Scammers Are Getting Better at Hacking Your Smartphone

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This post comes from Bob Sullivan at partner site Credit.com.

As smartphone viruses creep closer to U.S. shores, malicious programmers behind them have become more ingenious, according to a report by computer security firm McAfee. Predictably, it’s all about the money — that is, hackers are learning how to turn your smartphone into cash for them.

One year ago, state-of-the-art smartphone viruses tricked the gadgets into dialing pricey international phone numbers or sending premium texts routed through accounts controlled by hackers, not unlike old-fashioned 1-900 toll call scams. But a new crop of sophisticated mobile phone viruses is worming its way into consumers’ handset software and enabling criminals to send themselves cash directly without a phone ever leaving your pocket.

“The type of threat is really evolving,” said Adam Wosotowsky, a threat researcher for McAfee Labs who helped prepare the McAfee Threats Report. For example, a new crop of mobile viruses intercept two-factor authentication codes sent as text messages by banks, cracking a system that has long been considered safe. Some phone viruses are smart enough to collect passwords and launch mobile bank apps, the report says.

Researchers are also discovering much more sophisticated infection ploys from mobile virus writers, Wosotowsky said. Rather than shoehorning malicious code into existing apps, some are even writing mobile malware from scratch. In one instance, McAfee found an online dating app that was completely fake, and designed only to infect a user’s phone.

“Even if the apps don’t really work, most users don’t bother uninstalling apps after they go on a download binge, so it works (for the virus writer),” he said.

‘This is a robbery!’

The McAfee report also found an explosion of “ransomware” viruses, both on PCs and mobile phones. With ransomware, a computer criminal infects a user’s gadget and makes it lock up, then demands the user pay $50 or $100 for software that allegedly cleans the infection. Often, users who pay up find their machines are still infected. McAfee said it found 320,000 different ransomware programs last quarter, double the amount from last year. That must mean ransomware is working for criminals; warnings issued by Scotland Yard, the FBI and other international agencies also show the extent of the ransomware problem.

The Android platform remains the most attractive target for mobile phone hackers, Wosotowsky said. The firm uncovered more than 17,000 Android viruses in the second quarter of this year, and expects 2013 to bring twice as many such viruses as 2012.

Google’s Android platform is more “open” than Apple’s iPhone: Android users can download and install new apps from anywhere, while iPhone users must use Apple’s App Store, making Android a better platform for hackers. The target is bigger, too. Worldwide, Android’s new shipment market share is now 80 percent, compared with iPhone’s 13 percent, according to IDC.

Non-English-speaking Android users, particularly in Asia, are the easiest targets for mobile virus writers, because they are much more likely to use third-party app sites instead of Google’s Play store. But American users shouldn’t take much comfort in that. Virus writers have upped their game in delivery mechanisms designed to hit Americans. Earlier this year, a mobile virus named NotCompatible attacked 10,000 U.S. phones daily, according to security firm Lookout. Its trick: using clever spam that appeared to come from a friend to fool recipients into clicking on a link and agreeing to download a malicious app.

In most attacks, hackers download a legitimate phone app, edit it to include a dangerous payload, and then upload it to an app store. What appears to be an innocent game for kids can be turned into a Trojan horse that intercepts every phone keystroke, and can now even initiate banking transfers without user intervention.

Such attacks can be lucrative. A malicious program named Eurograbber is blamed for stealing $47 million from 30,000 bank accounts this way, according to a report by security firm F-Secure.

And even if smartphone users avoid clicking on booby-trapped spam e-mails and downloading apps from rogue locations, they’re not entirely in the clear. Another disturbing trend: so-called cross-platform hacking, in which computer criminals infect a user’s PC with a virus, then use that PC to leap onto a victim’s smartphone the next time it’s attached via USB cable. Because the phone has a trust relationship with the PC, it allows installation of the bogus app.

“Keep in mind your online identity involves all your machines,” Wosotowsky said. “When you connect them together, they can infect each other. … We’re going to start seeing cross-over there.”

You can spot a possible hack by monitoring your credit regularly. You can pay for a monitoring service, or you can use the free Credit Report Card to watch your credit.

What to do?

  • Stick with app stores you know. Google’s Play store and Apple’s App Store aren’t foolproof, but they are close. Don’t be tempted to try apps you find other places online, even if the invitation comes from a friend. Having your phone hacked can be a lot more devastating than having your PC hacked; it’s not worth tempting fate.
  • Don’t allow an app you download to trigger a download of another app that’s outside the standard app stores. Even if you trust the first app, such escalation is a new trick from virus writers, Wosotowsky said.
  • If you are infected by ransomware, don’t pay! That probably won’t fix your computer. Go to another computer and find fix-it tools from reputable antivirus firms. (Don’t fall for “fixes” posted by other hackers.)

“Every aspect of our day-to-day life is online now, with mobile phones,” Wosotowsky said. “We are going to see lot more of malware targeted in that direction.”

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