Security Experts:

Fraud Service Uses Charity Websites to Validate Stolen Credit Card Data

Cybercriminals who specialize in payment card fraud can verify the validity of stolen data by using an automated tool which conducts transactions on the websites of non-profit organizations, researchers at PhishLabs reported on Friday.

The card data verification service relies on a bot developed in the Perl programming language and an IRC channel. Fraudsters can use the IRC channel to communicate with each other, while the verification process takes place via private messages.

Once they log in to the IRC channel, cybercrooks must simply send a private message containing credit card numbers, cardholder names, and expiration dates to a moderator by using a special input syntax. The bot monitors messages and when the specific syntax is identified, and then conducts a transaction on the website of a charity or a non-profit organization. The fraudsters are then provided with transaction details from which they can learn if the stolen card data is valid, researchers said.

Using IRC interactions in such a manner is not a new technique, but PhishLabs experts say this particular bot is more complex than older threats. In addition to helping cybercriminals verify the validity of payment card data, the service can also be utilized to check tracking numbers on packages, which most likely helps fraudsters keep track of the items they buy using stolen data. Another feature allows users to verify addresses and ZIP codes for cardholder identity data.

According to researchers, not everyone can sign up for the card verification service, which is advertised only on some closed underground forums. All unauthorized users are automatically kicked off the IRC channel by a special bot.

Once they sign up, fraudsters must earn or buy credit points in order to continue using the service. Credit can be purchased directly, it can be earned by referring new members or by completing various tasks (vouching for forum access or delivering source code), or it can be obtained in exchange for other services, information, and stolen data.

The operators of the cybercrime service told undercover PhishLabs researchers that their customers don't have to worry about managing compromised or rogue merchant accounts. They claim the bots can easily make the transactions since charities and other non-profits make the donations process as easy as possible, and their fraud detection mechanisms only decline a small number of transactions.

"One moderator offered the absurd suggestion that letting the charities keep the funds used to verify the cards somehow compensated for damage done to the actual cardholders. Another moderator suggested that cardholders would be less inclined to report payments as fraudulent since they were sent to a charity or non-profit," Don Jackson, Director of Threat Intelligence at PhishLabs, noted in a blog post. "However, once flagged for other fraudulent activity, the organizations behind the abused websites would suffer loss from charge backs and the time and effort it would take to identify related activity."

In an effort to avoid raising any suspicion, the bot donates a random amount of money ranging between $1 and $5. However, this tactic can also lead to cardholders realizing that they are victims of fraud since most legitimate donations are for whole dollar amounts, and transactions made by the bot are in many cases for amounts such as $1.23 or $3.55.

Website operators can detect fraud by monitoring donations for such amounts, especially if a large number of transactions is made in a short timeframe. Other potential abuse cases are where the donor's IP address is different from the cardholder's billing address (e.g. different countries), and where a single IP address is utilized to make multiple small donations from different payment cards.  

 Payment processors and financial institutions have been working on implementing security systems designed to prevent fraud, but cybercriminals are not ready to give up. In October, IntelCrawler reported identifying a new service that mimics human behavior and buying patterns in an effort to avoid detection by anti-fraud systems.

 

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Eduard Kovacs (@EduardKovacs) is a contributing editor at SecurityWeek. He worked as a high school IT teacher for two years before starting a career in journalism as Softpedia’s security news reporter. Eduard holds a bachelor’s degree in industrial informatics and a master’s degree in computer techniques applied in electrical engineering.