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LAS VEGAS – Cyber gangs have begun using the digital equivalent of invisible ink to disguise the malicious coding that helps them take control of your computer and put it to criminal use.

Steganography—the craft of hiding something seemingly out in the open—is an old secret agent trick. Now cybercriminals have adapted the technique to help them carry out drive-by download infections, according to research findings disclosed at the Black Hat conference here this morning by Dell SecureWorks senior researcher Dr. Brett Stone-Gross.

In a drive-by download, malicious software gets inserted into the web browser of an unsuspecting Internet user—just by navigating to a corrupted web page.

Specifically, Stone-Gross uncovered the latest techniques bad guys are using for hiding something called a malware downloader, whose function is to relay commands to an infected computer. Criminals use steganography to make malware downloaders largely invisible to antivirus filters and cleanup tools.

This cloaking technique has helped the bad guys sustain drive-by infections on eHow.com, a high-traffic do-it-yourself site, and on Livestrong.com, a nutrition and fitness site. “By compromising these high-profile websites, they were able to direct a lot of traffic to a malicious server that then infects computers with additional malware,” says Stone-Gross.

The bad guys’ end game, in this particular instance, was to replenish networks of infected computers known as a botnets. They then sent instructions for the botnets to repeatedly click on certain ads as part of a click fraud scheme designed to trigger payments to the crooks.

Botnet Use Growing

Botnets are the highly versatile power plants of cybercrime and are often comprised of 10,000 or more infected computers that respond to commands from a lone controller. Botnets spread spam and infections, launch denial of service attacks, conduct click fraud campaigns and hijack online bank accounts.

And botnets increasingly are being used by crime rings and spying collectives to infiltrate and plunder company and government networks. They are useful for carrying out industrial espionage, wire fraud and even market manipulation schemes. “Attackers are using malware to build huge, private cloud computing networks out of our own compromised computers—and an attacker with such free compute power as a resource is a dangerous proposition,” says Kevin Epstein, vice president of advanced security and governance at security firm Proofpoint.

The good guys are making a great effort to close the gap. Giant security conferences like Black Hat and the RSA conference held in San Francisco each spring highlight how much brain power and resources the commercial sector is pouring into rooting out and undercutting cybercriminals. Gartner research director Lawrence Pingree calculates global spending on security hardware and software will continue growing at a robust 9% a year clip, topping $99.2 billion by 2018.

But the bad guys are smart, motivated and well-funded too. And they’ve proven to be terrific at innovation. As Stone-Gross’ gumshoeing shows, they are rapidly advancing the art of making hacking tools stealthier. And they are getting more focused on probing weaknesses in nooks and crannies of older systems, while also aggressively probing fresh vulnerabilities born of Internet-centric commerce and culture.

Growing Retail Threats

The recent rash of data breaches at Target, Neiman Marcus, Michaels and other major retail chains are a case in point; they all stemmed from attacks on in-store point-of-sale transaction devices and old-school, on-premises data storage servers, systems not so long ago considered mundane.

A sign of the times: The U.S. Department of Homeland Security last week issued an alert to the retail sector warning about the dangers of the Backoff family of malware, now in active use by hackers who’ve made an art form of scraping memory modules in point-of-sale systems for payment card data, including PINs.

“The Backoff authors either wrote the malware from scratch or hired someone to do so,” says Karl Sigler, threat intelligence manager at Trustwave. “The code does not borrow from other common PoS malware. This makes it undetectable to every signature based antivirus and intrusion detection solution available before the indicators of compromise were publicly released.”

Every day, new evidence surfaces in the security community showing how botnets and stealthy tactics are being leveraged in clever new ways to rip off and scam consumers and to pilfer proprietary data from companies of all sizes, at scale.

And if you’re wondering how it might be possible for a Russian ring to amass more than 1 billion stolen passwords, as disclosed in a recent article from The New York Times, it comes down to the same thing. All large scale data thefts leverage botnets and stealthy hacking tools and methods in one way or another.

“It is in the crime rings’ best interests to create botnets that are as large as possible and that persist for as long as possible, and making the malware undetectable improves the chances of both aims,” observes Greg Kazmierczak, CTO of quantum computing company Wave Systems. “In the continuing arms race we expect attackers to move even lower in the software stack to accelerate and improve effectiveness of malware infections.”

So what can individuals and companies do? Become more aware and adopt wiser behaviors. Let’s continue the discussion.

This post originally appeared on ThirdCertainty.com.

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