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Appstore and the forty thieves

Friday 16th March 2012
Getting hacked with no comeback.

Apple iTunes and its App Store has become either vulnerable to external hackers or maybe have their own internal thieves, as both app buyers and app creators are being defrauded with very little response from Apple Mac itself. Motto, do not buy iTunes money cards.

In The New York Times  article, Ryan Matthew Pierson racked up $437.71 in iTunes charges for virtual currency that he could use to buy guns, nightclubs and cars in iMobsters, a popular iPhone game. But Mr. Pierson, a technology writer in Texas, has never played iMobsters..

“This was fraud,” he as quoted  recalling the November incident. “I woke up, checked my e-mail, and I could see these purchases happening in real time.” He  raised the issue with Apple and his bank, and the problem was eventually resolved. But his experience is hardly unique, as reflected by hundreds of online complaints saying that Apple’s iTunes Store, and in particular its App Store, which the company portrays as the safest of shopping environments, is not so secure.

Mr Pierson was lucky to have a bank to fight for him. Gaberlunzie also racked up payments for a game he had never heard off, and has been trying to find out how much is missing for a gift card with only a couple of purchases on it.

Apple Store who apparently allowed this to happen even after he'd changed his identity and password at Apple's request and despite this occurring in January, has had not satisfactory answer as yet to what remains in his account. Having changed his identity, it looks like Apple can now pretend the money never existed.
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Complaints come not only from consumers but also from apps' creators who are having to deal with fraudulent purchases that drain their time and resources. Software makers also complain that competition in the App Store has become so brutal that many companies resort to artificially inflating their popularity rankings to grab attention.

Apple, once criticised for its micromanaging of the App Store now seems to have no control. With more than 600,000 applications for iPhones, iPads and iPodTouches, it has generated billions in Apple and developer revenues as it is the only source that  Apple users can use to buy software. That makes it a wonderful hacker  target.

Apple declined a NYT request for an interview, but at least it answered the New York Times. In a statement it said that it was working to enhance security advising customers whose payment information had been stolen to change their iTunes passwords and to contact their financial institutions.

But if the money was sitting in the Apple Store in an Apple card and you've been forced by Apple to change your identity and password, then of course, you have lost all rights to that money and that old identity and the Apple Store can quietly clean up.

NYT  notes it’s often unclear how criminals get iTunes passwords or credit card information. But the App Store, and Apple’s broader iTunes Store, have become playgrounds for illicit transactions. And the Web is rife with App Store scams.

On Chinese online marketplaces, like Taobao or DHgate, some sellers offer access to iTunes accounts for as little as $33. One seller on DHgate, for instance, has sold 56 iTunes accounts for less than $35 each, promising thousands of dollars in “credit.”

There are services that claim to generate codes for iTunes gift cards, and forums that explain how to use prepaid Visa cards to get free App Store purchases.

The scale of the problem may indeed be difficult to gauge without Apple’s cooperation, though there is such widespread anecdotal evidence, even on Apple’s own site, that the fire must well alight.

On one Apple support forum, a thread titled “iTunes store account hacked,” there are some 1,370 replies, starting in November 2010 and extending to Thursday. Last week, more than 100 people on Twitter who said they were iTunes users complained about stolen funds.

Last month, Daniel Saewitz, a 20-year-old Syracuse University student, was charged $81 for purchases related to a Chinese iPhone game. He alerted Apple and changed his iTunes password. But 24 hours later, he said, his account was hacked again. In an e-mail, Apple said it was refunding Mr. Saewitz’s money, but added that it was making an exception to its usual rules.

Yes, Gaberlunzie agrees, that is quite common and what happened to him and it makes one feel the purloining may even be within the Apple iTunes organisation.

APPLE SIMPLY IGNORES FRAUDULENT TRANSACTIONS
 For developers, the scams can cause big headaches, eating up resources and damaging their reputations. Several game makers in China, where many of the hacks appear to originate, said they had lost hundreds of thousands of dollars because of fraud.

Hoolai Game, a Beijing-based developer that introduced an iPhone app last year, looked at its monthly payments from Apple and found that they were roughly 20 to 50 percent less than the sum of the daily reports it gets from the company. Hoolai and others say they believe these missing payments are fraudulent transactions that are wiped out by Apple.

More troubling for developers is that consumers whose accounts have been improperly charged often blame the game makers. The reviews in the App Store for Kingdom Conquest, from the Japanese game giant Sega, include dozens from incensed users who accuse Sega of robbing them.


Sega, which first noticed a burst of fraudulent transactions last summer, is still working on the problem, according to Ben Harborne, a brand manager at the company. “We are very worried about reputation,” said Jian Huang, the president of Hoolai, who hopes to introduce a game in the United States later this year. “We have no way to tell the customer that we’re victims too.”

One successful American game developer, who spoke on condition of anonymity for fear of retribution by Apple, said he started to notice discrepancies in payments last summer.

The developer said his team had sent multiple e-mails to Apple, but that it had not addressed whether the missing payments were a result of fraud. Over the last year, the gap has amounted to millions of dollars, according to internal documents provided by the developer.

With little action from Apple, some affected developers have banded together. One Chinese developer, CocoaChina, has created an antifraud alliance of roughly a dozen developers.

While many of the affected consumers and developers said they did not blame Apple for their misfortunes, nearly all said the company could be more responsive, and noted that it lacked even a dedicated phone line to deal with complaints.

“Apple wants to pretend that everything is magic,” said Alex Stamos, co-founder of iSEC Partners, a security firm. “They need to admit that their products can be used by bad people to do bad things.”
One problem, Mr. Stamos said, is that iTunes customers use a single account and password to access all Apple services. For example, the same login can be used to download a $1 game or buy a $2,000 laptop through the Apple Store app.

He said that Apple could adopt a two-step verification method like Google’s. For example, if a user wanted to log in to the iTunes store on a new device, Apple could send a message to his iPhone containing a code, which he would enter to verify his identity.

Some App Store problems are the fault of the developers themselves — including those who make it harder for consumers to trust the store by cheating the system. The easiest ways to find new apps are Apple’s Top 25 lists for different categories, including “most downloaded.” But some of those downloads may not be generated by real people.

Walter Kaman, an independent programmer, said he was disheartened by a phone call from a service that offered to put his game in the Top 25. He said the promoter, whom he declined to name so as not to attract clients to the service, had hired someone to build an army of software “bots” that automatically download apps and drive up their rankings. The company wanted $5,000 for this service, said Mr. Kaman, who declined.

Mr. Edery of Spry Fox said his company was approached in October by a firm called GTekna, which offered to push its apps into the Top 25 for $10,000. Chang-Min Pak, GTekna’s chief executive, said in an interview this week that it stopped offering such a service because Apple reminded developers in February that it was not allowed.

Then there are the customers who have been tricked into downloading apps that are not what they seem to be. Apple has strict guidelines for developers, and it has tools and human reviewers to screen apps. But bad ones do slip through. One $2 app, for example, promises extra virtual coins for people playing the game DragonVale. But when customers download the app, no coins appear. The app has received dozens of one-star reviews from customers complaining that it is a scam and should be removed.

John Casasanta, owner of the iPhone app studio Tap Tap Tap, said the issue of developers manipulating the App Store remained largely unaddressed. “Apple has been doing the barest minimum to keep these things under control, because from their perspective, there’s simply not a problem,” Mr. Casasanta said. 

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