Home > Identity Theft > Scammers Getting Better at Hacking Your Smartphone

Comments 0 Comments

As smartphone viruses creep closer to U.S. shores, malicious programmers behind them have become more ingenious, according to a report issued Tuesday 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 are worming their 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, said Wosotowsky. Rather than shoe-horning 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 users’ 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 users’ 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 to 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.

Red Tape Wrestling Tips

  • Stick with app stores you know. Google’s Play store and Apple’s App Store aren’t fool-proof, 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.”

Image: iStockphoto

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team