IronPort Research Discovers Links Between Malware Originators and Illegal Online Pharmaceutical Supply Chain

Market Wire, June, 2008

IronPort® Systems, a leading provider of enterprise spam, virus and spyware protection, and now part of Cisco (NASDAQ: CSCO), today announced that recent research has identified a link between originators of malware, such as Storm, and illegal pharmaceutical supply chain businesses that recruit the botnets to send spam promoting their websites. By converting spam into high-value pharmaceutical purchases, these supply chain enterprises allow the monetization of spamming botnets, providing an enormous profit motivation for botnet attacks. In an update to its annual Internet Security Trends Report, IronPort analyzes the impact of these botnets and uncovers the true drivers of pharmacy spam and continued malware innovation.

"Our previous research revealed an extremely sophisticated supply chain behind the illegal pharmacy products shipped after orders were placed on botnet-spammed Canadian pharmacy websites. But the relationship between the technology-focused botnet masters and the global supply chain organizations was murky until now," said Patrick Peterson, vice president of technology at IronPort and a Cisco fellow. "Our research has revealed a smoking gun that shows that Storm and other botnet spam generates commissionable orders, which are then fulfilled by the supply chains, generating revenue in excess of (US)$150 million per year."

IronPort's research revealed that more than 80 percent of Storm botnet spam advertises online pharmacy brands. This spam is sent by millions of consumers' personal computers, which have been infected by the Storm worm via a multitude of sophisticated social engineering tricks and web-based exploits. Further investigation revealed that spam templates, "spamvertized" URLs, website designs, credit card processing, product fulfillment and customer support were being provided by a Russian criminal organization that operates in conjunction with Storm.

This criminal organization recruits botnet spamming partners to advertise their illegal pharmacy websites, which receive a 40 percent commission on sales orders. The organization offers fulfillment of the pharmaceutical product orders, credit card processing and customer support services. However, IronPort-sponsored pharmacological testing revealed that two-thirds of the shipments contained the active ingredient but were not the correct dosage, while the others were placebos. As a result, consumers take a significant risk of ingesting an uncontrolled substance from overseas distributors.

Details on the Storm botnet and the connection with the supply chain can be found in IronPort's special report "2008 Internet Malware Trends: Storm and the Future of Social Engineering." This report also identifies a number of ways in which malware is being used to infect host PCs to bypass security software. These methods include:

--  Webmail spam. Sophisticated bots are operating in conjunction with
    automated and manual Captcha-breaking processes to create large numbers of
    free webmail accounts. ("Captcha" stands for Completely Automated Public
    Turing Test to Tell Computers and Humans Apart.  A common Captcha test
    requires someone to type a series of distorted letters and numbers to
    ensure that the response is not computer-generated.)  After the accounts
    are created, the bots send out spam using these accounts, and the spam
    recipient observes the messages as originating from a legitimate ISP's mail
    servers, not from the botnet. These "theft of reputation" attacks accounted
    for more than 5 percent of all spam in the first quarter of 2008, up from
    less than 1 percent the previous quarter.
--  Google exploitation. Next-generation malware is using Google's "I'm
    feeling lucky" search option to channel traffic to infected sites. An
    estimated 1.3 percent of all Google searches return malware sites as valid
    results. Given the tremendous volume of searches carried out every minute,
    this translates into a potentially huge opportunity for malware
    distributors.
--  iFrame Injections. This is a redirection that happens when a user
    visits a website that has malicious code embedded, like JavaScript. These
    websites can appear to be well-known, "legitimate" websites or specifically
    created botsites that rank high in search engine results. The JavaScript
    tells the browsers to grab a file from another web server hosting the
    actual malicious Trojan, often through an embedded iFrame. The Trojan then
    installs in the background without the users knowledge. Once installed the
    Trojan can do a number of things like stealing passwords or system data.
    

The botnets examined in the report are unique in that they tied spam campaigns to current events or websites of interest, using a blend of email and the web to propagate. Additionally, these decentralized and highly coordinated attacks enabled a variety of Internet assaults, from email and blog spam to phishing, instant messaging (IM) attacks and distributed denial-of-service (DDoS) attacks.