The application, which has been taken down by Google, allowed attackers to steal SMS messages from infected devices.
Researchers at Trend Micro said they discovered a beta version of a spying tool targeting Google Android devices circulating on Google Play.
The tool, detected by the company as ANDROIDOS_SMSSPY.DT, was available for more than a month before being taken down by Google just recently after they were contacted by Trend Micro. Yoshikawa Takashi, a threat analyst with the security firm, blogged that he uncovered the tool being discussed on hacker forums, and that before it was taken down, between 500 and 1,000 users had already downloaded it.
"Based on our analysis, this spytool gathers SMS messages from an infected mobile device and sends these to a remote FTP server at regular times set during the app’s installation," he blogged.
Code embedded in the app executes the FTP Upload task that sends the stolen messages to defined FTP servers, he added. Spying on someone with this app poses some challenges however, he noted.
"First, it should be installed onto the target device without the victim knowing about it," he blogged. "Second, potential attackers would need to setup their own FTP servers, which may be difficult for those with less advanced IT knowledge. However, the developers behind this tool are likely to release an updated version that may include features and improvements to make it easier to use."
Google did not return a request for comment about the app.
Earlier this year, Google announced it was improving security for Android's app marketplace with a malware detection system nicknamed "Bouncer." Bouncer analyzes new applications before they are sold in the market to see if they contain known malware. The move followed a dramatic increase in malware targeting Android devices. According to F-Secure's Mobile Threat Report Q 1 2012, the number of Android malware families increased nearly four-fold between the first quarter of 2011 and the first quarter of 2012.
In April, researchers at NQ Mobile and North Carolina State University discovered new Android malware controlled via SMS that among other things is able to record calls and surrounding noise. Known as TigerBot, the malware was found in the wild in non-official Android app stores.
According to F-Secure Security Advisor Sean Sullivan, one of the biggest threats to consumers is malicious applications bundled with legitimate programs. "With this new paradigm, it remains to be seen just how long it takes victims to actually realize that they've been victimized," he said in a statement.