Backoff malware infections are more widespread than thought

The number of businesses hit by the data-stealing Backoff malware may be substantially more than the 1,000 or so companies estimated by federal officials.

The number of businesses hit by the data-stealing Backoff malware may be substantially more than the 1,000 or so companies estimated by federal officials, according to security vendor Kaspersky Labs.

Researchers at Kaspersky managed to intercept traffic between systems infected by Backoff and two servers used by hackers to control the malware.

In the span of just a few days, the researchers discovered more than 100 systems from 85 distinct IP addresses attempting to connect to the two malicious command-and-control servers. Of that number, 69 of the infected systems were in the U.S and 28 were in Canada.

The researchers also spied communications from a smattering of infected systems in other countries, including the United Kingdom and Israel.

Among those with infected systems were a global freight shipping and transportation company based in North America; a North American payroll association; a U.S.-based liquor store chain; and a U.S.-based Mexican food chain, Kaspersky said.

Most of the systems appear to have been compromised months ago, given that they were infected with a Backoff variant from October 2013, said Roel Schouwenberg, a senior security researcher at Kaspersky. "Looking at the bigger picture here, these companies were infected for a very long time -- maybe even half a year or longer," he said.

Though they should have detected and blocked any malicious activity related to the malware, none of the companies appears to have even known they were infected, he said.

The malicious servers Kaspersky intercepted represent less than 5% of the command-and-control channels used to operate Backoff-infected systems worldwide. The fact that even that small sample turned up more than 85 victims suggests that the number of infections in North America is well over 1,000, Schouwenberg noted.

Backoff is a Trojan program designed specifically to steal credit and debit card data from point-of-sale (POS) systems. It was released last October, but remained hidden from anti-virus and other malware tools until it was discovered in August.

The tool was used in the massive data theft at Target and in several smaller ones at other retailers like Neiman Marcus.

The U.S. Department of Homeland Security and U.S. Secret Service have so far issued two bulletins about Backoff warning retailers of the severity of the threat. The two agencies have said the malware has infected at least 1,000 U.S. businesses.

The Payment Card Industry Security Standards Council, which oversees the PCI security standard, issued an urgent bulletin this past week urging retailers to review security controls and take additional protective measures, such as end-to-end encryption to protect against the malware.

Backoff is not an especially sophisticated tool, said Schouwenberg. Even current versions are not any more advanced than versions of the malware when it was first released. But the fact that it still managed to infect so many systems highlights the weak security measures companies have deployed for POS operations, he said.

Even if anti-malware tools did not detect Backoff, companies should have still been able to spot malicious activity from it. For example, the companies should have spotted the massive transfers of stolen data taking place from within their networks, Schouwenberg said.

"Why does a POS terminal in Alabama need to connect to a server based in Russia?'' he asked. "There's just a whole number of things to show defenses are not up to par."

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