The economics of fear

In the world of computer security, there are two kinds of anti-virus software – stuff that works and stuff that doesn’t work at all. The problem for the average user is telling them apart, and this is something which criminals can make money from. A lot of money.
Have you ever had a window pop-up on your computer that said something along the lines of:

 “Warning!!! Your computer contains various signs of viruses and malware programs. Your system requires immediate anti virus check. Click to perform a quick and free scan of your PC

You have? Well you’re not alone.
I want to share with you some research carried out by one of my colleagues in TrendLabs, Bob McArdle. I can’t mention any names for fear of prejudicing ongoing investigations, but to be honest the names are irrelevant as they change so often anyway. Over the course of a year one criminal gang, let’s just call them Company X, made over $180 million US dollars by selling malware to their victims in at least 30 different countries around the globe.
You would be forgiven for asking why people would pay for malicious software and the answer is of course, they had no idea it was malicious in the first place.
The gang creates very convincing looking fake security programs designed to fool the victim into believing that their computer is badly infected. These scareware programs are then distributed by creating web pages designed to rank very highly in search engine results for popular current search terms or newsworthy events. As soon as the malicious search result is clicked a pop-up message like the above appears and the infection chain begins.
Here is a video of one such scam in action related to this incident I blogged about a while ago.

So how did they make so much money? Well firstly while the scan on offer might be free, the bogus results always show the machine to be very badly infected when in fact no scan at all has taken place. The worried user is then prompted to pay for the full version of the “security” software so that the non-existent malware can be cleaned up. So now, you have given your credit card details to criminals, downloaded malware onto your PC and paid somewhere between $50 – $100 US dollars for the privilege. This game is a volume one – if the gang can redirect 100,000 searches and only 1% of them pay for the product – they net $50,000 US for a day’s work.
The second part of the business model involves these machines that the criminals have now infected. As the infected user surfs the web, the malicious software quietly replaces all of the ads the user sees with ads belonging to one of the gang’s affiliates, most often pushing fake pharmaceuticals and the like. The gang get a kickback of two or three cents every single time an advertisement is replaced. Logs from one of the gang’s servers showed about a million ads replaced per day, netting them another $25,000 US per day, and this was only one of the gang’s botnets. So that’s $25K per botnet, per day.
The third part of Company X’s business model revolved around customer support strangely enough. Company X’s biggest problem of course, was credit card refunds. Customers who realised that they had been scammed would contact their card provider demanding a refund. After a while the credit card provider would refuse to do business with Company X and Company X would need to create another fake subsidiary company, complete with Fake IDs for all of their directors. To combat this, these criminals decided to invest heavily in call centres – setting up call centres in the US, Asia and Eastern Europe.
You see the Rogue AV would regularly ask the users to update their version, paying a small fee to do so – and would annoy the user with pop-ups until they did so. A lot of customers complied, however others rang the support line demanding the product be fixed. Each Rogue AV had a couple of settings that could be altered so that the users would never be prompted for updates again – the staff at the call centres simply stepped the users through to this point, all for the modest fee of $20 for the phone call.
Think before you click, not all security software is created equal.

4 thoughts on “The economics of fear

  1. Fenix

    Jajaja, that was pretty hilarous. Of course, it was not the same for the people that fell for it.
    That makes me remeber of an “antispyware” soft that one of the users installed, doing almost the same as this one, but that was a couple years ago.
    I like your style, I’ll be visiting you sometimes.

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