REDMOND, Wash. — March 25, 2012 — In its most complex effort to disrupt botnets to date, Microsoft Corp., in collaboration with the financial services industry — including the Financial Services – Information Sharing and Analysis Center (FS-ISAC) and NACHA – The Electronic Payments Association — as well as Kyrus Tech Inc., announced it has successfully executed a coordinated global action against some of the most notorious cybercrime operations that fuel online fraud and identity theft. With this legal and technical action, a number of the most harmful botnets using the Zeus family of malware worldwide have been disrupted in an unprecedented, proactive cross-industry action against this cybercriminal organization.

Through an extensive and collaborative investigation into the Zeus threat, Microsoft and its banking, finance and technical partners discovered that once a computer is infected with Zeus, the malware can monitor a victim’s online activity and automatically start keylogging, or recording a person’s every keystroke, when a person types in the name of a financial institution or ecommerce site. With this information, cybercriminals can steal personal information that can be used for identity theft or to fraudulently make purchases or access other private accounts. In fact, since 2007, Microsoft has detected more than 13 million suspected infections of the Zeus malware worldwide, including approximately 3 million computers in the United States alone.

“With this action, we’ve disrupted a critical source of money-making for digital fraudsters and cyberthieves, while gaining important information to help identify those responsible and better protect victims,” said Richard Boscovich, senior attorney for the Microsoft Digital Crimes Unit. “The Microsoft Digital Crimes Unit has long been working to combat cybercrime operations, and today is a particularly important strike against cybercrime that we expect will be felt across the criminal underground for a long time to come.”

This disruption was made possible through a successful pleading before the U.S. District Court for the Eastern District of New York, which allowed Microsoft and its partners to conduct a coordinated seizure of command and control servers running some of the worst known Zeus botnets. Because the botnet operators used Zeus to steal victims’ online banking credentials and transfer stolen funds, FS-ISAC and NACHA joined Microsoft as plaintiffs in the civil suit, and Kyrus Tech Inc. served as a declarant in the case. Other organizations, including F-Secure, also provided supporting information for the case.

As a part of the operation, on March 23, Microsoft and its co-plaintiffs, escorted by the U.S. Marshals, seized command and control servers in two hosting locations, Scranton, Pa., and Lombard, Ill., to seize and preserve valuable data and virtual evidence from the botnets for the case. Microsoft and its partners took down two Internet Protocol addresses behind the Zeus command and control structure, and Microsoft is currently monitoring 800 domains secured in the operation, which are helping identify thousands of computers infected by Zeus.

This is the second time Microsoft has conducted physical seizures in a botnet operation, and it is the first time other organizations have joined Microsoft as plaintiffs in the legal case for a botnet operation. This is also the first operation for Microsoft that involved the simultaneous disruption of multiple operating botnets in a single action and is the first known time the Racketeer Influenced and Corrupt Organizations (RICO) Act has been applied as the legal basis in a consolidated civil case to charge all those responsible in the use of a botnet.

“As crimes against banks and their customers move from stickups to mouse clicks, we’re also using our own mouse clicks — as well as the law — to help protect consumers and businesses,” said Greg Garcia, a spokesperson for the three major financial industry associations that worked with Microsoft on this initiative. “Disrupting the Zeus botnets is just one strike in our long-term commitment to help defend and protect people.”

Because of the complexities of these targets, unlike Microsoft’s previous botnet operations, the goal of this action was not to permanently shut down all impacted Zeus botnets. However, this action is expected to significantly impact the cybercriminals’ operations and infrastructure, advance global efforts to help victims regain control of their infected computers, and also help further investigations against those responsible for the threat. As with its previous botnet operations, Microsoft will now use the intelligence gained from this operation to partner with Internet service providers and Community Emergency Response Teams around the world to help rescue people’s computers from the control of Zeus, helping to reduce the size of the threat that these botnets pose and to help make the Internet safer for consumers and businesses worldwide. Together, these aspects of the operation are expected to undermine the criminal infrastructure that relies on these botnets every day to make money and to help provide new tools for the industry to work together to proactively fight cybercrime.

Michael Tanji, chief security officer of Kyrus Tech Inc., who helped analyze the Zeus malware and determine which botnets were the most dangerous said, “We are proud to have played a part in this groundbreaking effort and hope that others will start working together to combat malicious activity at the same scale as it is being perpetrated.”

There are steps consumers and businesses can take to better help protect themselves from becoming victims of malware, fraud and identity theft. All computer users should exercise safe practices, such as running up-to-date and legitimate computer software, firewall protection, and antivirus or antimalware protection. People should also exercise caution when surfing the Web and clicking on ads or email attachments that may prove to be malicious. For computer owners worried their computers might be infected, Microsoft offers free information and malware cleaning tools at http://support.microsoft.com/botnets that can help people remove Zeus and other malware from their computers. For businesses looking for more information about corporate account takeover issues, including those due to malicious software, a fraud advisory from FS-ISAC, the FBI and the U.S. Secret Service can be found at http://www.fsisac.com/files/public/db/p265.pdf.

More information about today’s news and the coordinated action against Zeus is available at http://www.microsoft.com/presspass/presskits/dcu. Legal documentation in the case can be found at http://www.zeuslegalnotice.com.