Online bookmakers who become victims of online extortion attacks more often than not pay up, according to an IBM security researcher. Martin Overton of IBM Global Services said those at the receiving end of denial of service attacks also often fail to report assaults to police despite improved policy procedures to guard the anonymity of victims in the UK and elsewhere.

"Criminals are pricing extortion rates at under the cost of preventing attacks. It's cheaper to pay up even if this encourages them [crooks] even more," he said. According to a recent study by analysts Forrester, one in three businesses has been at the receiving end of a successful DDoS attack, with more than 40 per cent suffering losses of more than £54,000 as a result. Victims who pay extortionists are playing into the hands of cybercrooks and likely to receive repeat protection money requests. By paying protection money they are increasing the threat to other businesses.

Botnets (networks of compromised PCs controlled by hackers) have been used as a platform for distributed denial of service attacks since infamous hacker Mafiaboy launched an attack from compromised machines against Yahoo!, eBay and Amazon at the turn of the millennium. Modern IRC-controlled bots are designed to be almost invisible and extensible. The increased sophistication and prevalence of malware agents responsible for the creation of botnets is only making matters worse.

Overton, a member of the British Tarantula Society, explained that botnet infestations are rife and can cause significant damage to the infected network owner due to lost bandwidth, data theft and possible loss of credibility. Common and widespread bot families include SDbot, Agobot, Spybot, Polybot and Mytob. Upwards of 12,800 variants of SDbot have been created, a figure which has doubled in the last six months, according to Overton. Source code for early versions of SDBot are readily available and have become a building block for spammers, DDoS attackers and other ne'er do wells to add extra components and release in the hopes of seeding a bot network under their control. McAfee has identified 3,821 copies of Agobot but production of this strain has "tailed off" over recent months. Of these 396 variants are non-functional. "Virus writers are pushing variants out so fast they don't always work first time," Overton said, adding that improved security policies and procedures were key to fighting the scourge of botnets.

Overton made his comments during a well received presentation on botnets at the Virus Bulletin conference in Dublin on Wednesday. ®

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