Bug hunting start-up: Pay up, or feel the pain

VDA Labs, which finds flaws in software, has a unique business model that's at the center of a debate over bug disclosure.

An upstart security research firm with a controversial business model is at the center of a debate over how software bugs should be disclosed.

Vulnerability Discovery and Analysis (VDA) Labs, founded in April by Jared DeMott, notifies software vendors of security bugs found in their software, as do many other security researchers.

But as part of VDA's business model, vendors are asked to pay for the bugs it discovers, or its consulting services, otherwise VDA threatens to sell the bug to a third party or make the details of the security flaw public.

DeMott, who has done work for the National Security Agency among other places, describes his business model as "edgy," while other security researchers see it as more akin to "extortion." The practice, in either case, veers from the more traditional ways bug hunters have worked with software vendors and security firms.

Just two weeks ago, LinkedIn, the popular social-networking site, got a taste of VDA's business practices, when the Michigan security company claimed it had found a critical security flaw in the LinkedIn Internet Explorer Toolbar.

"We've discovered an attack against the LinkedIn toolbar. If you are interested in the bug, we would like to give first right of refusal to purchase it. We'd also like to perform a more complete security audit of your products. We can help make the LinkedIn products more secure," DeMott stated in e-mail sent to LinkedIn on July 10, as viewed by CNET News.com.

The e-mail continues: "If you wouldn't like to buy it then we are happy to resell or release as a full disclosure to help prevent security issues arising on end users servers. We strongly believe in keeping users safe. We are unique in that we give vendors a first chance at the bugs we discover rather than selling to a third-party or releasing publicly. Please find the VDA Labs Value add document attached. If you'd like to buy the bug we will provide working attack code, so that you can verify the bug, before you send the check."

VDA set a deadline of July 17 and requested a payment of $5,000.

After failing to receive a response from LinkedIn, DeMott sent two e-mails on the eve of the deadline. One served as a reminder that the deadline was looming, and the other stated the price had increased to $10,000.

"Just developed the attack into a working exploit ($10K) now. Call me," DeMott wrote in the e-mail.

"I think this is extortion, particularly if he threatens to release the bug publicly if he's not paid. You should not hold a bug hostage."
--Johannes Ullrich, chief research officer for the Sans Institute

Two days after the deadline passed and details of the security flaw and how to exploit it were published, DeMott sent another e-mail to LinkedIn.

"So, if your company policy is to not buy bug reports, would you be willing to sign up for consulting (with VDA) then? We could include this bug as part of the final report. I really just had to irresponsibly release this exploit," DeMott said in the e-mail.

LinkedIn declined to comment. The company has since patched the exploit identified by VDA.

DeMott, who confirmed he sent the e-mails, defended his company's business practices and noted it's done to protect users by issuing them a heads-up, and by prompting vendors to take action to patch the flaw.

He also pointed to the , which outlines his company's services and pricing.

"Our business model is a little edgy, but we never saw it as extortion or thought of it that way," DeMott said. "We wanted to do something that would really grab the vendor. The vendors don't make money patching products. They're more interested in selling products. We were afraid they would try to put us on the back burner."

Some software companies, for example, do not work with security researchers as a matter of policy, and only act on vulnerabilities if flagged by their customers.

Other security researchers are critical of VDA's business model.

"Anytime you have someone saying they have this, and that unless you give them money, they'll do that, that's extortion," said Frederick Doyle, director of VeriSign/iDefense Research Lab and a former police officer in the state of New York.

Johannes Ullrich, chief research officer for the Sans Institute, expressed similar sentiments.

"I think this is extortion, particularly if he threatens to release the bug publicly if he's not paid," Ullrich said. "You should not hold a bug hostage."

VDA is not alone in its business practices, said Terri Forslof, manager of Security Response for Tipping Point, which is owned by 3Com.

Forslof, who previously worked as security program manager for the Microsoft Security Response Center, said she came across similar situations about a dozen times during her stint at the software giant between 2000 to 2005.

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