Hong Kong domains are the most dangerous in the world; this little factoid from a recent McAfee report [PDF] generated quite a bit of media coverage, and even made TIME magazine‘s top stories list (here is McAfee’s press release on the subject). But all is not as it seems, and aspects of the report may have been out of date before the report was even published.

McAfee’s study seems to be based on a year’s worth of data, and last year was a particularly bad year for the Hong Kong domain, thanks to a gang of botnet spammers registering thousands of domains under the .hk ccTLD.

These domains were most likely registered using stolen credit cards, and contained bogus information in the whois records. The contact email address for each domain was usually an email address at a random free webmail site like Yahoo, Hotmail, or some free webmail domains hosted on Outblaze, where I head the anti-spam operations.

The .hk domains started turning up in spam for porn, fake prescription medication, phishing (identity theft) and many other illegal schemes such as “money mule recruitment”, where people are conned into running an “export agency” and unwittingly become conduits for money laundering and receivers of goods bought with stolen credit cards.

This certainly turned out to be a gigantic reputation problem for the .hk ccTLD—far more scam domains were being registered under .hk than legitimate domains. Even worse, these scam domains were being hosted on botnets.

A botnet is a very large, highly failure-tolerant and distributed network. It is also international in nature, so that a child pornography website hosted on an infected PC in Hong Kong could turn up the very next minute on an infected laptop in Brazil. With distributed peer-to-peer botnets the domain name used by a botnet is sometimes its single point of failure.

Registrars (which provide domain registration services) and Registries (which administer gTLDs and ccTLDs) are therefore crucial to any attempt to mitigate botnets.

HKDNR, the registry for the .hk ccTLD, was initially slow to react to this problem, prompting antivirus and anti-phishing researchers like Gary Warner (now Director of Research in Computer Forensics & Cybercrime at the University of Alabama at Birmingham) to declare a “crisis situation” in a March 2007 email to a mailing list that discusses phishing. In the email he accused HKDNR of inaction and insufficient response to the concerns of the anti-spam community.

HKDNR and the Hong Kong CERT (HKCERT) were accused of responding to complaints with canned letters that promised to investigate, but appeared to take no action at all. The response letters (samples of which he quoted in his email) encouraged complainants from outside Hong Kong to “report the matter to their local law enforcement agencies”. Which is, of course, appropriate, but is not a substitute for quick deactivation of these scam domains.

By late 2007, the number of .hk domains registered by scam artists numbered in the tens of thousands. Action by various groups (independent technologists, anti-spam block list providers, CERT teams, law enforcement and regulatory agencies) then seemed to convince HKDNR of the need to take immediate drastic action against scam domains registered in the .hk ccTLD.

As the Postmaster and Head of Anti-spam Operations for Outblaze, I contributed to the effort by providing a feed of several thousand .hk domains from spam reported on our network of 40 million hosted email users.

The results were astounding. Over 10,000 scam domains were terminated in a matter of days. Long term measures were also put in place, such as:

• Credit card fraud prevention, including Verified by Visa (most of these scam domains were registered using stolen credit cards)
• Due diligence measures to detect fake domain registration
• Closer cooperation of HKDNR with relevant authorities and agencies.

International cooperation is vital for two reasons:

1. as an early warning when scam artists attempt to set up shop again
2. as a way to share best practices with groups, associations, government regulators, and law enforcement agencies working on the prevention of spam and cybercrime.

In a matter of days, the huge concentration of scammer domains in the .hk ccTLD scattered, shifting to other countries and ccTLDs. Some moved to China (as the McAfee report indicates, a large number of scammer domains still exist in .cn space) and others went onto .biz, .info, and even ccTLDs like .ma (Morocco).

The botnet problem is clearly international, and registrars and registries around the world are vulnerable to what HKDNR suffered last year. While it might be stale news in that HKDNR has already dealt with this problem, it serves as a reminder that botnet criminals are still out there and still causing trouble. Spam and cybercrime are hitting record levels and that there is a need for constant awareness and joint efforts to mitigate the menace that botnets have evolved into over the last few years.

I have earlier written a long and detailed paper [PDF] on botnet mitigation for the International Telecommunications Union (ITU) as part of the ITU’s Botnet Mitigation Toolkit.

It discusses the threat that botnets pose to the worldwide community of Internet users, and describes an interlinked set of policy, technology, and civil society approaches to the problem of botnets. Most of what I have written in this blog entry is already present in the ITU paper, so I will stop here and encourage people reading this to glance at the paper as well. It is 100 pages long so probably not bedtime reading, but I’d still appreciate your comments.