Security Experts:

Inside the Ransomware Business: How to Make Nearly $400,000 in a Month

Kidnap and ransom can be a profitable business in the world of computers.

In a new report entitled 'Ransomware: A Growing Menace', researchers at Symantec showed just how much. Analyzing a command and control (C&C) server for a single ransomware family, Symantec found that the earnings for the gang behind it hit approximately $394,000 in a single month.  

The high profits may be a large part of the reason ransomware has been on the uptick this year. In September, security vendor McAfee noted that the number of new rasomware samples it detected jumped approximately 50 percent between the first and second quarters of 2012.

At Symantec, researchers have identified at least 16 different ransomware malware families during the past two years. The malware all operate in a similar manner – locking down computers and displaying a message claiming to be from a law enforcement agency. The message demands payment in exchange to restoring full access to the computer.

The conversion rate – that is, the percentage of people who respond to the ransom demands – in the case of the C&C mentioned above, was estimated to be about 2.9 percent. That percentage is based on an analysis of 168 unique, infected IP addresses out of a pool of 5,700 that entered a valid PIN code to unlock their computer after connecting to the command and control server in a single day. With 68,000 unique IPs having connected to the C&C between September and early October, the gang made an estimated $394,000 in profits.

"We believe that a majority of home users are not paying up on the ransoms," said Vikram Thakur, principal security response manager at Symantec. "On the corporate side, we believe the conversion rates – the ratio of people getting infected versus paying up – is even lower."

In the paper, Symantec notes that there has been an increase in the number of Trojans in the last few months – something which may be related to established online criminals branching out into ransomware from other scams.

"The variants active in early 2011 were quite small in terms of infection size," the authors noted. "The fraudsters often distributed the ransomware executables from the same server they used for command-and-control. This server reuse indicates a lack of resources, a small-scale operation. A different model is in use for some of the more recent variants."

"Several different ransomware families, sold to what appear to be separate gangs, have all been tracked back to a single individual," the report continues. "That individual, who we have been unable to identify, is seemingly working full-time on programming ransomware on request. This dedicated development of multiple different versions of the same type of malware is reminiscent of how fake antivirus was developed."

One of the most common ways ransomware is delivered is via drive-by downloads.

"The most prevalent type of sites spreading ransomware infections via the drive-by downloads are pornography sites," Thakur said. "In fact, our telemetry shows that most referrers to sites hosting exploit packs are pornographic sites."

"While there are certain groups of exploit kit operators that have a very aggressive involvement in distributing ransomware, the overall ransomware landscape involves many, many distributors," he said. "Online underground forums have a plethora of ads trying to recruit people for distributing ransomware."

The report speculates that ransomware gangs will come into conflict with more traditional malware distributors.

"Ransomware is a very obvious malware, it is not subtle, or discreet," the report notes. "The presence of ransomware on a computer will usually prompt the computer owner to clean the machine thoroughly, removing any malware from it. As the ransomware may have been installed by a separate piece of malware, that other malware will also be removed, cutting into the malware operator’s business model. Malware distribution networks may refuse to distribute such obvious malware, forcing the ransomware gangs to develop their own distribution methods (as some, such as Trojan.Ransomlock.G and Trojan.Ransomlock.P have already done)."

The full report from Symantec is available here.