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2011 was a banner year for the Android operating system – as well as for Android malware. The increasing number of Android users made it profitable for attackers to go after them in full force, as we’ve been saying all year long.

Where are the threats coming from?

Many of these threats arrive via third-party app stores, particularly in China (where access to the Android Market can be irregular at times). While the app stores are not necessarily malicious, they simply do not have the resources to adequately curate submissions. As a result, malicious, repackaged, and pirated applications are frequently found in these independent app stores.

What kinds of threats are we seeing?

What kinds of threats did we see in the mobile arena? Some of them have been seen previously for older OSes, such as premium service abusers that sign users up for paid services they didn’t subscribe to. In fact, these premium service abusers were the biggest threat in 2011, with these malicious apps reaching not just third-party stores, but the Android Market as well (as in the case of RuFraud, DroidDream and DroidDreamLight).

This threat type is popular because it offers cybercriminals a direct path to profit. However, we are also seeing more sophisticated threats emerge. Some of these kinds of threats have long been seen in the desktop platform. As mobile threats grow in sophistication, it should not be a surprise that tactics are being recycled, as it were.

Information theft has long been a problem on desktops, but now it is affecting mobile platforms as well. The well-documented DroidDreamLight family is a good case in point: earlier versions restricted themselves to stealing information related to the device; newer variants now steal such personal information such as text messages and call logs. For an attacker more interested in stealing corporate secrets rather than money, such information could be priceless.

However, if attackers are interested in stealing financial information, that threat also grew in 2011. While the first cases of ZITMO – mobile malware that works with ZeuS to defeat two-factor authentication systems on mobile phones – were seen in 2010, in 2011 we encountered ZITMO Android variants . This highlights how cybercriminals are now attempting to defeat even two-factor authentication schemes.

What about vulnerabilities and exploits?

Vulnerabilities in mobile operating systems were also seen and exploited in 2011. Certain variants of DroidKungFu exploit vulnerabilities in older Android versions to obtain root privileges. (Android was not the only phone operating system to have vulnerabilities discovered in its code: both iOS and Windows Phone 7 had their own flaws discovered in 2011.)

2011 represented the biggest year of mobile malware threats to date, but the threat will only get worse in 2012. Users should take steps to protect themselves now in order to avoid worse consequences down the road.

For a more forward-looking read, please check our security predictions for 2012.

Additional text by Julius Dizon, Research Engineer