Ransomware (which when carried out correctly is called cryptoviral extortion, but is sometimes also called scareware) comprises a class of malware which restricts access to the computer system that it infects, and demands a ransom paid to the creator of the malware in order for the restriction to be removed. Some forms of ransomware encrypt files on the system's hard drive, while some may simply lock the system and display messages intended to coax the user into paying. Modern ransomware attacks were initially popular within Russia, but in recent years there have been an increasing number of ransomware attacks targeted towards other countries, such as Australia, Germany, and the United States among others.
Ransomware typically propagates like a conventional computer worm, entering a system through, for example, a downloaded file or a vulnerability in a network service. The program will then run a payload: such as one that will begin to encrypt personal files on the hard drive. More sophisticated ransomware may hybrid-encrypt the victim's plaintext with a random symmetric key and a fixed public key as shown by Young and Yung. The malware author is the only party that knows the needed private decryption key. Some ransomware payloads do not use encryption. In these cases, the payload is simply an application designed to effectively restrict interaction with the system, typically by overriding explorer.exe in the Windows registry as the default shell, or even modify the master boot record, not allowing the operating system to start at all until it is repaired.
Ransomware payloads, especially ones which do not encrypt files, utilize elements of scareware to coax the user into paying for its removal. The payload may, for example, display notices purportedly issued by companies or law enforcement agencies which falsely claim that the user's system had been used for illegal activities, or contains illegal content such as pornography and unlawfully obtained software. Some ransomware payloads imitate Windows XP's product activation notices, falsely claiming that their computer's Windows installation is counterfeit or requires re-activation.
In any case, the ransomware will attempt to extort money from the system's user by forcing them to purchase either a program to decrypt the files it had encrypted, or an unlock code which will remove the locks it had applied. These payments are often delivered using either a wire transfer, premium-rate text messages, or through an online payment voucher service such as Ukash or Paysafecard.
The first known ransomware was the 1989 "PC Cyborg" trojan written by Joseph Popp, which triggered a payload claiming that the user's license to use a certain piece of software had expired, encrypted file names on the hard drive, and required the user to pay 189 United States dollars to "PC Cyborg Corporation" in order to unlock the system. Young and Yung pointed out, however, that Popp had used symmetric cryptography and that this attack design is weak. Popp was declared mentally unfit to stand trial for his actions, but he promised to donate the profits from the malware to fund AIDS research. The notion of using public key cryptography for such attacks was introduced in 1996 by Adam L. Young and Moti Yung, who presented a proof-of-concept cryptovirus for the Macintosh SE/30 using RSA and TEA. Young and Yung referred to this attack as cryptoviral extortion, an overt attack that is part of a larger class of attacks in a field called cryptovirology, which encompasses both overt and covert attacks.
Examples of extortionate ransomware reappeared in May 2005. By mid-2006, worms such as Gpcode, TROJ.RANSOM.A, Archiveus, Krotten, Cryzip, and MayArchive began utilizing more sophisticated RSA encryption schemes, with ever-increasing key-sizes. Gpcode.AG, which was detected in June 2006, was encrypted with a 660-bit RSA public key. In June 2008, a variant known as Gpcode.AK was detected. Using a 1024-bit RSA key, it was believed to be large enough to be computationally infeasible to break without a concerted distributed effort.
In August 2010, Russian authorities arrested ten individuals who had been connected to WinLock, a ransomware which displayed pornographic images and asked users to send a premium-rate text message costing around US$10 to receive a code which can unlock their machines. The scam hit a large number of users across Russia and neighboring countries—reportedly earning the group over US$16 million. Unlike the previous Gpcode worms, WinLock did not use encryption, using a more trivial process of simply requiring an activation code.
In 2011, a ransomware worm imitating the Windows Product Activation notice surfaced that informed users that a system's Windows installation would have to be re-activated due to "[being a] victim of fraud". An online activation option was offered (like the actual Windows activation process), but was unavailable, requiring the user to call one of six international numbers to input a 6-digit code. While the malware claimed that this call would be free, it was routed through a rogue operator in a country with high international phone rates, who placed the call on hold, causing the user to incur large long distance charges.
In 2012, a major ransomware worm known as Reveton began to spread. Its payload displays a warning purportedly from a law enforcement agency (leading to its nickname as the "police trojan"), claiming that the computer had been used for illegal activities; such as downloading pirated software. The warning informs the user that to unlock their system, they would have to pay a fine using a voucher from an anonymous prepaid cash service such as Ukash or Paysafecard. To increase the illusion that the computer is being tracked by law enforcement, the screen also displays the computer's IP address, while recent versions can also purportedly show footage from a computer's webcam to give the illusion that the user is also being recorded by law enforcement.
Variants that targeted the United Kingdom included ones branded as being from the Metropolitan Police Service, the collection society PRS for Music (which specifically accused the user of illegally downloading music), and the Police National E-Crime Unit. In a statement warning the public about the malware, the Metropolitan Police clarified that they would never lock a computer in such a way as part of an investigation.
Reveton initially began spreading in various European countries in early 2012. In May 2012, Trend Micro threat researchers discovered templates for variations for the United States and Canada, suggesting that its authors may have been planning to target users in North America. By August 2012, a new variant of Reveton began to spread in the United States, claiming to require the payment of a $200 fine to the FBI using a MoneyPak card.
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