking has “progressed” from an exercise of the curious, to an act of a maladjusted “geek”, to an exploit of a privateer to a highly organized business run by big crime. The truth is that Yevgeny in the opening story is far outnumbered by the Russian mafia and by crime syndicates in China, Bulgaria, North Korea and other places where western law enforcement cannot protect your ability to safely conduct business. And why would they not operate this way? It is efficient, clean, highly profitable with very little possibility of being caught and prosecuted. And with the “no boundaries” nature of the Internet, it is very possible to rob a small bank in Ohio for far more than the typical armed bank robber carries out the door. And the worst part of it is, you never see the gun or their face or a withdrawal slip when these 21st century criminals transfer money from your bank accounts into theirs.

Tagged as: attacks, cybercrime, hacker, owned, security