The online mafia

Cyber gangsters are using computer networks to blackmail businesses - and they could be making you an unwitting accomplice

Detective Chief Superintendent Mick Deats, the head of the National Hi-Tech Crime Unit (NHTCU), has an impossible task. How does he defend the UK against attacks from 11 million PCs around the world? The problem with "botnets" (as groups of these machines are known) is becoming serious. "One indication of the increase in organised crime groups' use of botnets is that 25 per cent of our work revolves around this area of criminality, and that looks likely to increase," Deats says.

Detective Chief Superintendent Mick Deats, the head of the National Hi-Tech Crime Unit (NHTCU), has an impossible task. How does he defend the UK against attacks from 11 million PCs around the world? The problem with "botnets" (as groups of these machines are known) is becoming serious. "One indication of the increase in organised crime groups' use of botnets is that 25 per cent of our work revolves around this area of criminality, and that looks likely to increase," Deats says.

The NHTCU is charged with the task of combating computer-based serious and organised crime. Here's an example of what it's up against; several UK gambling firms were targeted by Russian criminals using botnets to bombard websites with millions of messages (packets of data) in an attempt to put them off the air. "William Hill did incur a DOS [denial of service] attack in early 2004, and an extortion demand for $50,000," said a spokesman for the company. "We were and remain totally non-compliant with demands of this nature." During the attack, William Hill's online gaming trade dipped by 30 per cent.

A spokesman for Coral confirmed that the company had also received extortion demands. The denial-of-service attacks caused only "minimal disruption" and Coral now has defensive measures in place. Ladbrokes was not affected by the attacks, despite criminals flooding its internet service providers with bogus traffic. "Investment in our internal security systems is reaping dividends, thankfully, and we have not been the subject of demands or threats," said a spokesman.

Following the money trail from companies who did pay up, the NHTCU helped to dismantle a determined group of organised criminals. In July, a joint operation with its Russian Federation counterparts saw the arrests of three men suspected of running a global protection racket netting hundreds of thousands of pounds from online gambling sites. The case has yet to be tried.

So how do botnets work? A bot is a hidden remote-control program loaded on to your computer without your consent, and increasingly used for villainous purposes. Under the control of a "botherd", the botnet can be anything from few hundred to tens of thousands of machines. Large botnets pack a mighty electronic punch when the combined bandwidth attacks a website, denying access to legitimate users. Botnets send out spam, carry out identity theft, mount "phishing" scams (getting people to divulge personal information and data) or disseminate new malware (malicious software, designed to damage or disrupt a system).

"Botnets are attractive to hi-tech criminals because they can be reconfigured to commit different crimes and reprogrammed in response to new security developments, and particularly because criminals can use them to commit offences on a massive scale," Deats says.

It all began, innocently enough, in internet relay chat (IRC) channels, where the first bots were created as robotic helpers. Eventually, somebody demonstrated that large groups of compromised PCs could be controlled from an IRC channel, and the botnet was born. "We know, for example, that botnets are also increasingly being hired out to third parties, making them a valuable commodity in themselves," Deats says.

A botherd may control different types of bot. They swap information, services or favours, and read underground hacker publications on how to make money from their botnets. Botherds will even patch your computer with the latest Microsoft security updates to prevent other botherds from stealing it. And one-line commands initiate massive attacks from as many as 75,000 bots simultaneously.

This is what the NHTCU is now afraid of: that serious organised crime will pay hackers to write more powerful bots. Worryingly, it has noted denial-of-service extortion attacks on other kinds of firm as the online gaming industry strengthens its defences and refuses to pay up. The NHTCU also strongly advises home PC users to install the latest software patches and anti-virus software and a firewall.

AOL does more than most internet service providers to curb the botnet menace. Broadband customers have free McAfee firewall software, backed by central virus and spam scanning. An AOL spokesman claims that other ISPs face problems: "Most ISPs could, at peak, be experiencing hundreds of compromised accounts each day; probably more among those ISPs that don't have a strong security focus."

But it's easy to ignore nagging messages from Microsoft Windows about updates. Worse still, you might have a totally unprotected PC. The result? The IT firm Mi2g says there's now a malware epidemic, with as many as 11 million computers around the world being permanently infected "zombies" - that's another name for bots.

The head of threat analysis at Symantec, Nigel Beighton (he's also the company's director of enterprise strategy) knows all about user laziness. The company reckons that 30,000 new machines are recruited as bots every day, although its Norton software products will repel viruses, worms and malware. "It's now quite common for us to see that denial-of-service attacks are sophisticated and can be controlling 30,000 bots at time," Beighton says.

Matt Sergeant, a senior anti-spam technologist at Messagelabs, also understands the problem. From its work in filtering spam and viruses, Messagelabs reckons that 70 to 90 per cent of spam is sent by botnets. Sergeant says his company works with law enforcement to seek justice, even though this runs the risk of becoming a target of some "particularly nasty" people.

You might imagine that such people are tucked away in Eastern Europe, China or the spammers' favourite location, Florida. Certainly, most of the machines they control are overseas. But sometimes the long arm of the law isn't too stretched; in February, two men in Bolton, Lancashire and Carshalton in south London were arrested on suspicion of conspiracy to commit offences under Section 3 of the Computer Misuse Act 1990. Computer equipment was seized and examined.

An FBI document obtained by The Independent gives detailed insights into the arrests. A botnet of up to 10,000 computers controlled from the UK was used for denial-of-service attacks on US businesses. What makes this really alarming is that botherds were hired by an American businessman through an intermediary to attack his competitors' websites. The Moroccan-born American is now a fugitive.

Attacks on firms here in the UK are continuing. Blue Square is one of the largest interactive betting services in the UK. In October, a brief denial-of-service attack, cutting trade by 15 per cent, was followed by a poorly-written e-mail demanding €7,000 (£6,200). A phone call from a man with an Eastern European accent then threatened to send out pornographic child images in the company's name. Blue Square immediately went public to prevent a public relations disaster. "It now looks like it was an empty threat, although obviously a deeply unpleasant one," says a company spokesman.

The problems for law enforcement don't get any easier. Botnet technology has combined with phishing, another major concern for the NHTCU. Phishing fools 5 per cent of recipients into divulging bank details, credit-card numbers, user names and passwords. According to the Anti-Phishing Working Group, the number of spoof websites that are hosted on compromised broadband PCs has risen by more than 50 per cent. The sites are quickly switched around, suggesting that some degree of automation is involved. And the phishing e-mails are already sent out by botnets.

In the face of this growing evidence of hi-tech criminal activity, it is hard not to conclude that the computer gangsters have the edge - for now. It's the job of the cyber police, such as the NHTCU, to change that.