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IRS: Selfies Now Optional, Biometric Data to Be Deleted

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The U.S. Internal Revenue Service (IRS) said Monday that taxpayers are no longer required to provide facial scans to create an account online at irs.gov. In lieu of providing biometric data, taxpayers can now opt for a live video interview with ID.me, the privately-held Virginia company that runs the agency’s identity proofing system. The IRS also said any biometric data already shared with ID.me would be permanently deleted over the next few weeks, and any biometric data provided for new signups will be destroyed after an account is created.

“Taxpayers will have the option of verifying their identity during a live, virtual interview with agents; no biometric data – including facial recognition – will be required if taxpayers choose to authenticate their identity through a virtual interview,” the IRS said in a Feb. 21 statement.

“Taxpayers will still have the option to verify their identity automatically through the use of biometric verification through ID.me’s self-assistance tool if they choose,” the IRS explained. “For taxpayers who select this option, new requirements are in place to ensure images provided by taxpayers are deleted for the account being created. Any existing biometric data from taxpayers who previously created an IRS Online Account that has already been collected will also be permanently deleted over the course of the next few weeks.”

In addition, the IRS said it planned to roll out Login.gov as an authentication tool for those seeking access to their tax records online. Login.gov is a single sign-on solution already used to access 200 websites run by 28 federal agencies.

“The General Services Administration is currently working with the IRS to achieve the security standards and scale required of Login.Gov, with the goal of moving toward introducing this option after the 2022 filing deadline,” the agency wrote.

The IRS first announced its partnership with ID.me in November, but the press release received little public attention. On Jan. 19, KrebsOnSecurity published the story IRS Will Soon Require Selfies for Online Access, detailing a rocky experience signing up for IRS access via ID.me.

The IRS says it will require ID.me for all logins later this summer.

That story went viral, and the ensuing media coverage forced the IRS to answer questions about why it was incentivizing the collection and storage of biometric data by a private company. On Feb. 7, the IRS announced its intention to transition away from requiring biometric data from taxpayers who wish to access their records at the agency’s website, but it left unanswered the question of what would happen with the facial recognition data already collected by ID.me on behalf of the IRS.

In a letter to the IRS this month, Senate Finance Committee Chairman Ron Wyden (D-Ore.) challenged the Treasury Department and IRS to reconsider the biometric requirements, saying login.gov is perfectly up to the task if given all of the resources and funding it deserves.

“Unfortunately, login.gov has not yet reached its full potential, in part because many agencies have flouted the Congressional mandate that they use it, and because successive Administrations have failed to prioritize digital identity,” Wyden wrote. “The cost of this inaction has been billions of dollars in fraud, which has in turn fueled a black market for stolen personal data, and enabled companies like ID.me to commercialize what should be a core government service.”

Red Cross Hack Linked to Iranian Influence Operation?

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A network intrusion at the International Committee for the Red Cross (ICRC) in January led to the theft of personal information on more than 500,000 people receiving assistance from the group. KrebsOnSecurity has learned that the email address used by a cybercriminal actor who offered to sell the stolen ICRC data also was used to register multiple domain names the FBI says are tied to a sprawling media influence operation originating from Iran.

On Jan. 19, the ICRC disclosed the compromise of servers hosting the personal information of more than 500,000 people receiving services from the Red Cross and Red Crescent Movement. The ICRC said the hacked servers contained data relating to the organization’s Restoring Family Links services, which works to reconnect people separated by war, violence, migration and other causes.

The same day the ICRC went public with its breach, someone using the nickname “Sheriff” on the English-language cybercrime forum RaidForums advertised the sale of data from the Red Cross and Red Crescent Movement. Sheriff’s sales thread suggests the ICRC was asked to pay a ransom to guarantee the data wouldn’t be leaked or sold online.

“Mr. Mardini, your words have been heard,” Sheriff wrote, posting a link to the Twitter profile of ICRC General Director Robert Mardini and urging forum members to tell him to check his email. “Check your email and send a figure you can pay.”

RaidForums member “unindicted” aka Sheriff selling access to the International Red Cross and Red Crescent Movement data. Image: Ke-la.com

In their online statement about the hack (updated on Feb. 7) the ICRC said it had not had any contact with the hackers, and no ransom demand had been made.

“In line with our standing practice to engage with any actor who can facilitate or impede our humanitarian work, we are willing to communicate directly and confidentially with whoever may be responsible for this operation to impress upon them the need to respect our humanitarian action,” the ICRC statement reads.

Asked to comment on Sheriff’s claims, the ICRC issued the following statement:

“Right now, we do not have any conclusive evidence that this information from the data breach has been published or is being traded. Our cybersecurity team has looked into any reported allegation of data being available on the dark web.”

Update, 2:00 p.m., ET: The ICRC just published an update to its FAQ on the breach. The ICRC now says the hackers broke in on Nov. 9, 2021, using an unpatched critical vulnerability (CVE-2021-40539). “This vulnerability allows malicious cyber actors to place web shells and conduct post-exploitation activities such as compromising administrator credentials, conducting lateral movement, and exfiltrating registry hives and Active Directory files. Once inside our network, the hackers were able to deploy offensive security tools which allowed them to disguise themselves as legitimate users or administrators. This in turn allowed them to access the data, despite this data being encrypted.”

Original story:

The email address that Sheriff used to register at RaidForums — kelvinmiddelkoop@hotmail.com — appears in an affidavit for a search warrant filed by the FBI roughly a year ago. That FBI warrant came on the heels of an investigation published by security firm FireEye, which examined an Iranian-based network of inauthentic news sites and social media accounts aimed at the United States., U.K. and other western audiences.

“This operation is leveraging a network of inauthentic news sites and clusters of associated accounts across multiple social media platforms to promote political narratives in line with Iranian interests,” FireEye researchers wrote. “These narratives include anti-Saudi, anti-Israeli, and pro-Palestinian themes, as well as support for specific U.S. policies favorable to Iran.”

The FBI says the domains registered by the email address tied to Sheriff’s RaidForums account were used in service of the Liberty Front Press, a network of phony news sites thought to originate from Iran.

According to the FBI affidavit, the address kelvinmiddelkoop@hotmail.com was used to register at least three different domains for phony news sites, including awdnews[.]com, sachtimes[.]com, and whatsupic[.]com. A reverse WHOIS search on that email address at DomainTools.com (an advertiser on this site) shows it was used to register 17 domains between 2012 and 2021, including moslimyouthmedia[.]com, moslempress[.]com, and realneinovosti[.]net.

A review of Sheriff’s postings to RaidForum reveals he has used two other nicknames since registering on the forum in December 2021: “Unindicted,” and “threat_actor.” In several posts, Sheriff taunts one FireEye employee by name.

In a Jan. 3, 2022 post, Sheriff says their “team” is seeking licenses for the Cobalt Strike penetration testing tool, and that they’re prepared to pay $3,000 – $4,000 per license. Cobalt Strike is a legitimate security product that is sold only to vetted partners, but compromised or ill-gotten Cobalt Strike licenses frequently are used in the run-up to ransomware attacks.

“We will buy constantly, make contact,” Sheriff advised. “Do not ask if we still need)) the team is interested in licenses indefinitely.”

On Jan. 4, 2022, Sheriff tells RaidForums that their team is in need of access to a specific data broker platform, and offers to pay as much as $35,000 for that access. Sheriff says they will only accept offers that are guaranteed through the forum’s escrow account.

The demand for escrow in a sales thread is almost universally a sign that someone means business and they are ready to transact on whatever was advertised or requested. That’s because escrow transactions necessarily force the buyer to make a deposit with the forum’s administrators before proceeding on any transaction.

Sheriff appears to have been part of a group on RaidForums that offered to buy access to organizations that could be extorted with ransomware or threatened with the publication of stolen data (PDF screenshot from threat intelligence firm KELA). In a “scam report” filed against Sheriff by another RaidForums member on Dec. 31, 2021, the claimant says Sheriff bought access from them and agreed to pay 70 percent of any ransom paid by the victim organization.

Instead, the claimant maintains, Sheriff only paid them roughly 25 percent. “The company pay $1.35 million ransom and only payment was made of $350k to me, so i ask for $600k to fix this dispute,” the affiliate wrote.

In another post on RaidForums, a user aptly named “FBI Agent” advised other denizens to steer clear of Sheriff’s ransomware affiliate program, noting that transacting with this person could run afoul of sanctions from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) that restrict commerce with people residing in Iran.

“To make it clear, we don’t work with individuals under the OFAC sanctions list, which @Sheriff is under,” the ransomware affiliate program administrator wrote in reply.

RaidForums says Sheriff was referred to the forum by Pompompurin, the same hacker who used a security hole in the FBI’s website last year to blast a phony alert about a cybercrime investigation to state and local authorities. Pompompurin has been quite active on RaidForums for the past few years, frequently posting databases from newly-hacked organizations, and selling access to stolen information.

Reach via Twitter, Pompompurin said they had no idea who might have offered money and information on Sheriff, and that they would never “snitch” on Sheriff.

“I know who he is but I’m not saying anything,” Pompompurin replied.

The information about Sheriff was brought to my attention by an anonymous person who initially contacted KrebsOnSecurity saying they wanted to make a donation to the publication. When the person offering the gift asked if it was okay that the money came from a ransomware transaction, I naturally declined the offer.

That person then proceeded to share the information about the connection between Sheriff’s email address and the FBI search warrant, as well as the account’s credentials.

The same identity approached several other security researchers and journalists, one of whom was able to validate that the kelvinmiddelkoop@hotmail.com address actually belonged to Sheriff’s account. Those researchers were likewise offered tainted donations, except the individual offering the donation seemed to use a different story with each person about who they were or why they were offering money. Others contacted by the same anonymous user said they also received unsolicited details about Sheriff.

It seems clear that whoever offered that money and information has their own agenda, which may also involve attempts to make members of the news media appear untrustworthy for agreeing to accept stolen funds. However, the information they shared checks out, and since there is precious little public reporting on the source of the ICRC intrusion, the potential connection to hacker groups based in Iran seems worth noting.

Wazawaka Goes Waka Waka

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In January, KrebsOnSecurity examined clues left behind by “Wazawaka,” the hacker handle chosen by a major ransomware criminal in the Russian-speaking cybercrime scene. Wazawaka has since “lost his mind” according to his erstwhile colleagues, creating a Twitter account to drop exploit code for a widely-used virtual private networking (VPN) appliance, and publishing bizarre selfie videos taunting security researchers and journalists.

Wazawaka, a.k.a. Mikhail P. Matveev, a.k.a. “Orange,” a.k.a. “Boriselcin,” showing off his missing ring finger.

In last month’s story, we explored clues that led from Wazawaka’s multitude of monikers, email addresses, and passwords to a 30-something father in Abakan, Russia named Mikhail Pavlovich Matveev. This post concerns itself with the other half of Wazawaka’s identities not mentioned in the first story, such as how Wazawaka also ran the Babuk ransomware affiliate program, and later became “Orange,” the founder of the ransomware-focused Dark Web forum known as “RAMP.”

The same day the initial profile on Wazawaka was published here, someone registered the Twitter account “@fuck_maze,” a possible reference to the now-defunct Maze Ransomware gang.

The background photo for the @fuck_maze profile included a logo that read “Waka Waka;” the bio for the account took a swipe at Dmitry Smilyanets, a researcher and blogger for The Record who was once part of a cybercrime group the Justice Department called the “largest known data breach conspiracy ever prosecuted.”

The @fuck_maze account messaged me a few times on Twitter, but largely stayed silent until Jan. 25, when it tweeted three videos of a man who appeared identical to Matveev’s social media profile on Vkontakte (the Russian version of Facebook). The man seemed to be slurring his words quite a bit, and started by hurling obscenities at Smilyanets, journalist Catalin Cimpanu (also at The Record), and a security researcher from Cisco Talos.

At the beginning of the videos, Matveev holds up his left hand to demonstrate that his ring finger is missing. This he smugly presents as evidence that he is indeed Wazawaka.

The story goes that Wazwaka at one point made a bet wherein he wagered his finger, and upon losing the bet severed it himself. It’s unclear if that is the real story about how Wazawaka lost the ring finger on his left hand; his remaining fingers appear oddly crooked.

“Hello Brian Krebs! You did a really great job actually, really well, fucking great — it’s great that journalism works so well in the US,” Matveev said in the video. “By the way, it is my voice in the background, I just love myself a lot.”

In one of his three videos, Wazawaka says he’s going to release exploit code for a security vulnerability. Later that same day, the @fuck_maze account posted a link to a Pastebin-like site that included working exploit code for a recently patched security hole in SonicWall VPN appliances (CVE-2021-20028).

When KrebsOnSecurity first started researching Wazawaka in 2021, it appeared this individual also used two other important nicknames on the Russian-speaking crime forums. One was Boriselcin, a particularly talkative and brash personality who was simultaneously the public persona of Babuk, a ransomware affiliate program that surfaced on New Year’s Eve 2020.

The other handle that appeared tied to Wazawaka was “Orange,” the founder of the RAMP ransomware forum. I just couldn’t convincingly connect those two identities with Wazawaka using the information available at the time. This post is an attempt to remedy that.

On Aug. 26, 2020, a new user named Biba99 registered on the English language cybercrime forum RaidForums. But the Biba99 account didn’t post to RaidForums until Dec. 31, 2020, when they announced the creation of the Babuk ransomware affiliate program.

On January 1, 2021, a new user “Babuk” registered on the crime forum Verified, using the email address teresacox19963@gmail.com, and the instant message address “admin@babuk.im.” “We run an affiliate program,” Babuk explained in their introductory post on Verified.

A variety of clues suggest Boriselcin was the individual acting as spokesperson for Babuk. Boriselcin talked openly on the forums about working with Babuk, and fought with other members of the ransomware gang about publishing access to data stolen from victim organizations.

According to analysts at cyber intelligence firm Flashpoint, between January and the end of March 2021, Babuk continued to post databases stolen from companies that refused to pay a ransom, but they posted the leaks to both their victim shaming blog and to multiple cybercrime forums, an unusual approach.

This matches the ethos and activity of Wazawaka’s posts on the crime forums over the past two years. As I wrote in January:

“Wazawaka seems to have adopted the uniquely communitarian view that when organizations being held for ransom decline to cooperate or pay up, any data stolen from the victim should be published on the Russian cybercrime forums for all to plunder — not privately sold to the highest bidder. In thread after thread on the crime forum XSS, Wazawaka’s alias ‘Uhodiransomwar’ can be seen posting download links to databases from companies that have refused to negotiate after five days.”

Around Apr. 27, 2021, Babuk hacked the Washington Metropolitan Police Department, demanding $4 million in virtual currency in exchange for a promise not to publish the police department’s internal data.

Flashpoint says that on April 30, Babuk announced they were shuttering the affiliate program and its encryption services, and that they would now focus on data theft and extortion instead. On May 3, the group posted two additional victims of their data theft enterprise, showing they are still in operation.

On May 11, 2021, Babuk declared negotiations with the MPD had reached an impasse, and leaked 250 gigabytes worth of MPD data.

On May 14, 2021, Boriselcin announced on XSS his intention to post a writeup on how they hacked the DC Police (Boriselcin claims it was via the organization’s VPN).

On May 17, Babuk posted about an upcoming new ransomware leaks site that will serve as a “huge platform for independent leaks,” — i.e., a community that would publish data stolen by no-name ransomware groups that don’t already have their own leaks/victim shaming platforms.

On May 31, 2021, Babuk’s website began redirecting to Payload[.]bin. On June 23, 2021, Biba99 posted to RaidForums saying he’s willing to buy zero-day vulnerabilities in corporate VPN products. Biba99 posts his unique user ID for Tox, a peer-to-peer instant messaging service.

On July 13, 2021, Payload[.]bin was renamed to RAMP, which according to Orange stands for “Ransom Anon Market Place.” Flashpoint says RAMP was created “directly in response to several large Dark Web forums banning ransomware collectives on their site following the Colonial Pipeline attack by ransomware group ‘DarkSide.” [links added]

“Babuk noted that this new platform will not have rules or ‘bosses,’” Flashpoint observed in a report on the group. “This reaction distinguishes Babuk from other ransomware collectives, many of which changed their rules following the attack to attract less attention from law enforcement.”

The RAMP forum opening was announced by the user “TetyaSluha. That nickname soon switched to “Orange,” who appears to have registered on RAMP with the email address “teresacox19963@gmail.com.” Recall that this is the same email address used by the spokesperson for the Babuk ransomware gang — Boriselcin/Biba99.

In a post on RAMP Aug. 18, 2021, in which Orange is attempting to recruit penetration testers, he claimed the same Tox ID that Biba99 used on RaidForums.

On Aug. 22, Orange announced a new ransomware affiliate program called “Groove,” which claimed to be an aggressive, financially motivated criminal organization dealing in industrial espionage for the previous two years.

In November 2021, Groove’s blog disappeared, and Boriselcin posted a long article to the XSS crime forum explaining that Groove was little more than a pet project to mess with the media and security industries.

On Sept. 13, 2021, Boriselcin posted to XSS saying he would pay handsomely for a reliable, working exploit for CVE-2021-20028, the same exploit that @fuck_maze would later release to Twitter on Jan. 25, 2022.

Asked for comment on this research, cyber intelligence firm Intel 471 confirmed that its analysts reached the same conclusion.

“We identified the user as the Russian national Михаил Павлович Матвеев aka Mikhail Pavlovich Matveev, who was widely known in the underground community as the actor using the Wazawaka handle, a.k.a. Alfredpetr, andry1976, arestedByFbi, boriselcin, donaldo, ebanatv2, futurama, gotowork, m0sad, m1x, Ment0s, ment0s, Ment0s, Mixalen, mrbotnet, Orange, posholnarabotu, popalvprosak, TetyaSluha, uhodiransomwar, and 999,” Intel 471 wrote.

As usual, I put together a rough mind map on how all these data points indicate a connection between Wazawaka, Orange, and Boriselcin.

A mind map connecting Wazawaka to the RAMP forum administrator “Orange” and the founder of the Babuk ransomware gang.

As noted in January’s profile, Wazawaka has worked with at least two different ransomware affiliate programs, including LockBit. Wazawaka said LockBit had paid him roughly $500,000 in commissions for the six months leading up to September 2020.

Wazawaka also said he’d teamed up with DarkSide, the ransomware affiliate group responsible for the six-day outage at Colonial Pipeline last year that caused nationwide fuel shortages and price spikes. The U.S. Department of State has since offered a $5 million reward for information leading to the arrest and conviction of any DarkSide affiliates.

Russian Govt. Continues Carding Shop Crackdown

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Russian authorities have arrested six men accused of operating some of the most active online bazaars for selling stolen payment card data. The crackdown — the second closure of major card fraud shops by Russian authorities in as many weeks — comes closely behind Russia’s arrest of 14 alleged affiliates of the REvil ransomware gang, and has many in the cybercrime underground asking who might be next.

Dept. K’s message for Trump’s Dumps users.

On Feb. 7 and 8, the domains for the carding shops Trump’s Dumps, Ferum Shop, Sky-Fraud and UAS were seized by Department K, a division of the Ministry of Internal Affairs of the Russian Federation that focuses on computer crimes. The websites for the carding stores were retrofitted with a message from Dept. K asking, “Which one of you is next?”

According to cyber intelligence analysts at Flashpoint, that same message was included in the website for UniCC, another major and venerated carding shop that was seized by Dept. K in January.

Around the same time Trump’s Dumps and the other three shops began displaying the Dept. K message, the Russian state-owned news outlet TASS moved a story naming six Russian men who were being charged with “the illegal circulation of means of payment.”

TASS reports the six detained include Denis Pachevsky, general director of Saratovfilm Film Company LLC; Alexander Kovalev, an individual entrepreneur; Artem Bystrykh, an employee of Transtekhkom LLC; Artem Zaitsev; an employee of Get-net LLC; and two unemployed workers, Vladislav Gilev and Yaroslav Solovyov.

None of the stories about the arrests tie the men to the four carding sites. But Flashpoint found that all of the domains seized by Dept. K. were registered and hosted through Zaitsev’s company — Get-net LLC.

“All four sites frequently advertised one another, which is generally atypical for two card marketplaces competing in the same space,” Flashpoint analysts wrote.

Stas Alforov is director of research for Gemini Advisory, a New York firm that monitors underground cybercrime markets. Alforov said it is most unusual for the Russians to go after carding sites that aren’t selling data stolen from Russian citizens.

“It’s not in their business to be taking down Russian card shops,” Alforov said. “Unless those shops were somehow selling data on Russian cardholders, which they weren’t.”

A carding shop that sold stolen credit cards and invoked 45’s likeness and name was among those taken down this week by Russian authorities.

Debuting in 2011, Ferum Shop is one of the oldest observed dark web marketplaces selling “card not present” data (customer payment records stolen from hacked online merchants), according to Gemini.

“Every year for the last 5 years, the marketplace has been a top 5 source of card not present records in terms of records posted for sale,” Gemini found. “In this time period, roughly 66% of Ferum Shop’s records have been from United States financial institutions. The remaining 34% have come from over 200 countries.”

In contrast, Trump’s Dumps focuses on selling card data stolen from hacked point-of-sale devices, and it benefited greatly from the January 2021 retirement of Joker’s Stash, which for years dwarfed most other carding shops by volume. Gemini found Trump’s Dumps gained roughly 40 percent market share after Joker’s closure, and that more than 87 percent of the payment card records it sells are from U.S. financial institutions.

“In the past 5 years, Ferum Shop and Trump’s Dumps have cumulatively added over 64 million compromised payment cards,” Alforov wrote. “Based on average demand for CP and CNP records and the median price of $10, the total revenue from these sales is estimated to be over $430 million. Due to the 20 to 30% commission that shops generally receive, the administrators of Ferum Shop and Trump’s Dumps likely generated between $86 and $129 million in profits from these card sales.”

The arrests of the six men comes less than two weeks after Russian law enforcement officials detained four suspected carders — including Andrey Sergeevich Novak, the reputed owner of the extremely popular and long-running UniCC carding shop.

In 2018, the U.S. Justice Department charged Novak and three dozen other defendants thought to be key members of “Infraud,” a huge cybercrime community online that prosecutors say cost merchants and consumers more than half a billion dollars.

Unicc shop, which sold stolen credit card data as well as Social Security numbers and other consumer information that can be used for identity theft. It was seized by Dept. K in January 2020.

Flashpoint said the recent arrests represent the first major actions against Russia-based cybercriminals since March 2020, when the FSB detained more than thirty members of an illicit carding operation, charging twenty-five of them with “illegal circulation of means of payment.”

Dumps, or card data stolen from compromised point-of-sale devices, have been declining in popularity among fraudsters for years as more financial institutions have issued more secure chip-based cards. In contrast, card-not-present data stolen from online stores continues to be in high demand, because it helps facilitate fraud at online retailers. Gemini says the supply of card-not-present data rose by 50 percent in 2021 versus 2020, fed largely by the success of Magecart e-skimmers that target vulnerabilities in e-commerce sites.

Alforov says while the carding shop closures are curiously timed, he doubts the supply of stolen card data is going to somehow shrink as a result. Rather, he said, some of the lower-tier card shops that were previously just resellers working with Trump’s Dumps and others are now suddenly ramping up inventory with their own new suppliers — very likely thanks to the same crooks who were selling cards to the six men arrested this week in Russia.

“What we’re seeing now is a lot of those reseller shops are coming to the market and saying, ‘We don’t have that order data we were getting from Ferum Shop but now have our own vendors,’” Alforov said. “Some of the lesser tier shops are starting to move up the food chain.”

Microsoft Patch Tuesday, February 2022 Edition

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Microsoft today released software updates to plug security holes in its Windows operating systems and related software. This month’s relatively light patch batch is refreshingly bereft of any zero-day threats, or even scary critical vulnerabilities. But it does fix four dozen flaws, including several that Microsoft says will likely soon be exploited by malware or malcontents.

While none of the patches address bugs that earned Microsoft’s most dire “critical” rating, there are multiple “remote code execution” vulnerabilities that Redmond believes are ripe for exploitation. Among those is CVE-2022-22005, a weakness in Microsoft’s Sharepoint Server versions 2013-2019 that could be exploited by any authenticated user.

“The vulnerability does require an attacker to be authenticated in order to exploit it, which is likely why Microsoft only labeled it ‘Important,’” said Allan Liska, senior security architect at Recorded Future. “However, given the number of stolen credentials readily available on underground markets, getting authenticated could be trivial. Organizations that have public-facing SharePoint Servers should prioritize implementing this patch.”

Kevin Breen at Immersive Labs called attention to CVE-2022-21996, an elevation of privilege vulnerability in the core Windows component “Win32k.”

“In January we saw CVE-2022-21882, a vulnerability in Win32k that was being actively exploited in the wild, which prompted CISA to issue a directive to all federal agencies to mandate that patches be applied,” Breen said. “February sees more patches for the same style of vulnerability in this same component. It’s not clear from the release notes whether this is a brand new vulnerability or if it is related to the previous month’s update. Either way, we have seen attackers leverage this vulnerability so it’s safer to err on the side of caution and update this one quickly.”

Another elevation of privilege flaw CVE-2022-21989 — in the Windows Kernel — was the only vulnerability fixed this month that was publicly disclosed prior to today.

“Despite the lack of critical fixes, it’s worth remembering that attackers love to use elevation of privilege vulnerabilities, of which there are 18 this month,” said Greg Wiseman, product manager at Rapid7. “Remote code execution vulnerabilities are also important to patch, even if they may not be considered ‘wormable.’ In terms of prioritization, defenders should first focus on patching server systems.”

February’s Patch Tuesday is once again brought to you by Print Spooler, the Windows component responsible for handling printing jobs. Four of the bugs quashed in this release relate to our friend Mr. Print Spooler. In July 2021, Microsoft issued an emergency fix for a Print Spooler flaw dubbed “PrintNightmare” that was actively being exploited to remotely compromise Windows PCs. Redmond has been steadily spooling out patches for this service ever since.

One important item to note this week is that Microsoft announced it will start blocking Internet macros by default in Office. This is a big deal because malicious macros hidden in Office documents have become a huge source of intrusions for organizations, and they are often the initial vector for ransomware attacks.

As Andrew Cunningham writes for Ars Technica, under the new regime when files that use macros are downloaded from the Internet, those macros will now be disabled entirely by default. The change will also be enabled for all currently supported standalone versions of Office, including versions 2021, 2019, 2016, and 2013.

“Current versions of the software offer an alert banner on these kinds of files that can be clicked through, but the new version of the banner offers no way to enable the macros,” Cunningham wrote. “The change will be previewed starting in April before being rolled out to all users of the continuously updated Microsoft 365 version of Office starting in June.”

January’s patch release was a tad heavier and rockier than most, with Microsoft forced to re-issue several patches to address unexpected issues caused by the updates. Breen said while February’s comparatively light burden should give system administrators some breathing room, it shouldn’t be viewed as an excuse to skip updates.

“But it does reinforce how important it is to test patches in a staging environment or use a staggered rollout, and why monitoring for any adverse impacts should always be a key step in your patching policy,” Breen said.

For a complete rundown of all patches released by Microsoft today and indexed by severity and other metrics, check out the always-useful Patch Tuesday roundup from the SANS Internet Storm Center. And it’s not a bad idea to hold off updating for a few days until Microsoft works out any kinks in the updates: AskWoody.com usually has the lowdown on any patches that may be causing problems for Windows users.

As always, please consider backing up your system or at least your important documents and data before applying system updates. And if you run into any problems with these patches, please drop a note about it here in the comments.

IRS To Ditch Biometric Requirement for Online Access

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The Internal Revenue Service (IRS) said today it will be transitioning away from requiring biometric data from taxpayers who wish to access their records at the agency’s website. The reversal comes as privacy experts and lawmakers have been pushing the IRS and other federal agencies to find less intrusive methods for validating one’s identity with the U.S. government online.

Late last year, the login page for the IRS was updated with text advising that by the summer of 2022, the only way for taxpayers to access their records at irs.gov will be through ID.me, an online identity verification service that collects biometric data — such as live facial scans using a mobile device or webcam.

The IRS first announced its partnership with ID.me in November, but the press release received virtually no attention. On Jan. 19, KrebsOnSecurity published the story IRS Will Soon Require Selfies for Online Access, detailing a rocky experience signing up for IRS access via ID.me. That story immediately went viral, bringing this site an almost unprecedented amount of traffic. A tweet about it quickly garnered more than two million impressions.

It was clear most readers had no idea these new and more invasive requirements were being put in place at the IRS and other federal agencies (the Social Security Administration also is steering new signups to ID.me).

ID.me says it has approximately 64 million users, with 145,000 new users signing up each day. Still, the bulk of those users are people who have been forced to sign up with ID.me as a condition of receiving state or federal financial assistance, such as unemployment insurance, child tax credit payments, and pandemic assistance funds.

In the face of COVID, dozens of states collectively lost tens of billions of dollars at the hands of identity thieves impersonating out-of-work Americans seeking unemployment insurance. Some 30 states and 10 federal agencies now use ID.me to screen for ID thieves applying for benefits in someone else’s name.

But ID.me has been problematic for many legitimate applicants who saw benefits denied or delayed because they couldn’t complete ID.me’s verification process.  Critics charged the IRS’s plan would unfairly disadvantage people with disabilities or limited access to technology or Internet, and that facial recognition systems tend to be less accurate for people with darker skin.

Many readers were aghast that the IRS would ask people to hand over their biometric and personal data to a private company that begin in 2010 as a way to help veterans, teachers and other public servants qualify for retail discounts. These readers had reasonable questions: Who has (or will have) access to this data? Why should it be stored indefinitely (post-verification)? What happens if ID.me gets breached?

The Washington Post reported today that in a meeting with lawmakers, IRS officials said they were considering another identity verification option that wouldn’t use facial recognition. At the same time, Senate Finance Committee Chairman Ron Wyden (D-Ore.) challenged the Treasury Department and IRS to reconsider the biometric requirements.

In a statement published today, the IRS said it was transitioning away from using a third-party service for facial recognition to help authenticate people creating new online accounts.

“The transition will occur over the coming weeks in order to prevent larger disruptions to taxpayers during filing season,” the IRS said. “During the transition, the IRS will quickly develop and bring online an additional authentication process that does not involve facial recognition. The IRS will also continue to work with its cross-government partners to develop authentication methods that protect taxpayer data and ensure broad access to online tools.”

“The IRS takes taxpayer privacy and security seriously, and we understand the concerns that have been raised,” IRS Commissioner Chuck Rettig wrote. “Everyone should feel comfortable with how their personal information is secured, and we are quickly pursuing short-term options that do not involve facial recognition.”

The statement further stressed that the transition announced today does not interfere with the taxpayer’s ability to file their return or pay taxes owed. “During this period, the IRS will continue to accept tax filings, and it has no other impact on the current tax season,” the IRS said. “People should continue to file their taxes as they normally would.”

It remains unclear what other service or method the IRS will use going forward to validate the identities of new account signups. Wyden and others have urged the IRS to use Login.gov, a single sign-on service that Congress required federal agencies to use in 2015.

“Login.gov is already used to access 200 websites run by 28 Federal agencies and over 40 million Americans have accounts,” Wyden wrote in a letter to the IRS today. “Unfortunately, login.gov has not yet reached its full potential, in part because many agencies have flouted the Congressional mandate that they use it, and because successive Administrations have failed to prioritize digital identity. The cost of this inaction has been billions of dollars in fraud, which has in turn fueled a black market for stolen personal data, and enabled companies like ID.me to commercialize what should be a core government service.”

Login.gov is run by the U.S. General Services Administration, which told The Post that it was “committed to not deploying facial recognition…or any other emerging technology for use with government benefits and services until a rigorous review has given us confidence that we can do so equitably and without causing harm to vulnerable populations.”

How Phishers Are Slinking Their Links Into LinkedIn

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If you received a link to LinkedIn.com via email, SMS or instant message, would you click it? Spammers, phishers and other ne’er-do-wells are hoping you will, because they’ve long taken advantage of a marketing feature on the business networking site which lets them create a LinkedIn.com link that bounces your browser to other websites, such as phishing pages that mimic top online brands (but chiefly Linkedin’s parent firm Microsoft).

At issue is a “redirect” feature available to businesses that chose to market through LinkedIn.com. The LinkedIn redirect links allow customers to track the performance of ad campaigns, while promoting off-site resources. These links or “Slinks” all have a standard format: “https://www.linkedin.com/slink?code=” followed by a short alphanumeric variable.

Here’s the very first Slink created: http://www.linkedin.com/slink?code=1, which redirects to the homepage for LinkedIn Marketing Solutions.

The trouble is, there’s little to stop criminals from leveraging newly registered or hacked LinkedIn business accounts to create their own ad campaigns using Slinks. Urlscan.io, a free service that provides detailed reports on any scanned URLs, also offers a historical look at suspicious links submitted by other users. This search via Urlscan reveals dozens of recent phishing attacks that have leveraged the Slinks feature.

Here’s one example from Jan. 31 that uses Linkedin.com links to redirect anyone who clicks to a site that spoofs Adobe, and then prompts users to log in to their Microsoft email account to view a shared document.

A recent phishing site that abused LinkedIn’s marketing redirect. Image: Urlscan.io.

Urlscan also found this phishing scam from Jan. 12 that uses Slinks to spoof the U.S. Internal Revenue Service. Here’s a Feb. 3 example that leads to a phish targeting Amazon customers. This Nov. 26 sample from Urlscan shows a LinkedIn link redirecting to a Paypal phishing page.

Let me be clear that the activity described in this post is not new. Way back in 2016, security firm Fortinet blogged about LinkedIn’s redirect being used to promote phishing sites and online pharmacies. More recently in late 2021, Jeremy Fuchs of Avanan wrote that the use of a LinkedIn URL may mean that any profession — the market for LinkedIn — could click.

“Plus, more employees have access to billing and invoice information, meaning that a spray-and-pray campaign can be effective,” Fuchs wrote. “The idea is to create a link that contains a clean page, redirecting to a phishing page.”

In a statement provided to KrebsOnSecurity, Linkedin said it has “industry standard technologies in place for URL sharing and chained redirects that help us identify and prevent the spread of malware, phishing and spam.” LinkedIn also said it uses 3rd party services — such as Google Safe Browsing, Spamhaus, Microsoft, and others — to identify known-bad URLs.

KrebsOnSecurity couldn’t find any evidence of phishers recently using LinkedIn’s redirect to phish LinkedIn credentials, but that’s certainly not out of the question. In a less complex attack, an adversary could send an email appearing to be a connection request from LinkedIn that redirects through LinkedIn to a malicious or phishous site.

Also, malicious or phishous emails that leverage LinkedIn’s Slinks are unlikely to be blocked by anti-spam or anti-malware filters, because LinkedIn is widely considered a trusted domain, and the redirect obscures the link’s ultimate destination.

Linkedin’s parent company — Microsoft Corp — is by all accounts the most-phished brand on the Internet today. A report last year from Check Point found roughly 45 percent of all brand phishing attempts globally target Microsoft. Check Point said LinkedIn was the sixth most phished brand last year.

The best advice to sidestep phishing scams is to avoid clicking on links that arrive unbidden in emails, text messages and other mediums. Most phishing scams invoke a temporal element that warns of dire consequences should you fail to respond or act quickly. If you’re unsure whether the message is legitimate, take a deep breath and visit the site or service in question manually — ideally, using a browser bookmark to avoid potential typosquatting sites.

Fake Investor John Bernard Sinks Norwegian Green Shipping Dreams

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Several articles here have delved into the history of John Bernard, the pseudonym used by a fake billionaire technology investor who tricked dozens of startups into giving him tens of millions of dollars. Bernard’s latest victim — a Norwegian company hoping to build a fleet of environmentally friendly shipping vessels — is now embroiled in a lawsuit over a deal gone bad, in which Bernard falsely claimed to have secured $100 million from six other wealthy investors, including the founder of Uber and the artist Abel Makkonen Tesfaye, better known as The Weeknd.

John Bernard is a pseudonym used by John Clifton Davies, a convicted fraudster from the United Kingdom who is currently a fugitive from justice and residing in Ukraine. Davies’ Bernard persona has fleeced dozens of technology companies out of an estimated $30 million with the promise of lucrative investments.

For several years until reinventing himself again quite recently, Bernard pretended to be a billionaire Swiss investor who made his fortunes in the dot-com boom 20 years ago and who was seeking investment opportunities. Bernard generated a stream of victims by offering extraordinarily generous finder’s fees for investment brokers who helped him secure new clients. But those brokers would eventually get stiffed as well because Bernard’s company would never consummate a deal.

In case after case, Bernard would promise to invest millions in tech startups, and then insist that companies pay tens of thousands of dollars worth of due diligence fees up front. However, the due diligence company he insisted on using — another Swiss firm called Inside Knowledge — also was secretly owned by Bernard, who would invariably pull out of the deal after receiving the due diligence money.

The scam artist John Bernard (left) in a recent Zoom call, and a photo of John Clifton Davies from 2015.

But Bernard would adopt a slightly different approach to stealing from Freidig Shipping Ltd., a Norwegian company formed in 2017 that was seeking the equivalent of USD $100 million investment to bring its green fleet of 30 new offshore service vessels to fruition.

Journalists Harald Vanvik and Harald Berglihn from the Norwegian Business Daily write that through investment advisors in London, Bernard was introduced to Nils-Odd Tønnevold, co-founder of Freidig Shipping and an investment advisor with 20 years of experience.

“Both Bernard and Inside Knowledge appeared to be professionals,” the reporters wrote in a story that’s behind a paywall. “Bernard appeared to be experienced. He knew a lot about start-ups and got into things quickly. Credible and reliable was the impression of him, said Tønnevold.”

“Bernard eventually took on the role of principal investor, claiming he had six other wealthy investors on the team, including artist Abel Makkonen Tesfaye, known as The Weeknd, Uber founder Garrett Camp and Norilsk Nickel owner Russian Vladimir Potanin,” the Norwegian journalists wrote. “These committed to contribute $99.25 million to Freidig.”

So in this case Bernard conveniently claimed he’d come up with almost all of the investment, which came $750,000 short of the goal. Another investor, a Belgian named Guy Devos, contributed the remaining $750,000.

But by the spring of 2020, it was clear that Devos and others involved in the shipping project had been tricked, and that all the money which had been paid to Bernard — an estimated NOK 15 million (~USD $1.67 million) — had been lost. By that time the two co-founders and their families had borrowed USD $1.5 million, and had transferred the funds to Inside Knowledge.

“Further investigations indicated that Bernard was in fact a convicted and wanted Briton based in the Ukrainian capital Kiev,” the Norwegian Business Daily reported. “Guy Devos has sued Nils-Odd Tønnevold with a claim of 750,000 dollars because he believes Tønnevold has a responsibility for the money being transferred to Bernard. Tønnevold rejects this.”

Bernard’s scam is genius because he never approaches investors directly; rather, investors are incentivized to put his portfolio in front of tech firms seeking financial backing. And because the best cons begin as an idea or possibility planted in the target’s mind.

What’s remarkable about Freidig Shipping’s fleecing is that we heard about it at all. In the first of this now five-part series, we heard from Jason Kane, an attorney who focuses on investment fraud. Kane said companies bilked by small-time investment schemes rarely pursue legal action, mainly because the legal fees involved can quickly surpass the losses. What’s more, most victims will likely be too ashamed to come forward.

“These are cases where you might win but you’ll never collect any money,” Kane said. “This seems like an investment twist on those fairly simple scams we all can’t believe people fall for, but as scams go this one is pretty good. Do this a few times a year and you can make a decent living and no one is really going to come after you.”

It does appear that Bernard took advantage of a stunning lack of due diligence by the Freidig co-founders. In this May 2020 post on Twitter — well after their funds had already been transferred to Bernard — Nils-Odd Tønnevold can be seen asking Uber co-founder Garrett Camp if he indeed had agreed to invest in his company:

John Clifton Davies, a.k.a. John Bernard, Jonathan Bibi, John Cavendish, is a U.K. man who absconded from justice before being convicted on multiple counts of fraud in 2015. Prior to his conviction, Davies served 16 months in jail on suspicion of murdering his third wife on their honeymoon in India. The U.K. authorities later dropped the murder charges for lack of evidence. Davies currently resides with his fourth wife in or near Kyiv, Ukraine.

If you liked this story, check out my previous reporting on John Bernard/Davies:

Due Diligence That Money Can’t Buy

Who is Tech Investor John Bernard?

Promising Infusions of Cash, Fake Investor John Bernard Walked Away With $30 Million

Investment Scammer John Davies Reinvents Himself?

Who Wrote the ALPHV/BlackCat Ransomware Strain?

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In December 2021, researchers discovered a new ransomware-as-a-service named ALPHV (a.k.a. “BlackCat“), considered to be the first professional cybercrime group to create and use a ransomware strain written in the Rust programming language. In this post, we’ll explore some of the clues left behind by a developer who was reputedly hired to code the ransomware variant.

Image: Varonis.

According to an analysis released this week by Varonis, ALPHV is actively recruiting operators from several ransomware organizations — including REvil, BlackMatter and DarkSide — and is offering affiliates up to 90 percent of any ransom paid by a victim organization.

“The group’s leak site, active since early December 2021, has named over twenty victim organizations as of late January 2022, though the total number of victims, including those that have paid a ransom to avoid exposure, is likely greater,” Varonis’s Jason Hill wrote.

One concern about more malware shifting to Rust is that it is considered a much more secure programming language compared to C and C++, writes Catalin Cimpanu for The Record. The upshot? Security defenders are constantly looking for coding weaknesses in many ransomware strains, and if more start moving to Rust it could become more difficult to find those soft spots.

Researchers at Recorded Future say they believe the ALPHV/BlackCat author was previously involved with the infamous REvil ransomware cartel in some capacity. Earlier this month the Russian government announced that at the United States’ request it arrested 14 individuals in Russia thought to be REvil operators.

Still, REvil rolls on despite these actions, according to Paul Roberts at ReversingLabs. “The recent arrests have NOT led to a noticeable change in detections of REvil malicious files,” Roberts wrote. “In fact, detections of files and other software modules associated with the REvil ransomware increased modestly in the week following the arrests by Russia’s FSB intelligence service.”

Meanwhile, the U.S. State Department has a standing $10 million reward for information leading to the identification or location of any individuals holding key leadership positions in REvil.

WHO IS BINRS?

A confidential source recently had a private conversation with a support representative who fields questions and inquiries on several cybercrime forums on behalf of a large and popular ransomware affiliate program. The affiliate rep confirmed that a coder for ALPHV was known by the handle “Binrs” on multiple Russian-language forums.

On the cybercrime forum RAMP, the user Binrs says they are a Rust developer who’s been coding for 6 years. “My stack is Rust, nodejs, php, golang,” Binrs said in an introductory post, in which they claim to be fluent in English. Binrs then signs the post with their identification number for ToX, a peer-to-peer instant messaging service.

That same ToX ID was claimed by a user called “smiseo” on the Russian forum BHF, in which smiseo advertises “clipper” malware written in Rust that swaps in the attacker’s bitcoin address when the victim copies a cryptocurrency address to their computer’s temporary clipboard.

The nickname “YBCat” advertised that same ToX ID on Carder[.]uk, where this user claimed ownership over the Telegram account @CookieDays, and said they could be hired to do software and bot development “of any level of complexity.” YBCat mostly sold “installs,” offering paying customers to ability to load malware of their choice on thousands of hacked computers simultaneously.

There is also an active user named Binrs on the Russian crime forum wwh-club[.]co who says they’re a Rust coder who can be reached at the @CookieDays Telegram account.

On the Russian forum Lolzteam, a member with the username “DuckerMan” uses the @CookieDays Telegram account in his signature. In one thread, DuckerMan promotes an affiliate program called CookieDays that lets people make money by getting others to install cryptomining programs that are infected with malware. In another thread, DuckerMan is selling a different clipboard hijacking program called Chloe Clipper.

The CookieDays moneymaking program.

According to threat intelligence firm Flashpoint, the Telegram user DuckerMan employed another alias — Sergey Duck. These accounts were most active in the Telegram channels “Bank Accounts Selling,” “Malware developers community,” and “Raidforums,” a popular English-language cybercrime forum.

I AM DUCKERMAN

The GitHub account for a Sergey DuckerMan lists dozens of code repositories this user has posted online over the years. The majority of these projects were written in Rust, and the rest in PHP, Golang and Nodejs — the same coding languages specified by Binrs on RAMP. The Sergey DuckerMan GitHub account also says it is associated with the “DuckerMan” account on Telegram.

Sergey DuckerMan’s GitHub profile.

Sergey DuckerMan has left many accolades for other programmers on GitHub — 460 to be exact. In June 2020, for example, DuckerMan gave a star to a proof-of-concept ransomware strain written in Rust.

Sergey DuckerMan’s Github profile says their social media account at Vkontakte (Russian version of Facebook/Meta) is vk.com/duckermanit. That profile is restricted to friends-only, but states that it belongs to a Sergey Pechnikov from Shuya, Russia.

A look at the Duckermanit VKontakte profile in Archive.org shows that until recently it bore a different name: Sergey Kryakov. The current profile image on the Pechnikov account shows a young man standing closely next to a young woman.

KrebsOnSecurity reached out to Pechnikov in transliterated Russian via the instant message feature built into VKontakte.

“I’ve heard about ALPHV,” Pechnikov replied in English. “It sounds really cool and I’m glad that Rust becomes more and more popular, even in malware sphere. But I don’t have any connections with ransomware at all.”

I began explaining the clues that led to his VK account, and how a key cybercriminal actor in the ransomware space had confirmed that Binrs was a core developer for the ALPHV ransomware.

“Binrs isn’t even a programmer,” Pechnikov interjected. “He/she can’t be a DuckerMan. I am DuckerMan.”

BK: Right. Well, according to Flashpoint, the Telegram user DuckerMan also used the alias Sergey Duck.

Sergey: Yep, that’s me.

BK: So you can see already how I arrived at your profile?

Sergey: Yep, you’re a really good investigator.

BK: I noticed this profile used to have a different name attached to it. A ‘Sergey Kryakov.’

Sergey: It was my old surname. But I hated it so much I changed it.

BK: What did you mean Binrs isn’t even a programmer?

Sergey: I haven’t found any [of] his accounts on sites like GitHub/stack overflow. I’m not sure, does binrs sell Rust Clipper?

BK: So you know his work! I take it that despite all of this, you maintain you are not involved in coding malware?

Sergey: Well, no, but I have some “connections” with these guys. Speaking about Binrs, I’ve been researching his personality since October too.

BK: Interesting. What made you want to research his personality? Also, please help me understand what you mean by “connections.”

Sergey: I think he is actually a group of some people. I’ve written him on telegram from different accounts, and his way of speaking is different. Maybe some of them somehow tied with ALPHV. But on forums (I’ve checked only XSS and Exploit) his ways of speaking are the same.

BK: …..

Sergey: I don’t know how to explain this. By the way, binrs now is really silent, I think he’s lying low. Well, this is all I know.

No doubt he is. I enjoyed speaking with Sergey, but I also had difficulty believing most of what he said. Also, I was bothered that Sergey hadn’t exactly disputed the logic behind the clues that led to his VK account. In fact, he’d stated several times that he was impressed with the investigation.

In many previous Breadcrumbs stories, it is common at this point for the interviewee to claim they were being set up or framed. But Sergey never even floated the idea.

I asked Sergey what might explain all these connections if he wasn’t somehow involved in coding malicious software. His answer, our final exchange, was again equivocal.

“Well, all I have is code on my github,” he replied. “So it can be used [by] anyone, but I don’t think my projects suit for malwares.”

Scary Fraud Ensues When ID Theft & Usury Collide

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What’s worse than finding out that identity thieves took out a 546 percent interest payday loan in your name? How about a 900 percent interest loan? Or how about not learning of the fraudulent loan until it gets handed off to collection agents? One reader’s nightmare experience spotlights what can happen when ID thieves and hackers start targeting online payday lenders.

The reader who shared this story (and copious documentation to go with it) asked to have his real name omitted to avoid encouraging further attacks against his identity. So we’ll just call him “Jim.” Last May, someone applied for some type of loan in Jim’s name. The request was likely sent to an online portal that takes the borrower’s loan application details and shares them with multiple prospective lenders, because Jim said over the next few days he received dozens of emails and calls from lenders wanting to approve him for a loan.

Many of these lenders were eager to give Jim money because they were charging exorbitant 500-900 percent interest rates for their loans. But Jim has long had a security freeze on his credit file with the three major consumer credit reporting bureaus, and none of the lenders seemed willing to proceed without at least a peek at his credit history.

Among the companies that checked to see if Jim still wanted that loan he never applied for last May was Mountain Summit Financial (MSF), a lending institution owned by a Native American tribe in California called the Habematelol Pomo of Upper Lake.

Jim told MSF and others who called or emailed that identity thieves had applied for the funds using his name and information; that he would never take out a payday loan; and would they please remove his information from their database? Jim says MSF assured him it would, and the loan was never issued.

Jim spent months sorting out that mess with MSF and other potential lenders, but after a while the inquiries died down. Then on Nov. 27 — Thanksgiving Day weekend — Jim got a series of rapid-fire emails from MSF saying they’ve received his loan application, that they’d approved it, and that the funds requested were now available at the bank account specified in his MSF profile.

Curiously, the fraudsters had taken out a loan in Jim’s name with MSF using his real email address — the same email address the fraudsters had used to impersonate him to MSF back in May 2021. Although he didn’t technically have an account with MSF, their authentication system is based on email addresses, so Jim requested that a password reset link be sent to his email address. That worked, and once inside the account Jim could see more about the loan details:

The terms of the unauthorized loan in Jim’s name from MSF.

Take a look at that 546.56 percent interest rate and finance charges listed in this $1,000 loan. If you pay this loan off in a year at the suggested bi-weekly payment amounts, you will have paid $3,903.57 for that $1,000.

Jim contacted MSF as soon as they opened the following week and found out the money had already been dispersed to a Bank of America account Jim didn’t recognize. MSF had Jim fill out an affidavit claiming the loan was the result of identity theft, which necessitated filing a report with the local police and a number of other steps. Jim said numerous calls to Bank of America’s fraud team went nowhere because they refused to discuss an account that was not in his name.

Jim said MSF ultimately agreed that the loan wasn’t legitimate, but they couldn’t or wouldn’t tell him how his information got pushed through to a loan — even though MSF was never able to pull his credit file.

Then in mid-January, Jim heard from MSF via snail mail that they’d discovered a data breach.

“We believe the outsider may have had an opportunity to access the accounts of certain customers, including your account, at which point they would be able to view personal information pertaining to that customer and potentially obtain an unauthorized loan using the customer’s credentials,” MSF said.

MSF said the personal information involved in this incident may have included name, date of birth, government-issued identification numbers (e.g., SSN or DLN), bank account number and routing number, home address, email address, phone number and other general loan information.

A portion of the Jan. 14, 2022 breach notification letter from tribal lender Mountain Summit Financial.

Nevermind that his information was only in MSF’s system because of an earlier attempt by ID thieves: The intruders were able to update his existing (never-deleted) record with new banking information and then push the application through MSF’s systems.

“MSF was the target of a suspected third-party attack,” the company said, noting that it was working with the FBI, the California Sheriff’s Office, and the Tribal Commission for Lake County, Calif.  “Ultimately, MSF confirmed that these trends were part of an attack that originated outside of the company.”

MSF has not responded to questions about the aforementioned third party or parties that may be involved. But it is possible that other tribal lenders could have been affected: Jim said that not long after the phony MSF payday loan was pushed through, he received at least three inquiries in rapid succession from other lenders who were all of a sudden interested in offering him a loan.

In a statement sent to KrebsOnSecurity, MSF said it was “the victim of a malicious attack that originated outside of the company, by unknown perpetrators.”

“As soon as the issue was uncovered, the company initiated cybersecurity incident response measures to protect and secure its information; and notified law enforcement and regulators,” MSF wrote. “Additionally, the company has notified individuals whose personal identifiable information may have been impacted by this crime and is actively working with law enforcement in its investigation. As this is an ongoing criminal investigation, we can make no additional comment at this time.”

According to the Native American Financial Services Association (NAFSA), a trade group in Washington, D.C. representing tribal lenders, the short-term installment loan products offered by NAFSA members are not payday loans but rather “installment loans” — which are amortized, have a definite loan term, and require payments that go toward not just interest, but that also pay down the loan principal.

NAFSA did not respond to multiple requests for comment.

Nearly all U.S. states have usury laws that limit the amount of interest a company can charge on a loan, but those limits traditionally haven’t applied to tribal lenders.

Leslie Bailey is a staff attorney at Public Justice, a nonprofit legal advocacy organization in Oakland, Calif. Bailey says an increasing number of online payday lenders have sought affiliations with Native American tribes in an effort to take advantage of the tribes’ special legal status as sovereign nations.

“The reason is clear: Genuine tribal businesses are entitled to ‘tribal immunity,’ meaning they can’t be sued,” Bailey wrote in a blog post. “If a payday lender can shield itself with tribal immunity, it can keep making loans with illegally-high interest rates without being held accountable for breaking state usury laws.”

Bailey said in one common type of arrangement, the lender provides the necessary capital, expertise, staff, technology, and corporate structure to run the lending business and keeps most of the profits. In exchange for a small percent of the revenue (usually 1-2%), the tribe agrees to help draw up paperwork designating the tribe as the owner and operator of the lending business.

“Then, if the lender is sued in court by a state agency or a group of cheated borrowers, the lender relies on this paperwork to claim it is entitled to immunity as if it were itself a tribe,” Bailey wrote. “This type of arrangement — sometimes called ‘rent-a-tribe’ — worked well for lenders for a while, because many courts took the corporate documents at face value rather than peering behind the curtain at who’s really getting the money and how the business is actually run. But if recent events are any indication, legal landscape is shifting towards increased accountability and transparency.”

In 2017, the Consumer Financial Protection Bureau sued four tribal online payday lenders in federal court — including Mountain Summit Financial — for allegedly deceiving consumers and collecting debt that was not legally owed in many states. All four companies are owned by the Habematolel Pomo of Upper Lake.

The CFPB later dropped that inquiry. But a class action lawsuit (PDF) against those same four lenders is proceeding in Virginia, where a group of plaintiffs have alleged the defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and Virginia usury laws by charging interest rates between 544 and 920 percent.

According to Buckley LLP, a financial services law firm based in Washington, D.C., a district court dismissed the RICO claims but denied the defense’s motion to compel arbitration and dismiss the case, ruling that the arbitration provision was unenforceable as a prospective waiver of the borrowers’ federal rights and that the defendants could not claim tribal sovereign immunity. The district court also “held the loan agreements’ choice of tribal law unenforceable as a violation of Virginia’s strong public policy against unregulated lending of usurious loans.”

Buckley notes that on Nov. 16, 2021, the U.S. Court of Appeals for the Fourth Circuit upheld the district court ruling, concluding that the arbitration clauses in the loan agreements “impermissibly force borrowers to waive their federal substantive rights under federal consumer protection laws, and contained an unenforceable tribal choice-of-law provision because Virginia law caps general interest rates at 12 percent.”

Jim said he learned of the Thanksgiving weekend MSF loan only because the hackers apparently figured it was easier to push through loans using existing MSF customer account information than it was to alter anything in the records other than the bank account for receiving the funds.

But had the hackers changed the email address, Jim might have first found out about the loan when the collection agencies came calling. And by then, his exorbitant loan would be in default and racking up some wicked late charges.

Jim says he’s still hopping mad at MSF, and these days he’s just waiting for the other shoe to drop.

“They issued this loan in my name without verification and without even checking my credit at all, even though they were already on notice that they shouldn’t have been dealing with me from the May incident,” Jim said. “I still feel like I’m going to get that call at some point from a collection agency asking why I haven’t been making payments on some installment loan I never asked for.”