1 in 20 Android mobiles and iPhones to be infected by financial malware and Trojans within the next 12 months

09 August 2011
Since online fraud is mostly a big numbers game, attacking mobile bankers is not yet an effective fraud operation. But expect a change. In a year from now this is all going to look completely different as more users start banking from their mobile phone and fraudsters release their heavy guns. Trusteer has just released figures predicting that within 12 to 24 months over 1 in 20 (5.6%) of all Android phones and iPads/iPhones could become infected by Mobile malware if fraudsters start integrating zero-day mobile vulnerabilities into leading exploit kits.

Fraudsters have all the tools they need to effectively turn mobile malware into the biggest customer security problem we've ever seen. They are lacking just one thing - customer adoption. The number of users who bank online from their mobile devices is still relatively low. Additionally, transactions are not yet enabled for mobile devices on many banks’ websites.

Android's security architecture is not currently up to the challenge. This is reflected mainly in the ease of generating powerful fraudulent applications and the ease of distributing these applications. Fraudsters can easily build applications that have access to sensitive operating system resources such as text messages, voice, web traffic, and more. Users installing these applications do get a message with a list of resources the app is requesting access to but would usually ignore it as many applications request access to an extensive list of resources. Building a powerful fraudulent Android application that steals and abuses your identity and your bank account is almost trivial. Distributing these applications on the Android Market is even more trivial. There are no real controls around the submission process that could identify and prevent publishing malicious applications on these stores. Compared to Apple's App Store, Android Market is the Wild West. You can't always trust applications you download from it.

Fraudsters have already started to abuse this big security hole. Dozens of malicious applications have already been identified on the Android Market. Google has removed most of them but more keep coming. Trusteer has identified malicious applications on the Android Market which have stayed there for weeks before being taken off by Google. The process of identifying and removing malicious applications from the Android Market requires major improvements.

Most of the malicious applications which hit Android are not financial. However, in May this year we've seen the (already known) Man in the Mobile (MitMo) malware which has previously attacked Symbian, Blackberry, and Windows phones being ported to Android as well. This attack is designed to bypass banks' SMS Out of Band (OOB) authentication and transaction verification processes. The proximity of this attack to the recent FFIEC guidance which advises banks to consider, among other, Out of Band to fight malware attacks is ironic. It demonstrates exactly why the fraudsters are two steps ahead.

For those of you who don't know how OOB works here is a short description: The general idea is to fight malware that infects the user's machine. Once the user browses to a bank's website from a PC infected with financial malware such as Zeus or SpyEye, the malware takes over the web session and injects fraudulent transactions on behalf of the user. With OOB in place the bank sends a text message to the user's pre-registered phone number. The message includes the transaction details and a verification code. The user needs to copy the verification code from the mobile device back to the browser on the PC.

The assumption is that if the transaction was generated by malware the user will not complete the process and will not copy the confirmation code back to the browser and as a result the bank will not approve the transaction. The MitMo attack breaks this assumption by doing the following: Once the user gets infected and tries to access the bank's website the malware kicks in and asks the user to download an authentication or security component onto their mobile device in order to complete the login process. The user wrongly assumes this message comes from the bank while in reality it comes from the malware. Once the user installs the malware on the mobile device the fraudsters control both the user's PC and the user's phone. Next the malware generates a fraudulent transaction on behalf of the user. The bank then sends a confirmation message to the user's mobile device. The malware on the user's device reads the confirmation message and sends it to the malware on the PC. It then deletes the confirmation message from the user's mobile device so the user will not see it. The malware on the user's PC enters the confirmation code and approves the transaction.

The Android malware that spread On May this year came in different flavors. One of the flavors was even using the Trusteer brand to gain users trust and convince them to download the application. The malware itself was used in conjunction with Zeus The user was first infected with Zeus on their PC and then Zeus showed the message requesting the user to download the Android malware component. People who had already downloaded Trusteer Rapport are protected from this type of attack.

iOS is the operating system of the iPhone, iPad, and iPod. With iOS malware, it’s a slightly different story. It's not easy to create malicious applications that have access to device resources since iOS applies strict access control on applications. It's also not easy to introduce malicious applications on the App Store as Apple conducts a manual review of each submitted application which allows them to detect abusing applications. However, there is a hole in this security architecture and it's called jailbreaking. A jailbroken iOS device doesn't enforce access control and basically allows any app to do whatever it wants on the device. Unfortunately many users jailbreak their devices as they want to run all sorts of applications that are not on the App Store. But what's more unfortunate is that vulnerabilities in iOS could allow malicious websites to jailbreak a device and infect it with malware without the user's consent or knowledge.

All the building blocks are in place: Fraudsters are researching iOS and Android for vulnerabilities, they have effective exploit kits which can automate this process, they have large scale operations which compromise websites and force them to distribute malware, and they have effective malware for mobile which can commit fraud. In my opinion, this all leads to one conclusion - we are about to face one of the worse security problems ever and it won't be long before we do.

Anti-malware solutions for mobile phones are hardly the answer to this problem. These solutions are not much different than their PC counterparts. They're based on scanning applications installed on the device against a list of known malicious applications. This type of solution cannot scale when the number of malicious applications explodes. As mobile malware numbers increase we're about to face the very same problem we're currently facing with desktop anti-virus solutions- low effectiveness.

A different solution that takes a different approach for mobile security is required - one that can protect these devices from getting infected to begin with and can protect mobile communication with banks from malware that may end up on the device. This concept which has been successfully used by Trusteer Rapport to protect 150 banks across the world is now available for the iOS and Android.

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