The third week of September 2016 was a dark and stormy one for KrebsOnSecurity. Wave after wave of huge denial-of-service attacks flooded this site, forcing me to pull the plug on it until I could secure protection from further assault. The site resurfaced three days later under the aegis of Google’s Project Shield, an initiative which seeks to protect journalists and news sites from being censored by these crippling digital sieges.

Damian Menscher, a Google security engineer with whom I worked very closely on the migration to Project Shield, spoke this week about the unique challenges involved in protecting a small site like this one from very large, sustained and constantly morphing attacks.

Addressing the Enigma 2017 security conference in Oakland, Calif., Menscher said his team only briefly considered whether it was such a good idea to invite a news site that takes frequent swings at the DDoS-for-hire industry.

“What happens if this botnet actually takes down google.com and we lose all of our revenue?” Menscher recalled. “But we considered [that] if the botnet can take us down, we’re probably already at risk anyway. There’s nothing stopping them from attacking us at any time. So we really had nothing to lose here.”

Ars Technica’s Dan Goodin was at the Engima conference and filed this report:

“It took only about an hour for Menscher’s team to arrive at the decision to help Krebs. A much more lengthy process involved actually admitting KrebsOnSecurity into Project Shield…A key requirement for admittance is that the person requesting service proves they have control over the site. Because KrebsOnSecurity was down at that moment, Krebs was unable to satisfy this requirement.

Making matters worse, the domain-name system settings KrebsOnSecurity used had been locked to thwart the attempted domain hijacking attacks that regularly targeted the site. That prevented Krebs from showing he had control of the site’s DNS settings.

Once Project Shield ultimately got KrebsOnSecurity back online, it took just 14 minutes for the attacks to resume.”

For more, check out Dan Goodin’s excellent piece, How Google Fought Back Against a Crippling IoT-Powered Botnet and Won. And a rolling thanks to Damian (a true mensch) and to Project Shield for deflecting the evil bits.

For more background on the botnet responsible for knocking this site offline, see Who is Anna-Senpai, the Mirai Worm Author?

Most regular readers here are familiar with CEO fraud — e-mail scams in which the attacker spoofs the boss and tricks an employee at the organization into wiring funds to the fraudster. Loyal readers also have heard an earful about W-2 phishing, in which crooks impersonate the boss and request a copy of all employee tax forms. According to a new “urgent alert” issued by the U.S. Internal Revenue Service, scammers are now combining both schemes and targeting a far broader range of organizations than ever before.

The IRS said phishers are off to a much earlier start this year than in tax years past, trying to siphon W-2 data that can be used to file fraudulent refund requests on behalf of taxpayers. The agency warned that thieves also appear to be targeting a wider range of organizations in these W-2 phishing schemes, including school districts, healthcare organizations, chain restaurants, temporary staffing agencies, tribal organizations and nonprofits.

Perhaps because they are already impersonating the boss, the W-2 phishers feel like they’re leaving money on the table if they don’t also try to loot the victim organization’s treasury: According to the IRS, W-2 phishers very often now follow up with an “executive” email to the payroll or comptroller requesting that a wire transfer be made to a certain account.

“This is one of the most dangerous email phishing scams we’ve seen in a long time,” IRS Commissioner John Koskinen said. “Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars.”

The Federal Bureau of Investigation (FBI) has been keeping a running tally of the financial devastation visited on companies via CEO fraud scams. In June 2016, the FBI estimated that crooks had stolen nearly $3.1 billion from more than 22,000 victims of these wire fraud schemes.

First surfacing in February 2016, the W-2 phishing scams also have netted thieves plenty of victims. At one point last year I was hearing from almost one new W-2 phishing victim each day. Some of the more prominent companies victimized by W-2 scams last year included Seagate Technology, Moneytree, Sprouts Farmer’s Market, and EWTN Global Catholic Network.

As noted earlier this week, scammers also are now selling 2016 employee W-2 forms that were phished or otherwise stolen from victim organizations, peddling individual W-2 tax records for between $4 and $20 apiece.

Tax refund fraud affects hundreds of thousands, if not millions, of U.S. citizens annually. Victims usually first learn of the crime after having their returns rejected because scammers beat them to it. Even those who are not required to file a return can be victims of refund fraud, as can those who are not actually due a refund from the IRS.

The IRS says organizations receiving a W-2 scam email should forward it to phishing@irs.gov and place “W2 Scam” in the subject line. Organizations that receive the scams or fall victim to them should file a complaint with the Internet Crime Complaint Center (IC3,) operated by the FBI.

Employees whose Forms W-2 have been stolen should review the recommended actions by the Federal Trade Commission at www.identitytheft.gov or the IRS at www.irs.gov/identitytheft. Employees should file a Form 14039 (PDF) Identity Theft Affidavit, if the employee’s own tax return rejects because of a duplicate Social Security number or if instructed to do so by the IRS.

W-2 forms are prized by ID thieves because they feature virtually all of the data needed to file a fraudulent tax refund request with the IRS in a victim’s name, including the employer name, employer ID, address, taxpayer address, Social Security number and information about 2016 wages and taxes withheld.

According to recent stats from the Federal Trade Commission, tax refund fraud was responsible for a nearly 50 percent increase in consumer identity theft complaints in 2015. The best way to avoid becoming a victim of tax refund fraud is to file your taxes before the fraudsters can. 

The FBI urges businesses to adopt two-step or two-factor authentication for email, where available, and to establish other communication channels — such as telephone calls — to verify significant banking transactions. Businesses are also advised to exercise restraint when publishing information about employee activities on their Web sites or through social media, as attackers perpetrating CEO fraud schemes often will try to discover information about when executives at the targeted organization will be traveling or otherwise out of the office.

The 2016 tax season is now in full swing in the United States, which means scammers are once again assembling vast dossiers of personal data and preparing to file fraudulent tax refund requests on behalf of millions of Americans. But for those lazy identity thieves who can’t be bothered to phish or steal the needed data, there is now another option: Buying stolen W-2 tax forms from other crooks who have phished the documents wholesale from corporations.

Pictured in the screenshot above is a cybercriminal shop which sells the usual goods — stolen credit card data, PayPal account logins, and access to hacked computers. But hidden beneath the “other” category of goods for sale by this fraud bazaar is an option I’ve not previously encountered on these ubiquitous, cookie-cutter stores: A menu item advertising “W-2 2016.”

This particular shop — the name of which is being withheld so as not to provide it with free advertising — currently includes raw W-2 tax form data on more than 3,600 Americans, virtually all of whom apparently reside in Florida. The data in each record includes the taxpayer’s employer name, employer ID, address, taxpayer address, Social Security number and information about 2016 wages and taxes withheld.

Each W-2 record costs the Bitcoin equivalent of between $4 and $20. W-2 records for employees with higher-than-average wages in the 2016 tax year cost more, ostensibly because thieves stand to reap a higher tax refund from those W-2’s if they successfully trick the Internal Revenue Service and/or the states into approving a fraudulent refund in the victim’s name.

Tax refund fraud affects hundreds of thousands, if not millions, of U.S. citizens annually. Victims usually first learn of the crime after having their returns rejected because scammers beat them to it. Even those who are not required to file a return can be victims of refund fraud, as can those who are not actually due a refund from the IRS.

Tax data can be phished directly from consumers via phony emails spoofing the IRS or employers. But more often, the information is stolen in bulk from employers. In a typical scenario, the thieves target people who work in HR and payroll departments at corporations, and spoof an email from a higher-up in the company asking for all employee W-2 data to be included in a single file and emailed immediately.

Incredibly, this scam tricks countless organizations into giving away all employee W-2 data directly to identity thieves who use it (or, in this case, sell it) for tax refund fraud. Earlier this month, solar panel maker Sunrun disclosed that a spear phishing attack exposed W-2 tax form data on more than 3,400 employees.

In this case, however, it does not appear the cybercrime shop obtained the W-2’s through phishing employers. It cost roughly $25 worth of Bitcoin to reveal the likely common thread among all 3,600+ Floridians being exploited by this shop: A local tax preparation firm that got hacked or phished.

Two tax records that a source purchased from the shop listed Kirai Restaurant Group LLC in Fort Lauderdale, Fla. Kirsta Grauberger, managing partner of that organization’s physical property — the Market 17 & Day Market Kitchen — confirmed that the two W-2 records were tied to two employees.

But Grauberger said her company has employed fewer than 150 employees total since it opened for business six years ago. So which other company or companies account for the remaining 3,450 employees whose W-2 are for sale by this shop?

Grauberger told KrebsOnSecurity that her firm doesn’t even handle employee tax forms, and that her company outsourced that entire process to a local tax preparation firm called The Payroll Professionals.

W-2 information also was on sale for employees of a doctor’s office in Boca Raton, Fla. The medical office told KrebsOnSecurity that it, too, managed its payroll through the same third-party payroll management firm.

A man answering the phone at Payroll Professionals who would only give his name as “Robert” said the company was “aware of the potential hacking” and was in the process of informing its clients.

According to recent stats from the Federal Trade Commission, tax refund fraud was responsible for a nearly 50 percent increase in consumer identity theft complaints in 2015. The best way to avoid becoming a victim of tax refund fraud is to file your taxes before the fraudsters can.

See last year’s Don’t Be A Victim of Tax Refund Fraud in ’16 for more tips on avoiding this ID theft headache. But here are the main takeaways from that story:

-File before the fraudsters do it for you – Your primary defense against becoming the next victim is to file your taxes at the state and federal level as quickly as possible. Remember, it doesn’t matter whether or not the IRS owes you money: Thieves can still try to impersonate you and claim that they do, leaving you to sort out the mess with the IRS later.

-Get on a schedule to request a free copy of your credit report. By law, consumers are entitled to a free copy of their report from each of the major bureaus once a year. Put it on your calendar to request a copy of your file every three to four months, each time from a different credit bureau. Dispute any unauthorized or suspicious activity. This is where credit monitoring services are useful: Part of their service is to help you sort this out with the credit bureaus, so if you’re signed up for credit monitoring make them do the hard work for you.

–Monitor, then freeze. Take advantage of any free credit monitoring available to you, and then freeze your credit file with the four major bureaus. A freeze can help you stop ID thieves from opening new lines of credit in your name. Instructions for doing that are here. However, note that neither a credit freeze nor credit monitoring will stop ID thieves from filing a fraudulent refund request with the IRS in your name. Again, your best bet to prevent this is to file your taxes before the fraudsters can do it for you.

-File form 14039 and request an IP PIN from the government. This form requires consumers to state they believe they’re likely to be victims of identity fraud. Even if thieves haven’t tried to file your taxes for you yet, virtually all Americans have been touched by incidents that could lead to ID theft — even if we just look at breaches announced in the past year alone.

A chief criticism I heard from readers of my book, Spam Nation: The Inside Story of Organized Cybercrime, was that it dealt primarily with petty crooks involved in petty crimes, while ignoring more substantive security issues like government surveillance and cyber war. But now it appears that the chief antagonist of Spam Nation is at the dead center of an international scandal involving the hacking of U.S. state electoral boards in Arizona and Illinois, the sacking of Russia’s top cybercrime investigators, and the slow but steady leak of unflattering data on some of Russia’s most powerful politicians.

In a major shakeup that could have lasting implications for transnational cybercrime investigations, it’s emerged that Russian authorities last month arrested Sergey Mikhaylov — the deputy chief of the country’s top anti-cybercrime unit — as well as Ruslan Stoyanov, a senior employee at Russian security firm Kaspersky Lab. 

In a statement released to media, Kaspersky said the charges against Stoyanov predate his employment at the company beginning in 2012. Prior to Kaspersky, Stoyanov served as deputy director at a cybercrime investigation firm called Indrik, and before that as a major in the Russian Ministry of Interior’s Moscow Cyber Crime Unit.

In a move straight out of a Russian spy novel, Mikhaylov reportedly was arrested while in the middle of a meeting, escorted out of the room with a bag thrown over his head. Both men are being tried for treason. As a result, the government’s case against them is classified, and it’s unclear exactly what they are alleged to have done.

However, many Russian media outlets now report that the men are suspected of leaking information to Western investigators about investigations, and of funneling personal and often embarrassing data on Russia’s political elite to a popular blog called Humpty Dumpty (Шалтай-Болтай).

According to information obtained by KrebsOnSecurity, the arrests may very well be tied to a long-running grudge held by Pavel Vrublevsky, a Russian businessman who for years paid most of the world’s top spammers and virus writers to pump malware and hundreds of billions of junk emails into U.S. inboxes.

In September 2016, Arlington, Va.-based security firm ThreatConnect published a report that included Internet addresses that were used as staging grounds in the U.S. state election board hacks [full disclosure: ThreatConnect has been an advertiser on this blog]. That report was based in part on an August 2016 alert from the FBI (PDF), and noted that most of the Internet addresses were assigned to a Russian hosting firm called King-Servers[dot]com.

King-Servers is owned by a 26-year-old Russian named Vladimir Fomenko. As I observed in this month’s The Download on the DNC Hack, Fomenko issued a statement in response to being implicated in the ThreatConnect and FBI reports. Fomenko’s statement — written in Russian — said he did not know the identity of the hackers who used his network to attack U.S. election-related targets, but that those same hackers still owed his company USD $290 in unpaid server bills.

A English-language translation of that statement was simultaneously published on ChronoPay.com, Vrublevsky’s payment processing company.

“The analysis of the internal data allows King Servers to confidently refute any conclusions about the involvement of the Russian special services in this attack,” Fomenko said in his statement, which credits ChronoPay for the translation. “The company also reported that the attackers still owe the company $US290 for rental services and King Servers send an invoice for the payment to Donald Trump & Vladimir Putin, as well as the company reserves the right to send it to any other person who will be accused by mass media of this attack.”

I mentioned Vrublevsky in that story because I knew Fomenko (a.k.a. “Die$el“) and he were longtime associates; both were prominent members of Crutop[dot]nu, a cybercrime forum that Vrublevsky (a.k.a. “Redeye“) owned and operated for years. In addition, I recognized Vrublevsky’s voice and dark humor in the statement, and thought it was interesting that Vrublevsky was inserting himself into all the alleged election-hacking drama.

That story also noted how common it was for Russian intelligence services to recruit Russian hackers who were already in prison — by commuting their sentences in exchange for helping the government hack foreign adversaries. In 2013, Vrublevsky was convicted of hiring his most-trusted spammer and malware writer to attack one of ChronoPay’s chief competitors, but he was inexplicably released a year earlier than his two-and-a-half year sentence required.

Meanwhile, the malware author that Vrublevsky hired to launch the attack which later landed them both in jail told The New York Times last month that he’d also been approached while in prison by someone offering to commute his sentence if he agreed to hack for the Russian government, but that he’d refused and was forced to serve out his entire sentence.

My book Spam Nation identified most of the world’s top spammers and virus writers by name, and I couldn’t have done that had someone in Russian law enforcement not leaked to me and to the FBI tens of thousands of email messages and documents stolen from ChronoPay’s offices.

To this day I don’t know the source of those stolen documents and emails. They included spreadsheets chock full of bank account details tied to some of the world’s most active cybercriminals, and to a vast network of shell corporations created by Vrublevsky and ChronoPay to help launder the proceeds from his pharmacy, spam and fake antivirus operations.

Fast-forward to this past week: Multiple Russian media outlets covering the treason case mention that King-Servers and its owner Fomenko rented the servers from a Dutch company controlled by Vrublevsky.

Both Fomenko and Vrublevsky deny this, but the accusations got me looking more deeply through my huge cache of leaked ChronoPay emails for any mention of Mikhaylov or Stoyanov — the cybercrime investigators arrested in Russia last week and charged with treason. I also looked because in phone interviews in 2011 Vrublevsky told me he suspected both men were responsible for leaking his company’s emails to me, to the FBI, and to Kimberly Zenz, a senior threat analyst who works for the security firm iDefense (now owned by Verisign).

In that conversation, Vrublevsky said he was convinced that Mikhaylov was taking information gathered by Russian government cybercrime investigators and feeding it to U.S. law enforcement and intelligence agencies and to Zenz. Vrublevsky told me then that if ever he could prove for certain Mikhaylov was involved in leaking incriminating data on ChronoPay, he would have someone “tear him a new asshole.”

As it happens, an email that Vrublevsky wrote to a ChronoPay employee in 2010 eerily presages the arrests of Mikhaylov and Stoyanov, voicing Vrublevsky’s suspicion that the two men were closely involved in leaking ChronoPay emails and documents that were seized by Mikhaylov’s own division — the Information Security Center (CDC) of the Russian Federal Security Service (FSB). A copy of that email is shown in Russian in the screen shot below. A translated version of the message text is available here (PDF).

In it, Vrublevsky claims Zenz was dating a Russian man who worked with Stoyanov at Indrik — the company that both men worked at before joining Kaspersky — and that Stoyanov was feeding her privileged information about important Russian hackers.

“Looks like Sergey and Ruslan were looking for various ‘scapegoats’ who were easy to track down and who had a lot of criminal evidence collected against them, and then reported them to iDefense through Kimberly,” Vrublevsky wrote to a ChronoPay subordinate in an email dated Sept. 11, 2010. “This was done so that iDefense could get some publicity for themselves by turning this into a global news story. Then the matter was reported by US intelligence to Russia, and then got on Sergey’s desk who made a big deal out of it and then solved the case brilliantly, gaining favors with his bosses. iDefense at the same time was getting huge grants to fight Russian cyberthreats.”

Based on how long Vrublevsky has been trying to sell this narrative, it seems he may have finally found a buyer.

Verisign’s Zenz said she did date a Russian man who worked with Stoyanov, but otherwise called Vrublevsky’s accusations a fabrication. Zenz said she’s uncertain if Vrublevsky has enough political clout to somehow influence the filing of a treason case against the two men, but that she suspects the case has more to do with ongoing and very public recent infighting within the Russian FSB.

“It is hard for me imagine how Vrublevsky would be so powerful as to go after the people that investigated him on his own,” Zenz told KrebsOnSecurity. “Perhaps the infighting going on right now among the security forces already weakened Mikhaylov enough that Vrublevsky was able to go after him. Leaking communications or information to the US is a very extreme thing to have done. However, if it really did happen, then Mikhaylov would be very weak, which could explain how Vrublevsky would be able to go after him.”

Nevertheless, Zenz said, the Russian government’s treason case against Mikhaylov and Stoyanov is likely to have a chilling effect on the sharing of cyber threat information among researchers and security companies, and will almost certainly create problems for Kaspersky’s image abroad.

“This really weakens the relationship between Kaspersky and the FSB,” Zenz said. “It pushes Kaspersky to formalize relations and avoid the informal cooperation upon which cybercrime investigations often rely, in Russia and globally. It is also likely to have a chilling effect on such cooperation in Russia. This makes people ask, “If I share information on an attack or malware, can I be charged with treason?’”

Vrublevsky declined to comment for this story. King Servers’ Fomenko could not be immediately reached for comment.

Several readers have called attention to warnings coming out of Canada about a supposedly new form of card skimming called “shimming” that targets chip-based credit and debit cards. Shimming attacks are not new (KrebsOnSecurity first wrote about them in August 2015), but they are likely to become more common as a greater number of banks in the United States shift to issuing chip-based cards. Here’s a brief primer on shimming attacks, and why they succeed.

Most skimming devices made to steal credit card data do so by recording the data stored in plain text on the magnetic stripe on the backs of cards. A shimmer, on the other hand, is so named because it acts a shim that sits between the chip on the card and the chip reader in the ATM or point-of-sale device — recording the data on the chip as it is read by the underlying machine.

Data collected by shimmers cannot be used to fabricate a chip-based card, but it could be used to clone a magnetic stripe card. Although the data that is typically stored on a card’s magnetic stripe is replicated inside the chip on chip-enabled cards, the chip contains an additional security components not found on a magnetic stripe.

One of those is a component known as an integrated circuit card verification value or “iCVV” for short — also known as a “dynamic CVV.” The iCVV differs from the card verification value (CVV) stored on the physical magnetic stripe, and protects against the copying of magnetic-stripe data from the chip and using that data to create counterfeit magnetic stripe cards.

The reason shimmers exist at all is that some banks have apparently not correctly implemented the chip card standard, known as EMV (short for Europay, Mastercard and Visa).

“The only way for this attack to be successful is if a [bank card] issuer neglects to check the CVV when authorizing a transaction,” ATM giant NCR Corp. wrote in a 2016 alert to customers. “All issuers MUST make these basic checks to prevent this category of fraud. Card Shimming is not a vulnerability with a chip card, nor with an ATM, and therefore it is not necessary to add protection mechanisms against this form of attack to the ATM.”

Here’s a look at the shimmer I wrote about back in August 2015, which was discovered inside an ATM in Mexico.

This shimming device was removed from an ATM in Europe in 2015:

Once you understand how stealthy these ATM fraud devices are, it’s difficult to use a cash machine without wondering whether the thing is already hacked. The truth is most of us probably have a better chance of getting physically mugged after withdrawing cash than encountering a skimmer in real life. However, here are a few steps we can all take to minimize the success of skimmer gangs.

-Cover the PIN pad while you enter your PIN.

-Keep your wits about you when you’re at the ATM, and avoid dodgy-looking and standalone cash machines in low-lit areas, if possible.

-Stick to ATMs that are physically installed in a bank. Stand-alone ATMs are usually easier for thieves to hack into.

-Be especially vigilant when withdrawing cash on the weekends; thieves tend to install skimming devices on a weekend — when they know the bank won’t be open again for more than 24 hours.

-Keep a close eye on your bank statements, and dispute any unauthorized charges or withdrawals immediately.

If you liked this piece and want to learn more about skimming devices, check out my series All About Skimmers.