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Panda report reveals thriving rogueware economy

Panda Security’s malware analysis and detection laboratory has released a comprehensive study on the proliferation of rogueware into the cyber-crime economy.

Rogueware consists of any kind of fake software solution that attempts to steal money from PC users by luring them into paying to remove nonexistent threats. Panda predicts that it will record more than 637,000 new rogueware samples by the end of Q3 2009, a tenfold increase in less than a year. Approximately 35 million computers are newly infected with rogueware each month (approximately 3.5% of all computers), and cyber-criminals are earning approximately $34 million per month through rogueware attacks.

“The Business of Rogueware”, Panda’s report, reviews the various forms of rogueware that have been created, and shows how this new class of malware has become an instrumental player in the overall cybercriminal economy. The study also provides in depth analysis on the increasingly sophisticated social engineering techniques used by cyber-criminals to distribute rogueware via Facebook, MySpace, Twitter and Google.

In early 2009 social media sites such as Facebook, MySpace, Twitter, and Digg, became large targets for rogueware distributors. The top five social media attacks involving rogueware are:

1. SEO attack against Ford Motor Company

2. Comments on Digg.com leading to rogueware

3. Twitter trending topics lead to rogueware

4. Rogueware exploits WordPress vulnerability to facilitate Blackhat SEO attack

5. Koobface moves to Twitter

“Rogueware is so popular among cyber-criminals primarily because they do not need to steal users’ personal information like passwords or account numbers in order to profit from their victims,” says Jeremy Matthews, head of Panda’s sub-Saharan operations. “By taking advantage of the fear in malware attacks, they prey upon willing buyers of their fake anti-virus software, and are finding more and more ways to get to their victims, especially since popular social networking sites have become mainstream.”

Rogueware morphs quickly and proves difficult to detect

There are approximately 200 different families of rogueware, and Panda expects the variations to continue to grow. In the first quarter of 2009 alone, more new strains were created than in all of 2008. The second quarter painted an even bleaker picture, with the emergence of four times as many samples as in all of 2008. In Q3, Panda forecasts a rogueware total greater than the previous eighteen months combined.

The primary reason for the creation of so many variants is to avoid signature-based detection by (legitimate) antivirus programs. The use of behavioural analysis, which works well with worms and Trojans, is of limited use in this type of malware because the programs themselves do not act maliciously on computers, other than displaying false information. However, Panda Security has started to identify more advanced malware variants that are using typical Trojan features, rootkits and other techniques to subvert virus detection technologies.

How rogueware business works – and tracking the source

The Panda report details how the rogueware business works. The rogueware business model consists of two major parts: programme creators and distributors — not unlike a traditional business. The creators are in charge of making rogue applications, providing the distribution platforms, payment gateways, and other back office services. The affiliates are in charge of distributing the rogueware to as many people and as quickly as possible.

Panda’s research reveals that the affiliates are mostly comprised of Eastern Europeans recruited from underground hacking forums. They earn a variable amount per each install and between 50-90 percent commissions for completed sales. The Panda report includes financial statements and photos from events hosted by the leaders of these organizations that are not dissimilar to corporate sales events.

To read the full report, click here.

For real-time updates on Panda’s research, follow @Panda_Security