China to Clamp Down on Credit Siphoning Mobile Trojans

The Chinese government is determined to crack down on fraud schemes that rely on mobile malware to steal money from consumers by sending unauthorized text messages or silently making phone calls.

The problem has existed for a long time, but things have gotten worse lately with the increased popularity of Android-based handsets.

Unbranded or knockoff Android smartphones are cheap and easy to come by in China, making them attractive products for the hundreds of millions of mobile consumers in the country.

Such phones come preloaded with popular applications, however, some sellers go a step further and also install hidden and malicious software.

These specially designed trojans are part of mobile "penny shaving" schemes, that involve silently sending SMS messages or making phone calls to special numbers.

The value of the SMS messages or the phone calls is actually very low in order to keep users from noticing or caring about the incurred costs.

However, collecting $0.05 from 1 million users means $50,000. Doing it several times means hundreds of thousands, which is huge in an economy like China's.

These rogue apps are not only preloaded onto phones, but are bundled together with otherwise legit apps and distributed from custom app markets.

The Chinese Ministry of Industry and Information Technology (MIIT) announced [Google translation] an initiative to crack down on these schemes.

It involves raising awareness among consumers, increasing the responsibility of telecom operators and mobile phone retailers, improving product quality supervision and inspection and regulating the practice of software preloading.

A special government team will also be created to receive and investigate complaints related to such mobile credit siphoning schemes.

This effort is part of a larger campaign to reduce intellectual property theft and trademark infringement in the country. Meanwhile, forged distribution permits for mobile devices and other electronic equipment are also a serious problem the government hopes to combat.