Mozilla is working on patching its Firefox browser after a hacker posted details of a flaw that could let criminals run unauthorized software on a victim’s machine.

The flaw lies in Firefox’s URL handler component, which was the source of another bug Mozilla disclosed Tuesday.

This second flaw was disclosed Tuesday by Billy Rios and Nathan McFeters, security consultants with Verisign and Ernst & Young respectively.

Like the first flaw, this one could be exploited by attackers to launch programs on the victim’s PC without authorization, said Tyler Reguly, a security research engineer at nCircle Network Security. “They’re both related to the URL handling process,” he said “It’s just different errors within that handling process.”

Even though the code posted by Rios and McFeters can only be used to launch software that is already installed on a victim’s PC, it could be very dangerous if used by criminals, Reguly said. “It’s still letting you run any program that exists on the user’s computer,” he said. “You can make it do some fairly bad things. For example, having it use command-line FTP to download a malicious file off a server somewhere and then execute that file.”

A victim would have to be tricked into clicking on a malicious link for the attack to work, Reguly said.

Mozilla’s security chief, Window Snyder, said that her team is working to verify and fix this latest flaw.

Firefox’s URL handler has been a headache for Mozilla ever since security researcher Thor Larholm showed that the way IE (Internet Explorer) and Firefox interact with each other could be exploited to launch software on a user’s machine without authorization. To make the attack work, IE would load malformed data from a Web site and would then send it to Firefox, which would launch the unauthorized software.

Microsoft and Mozilla disagreed about who was at fault, however. Snyder initially said that the attack wouldn’t work on Firefox alone and that Microsoft should change the way IE passes malformed data to other programs. Microsoft said that the problem lay with Firefox.

While disclosing details on the first URL handler bug on Tuesday, Snyder admitted that she was wrong. “We thought this was just a problem with IE. It turns out, it is a problem with Firefox as well,” she said. “We should have caught this scenario.”

Mozilla is planning to fix this issue in the upcoming 2.0.0.6 release of its browser. Snyder did not say when the Billy Rios bug would be patched.

Thor Larholm, A security researcher has found a security bug that could be attacked in Internet Explorer. Mozilla said it plans to patch the problem in its next Firefox software update. No, that’s not a typo, just the strange fall-out from an unusual bug that had security researchers debating the question this week: “Who’s to blame? Microsoft or Mozilla?”

Thor Larholm kicked off the controversy yesterday, claiming that he had discovered a flaw that would let an attacker run commands on a victim’s PC.

In his blog posting, Thor Larholm said the bug was similar to a flaw he’d discovered last month in Apple’s Safari 3.0 beta software, and he called it an “input validation flaw in Internet Explorer”. The problem is with a URL protocol handler component of Internet Explorer, he said. This software allows Internet Explorer users to launch applications such as Excel or Firefox by clicking on specially written links on web pages.

When Internet Explorer clicks on a link that launches the Firefox browser, however, the software does not properly check its syntax, and that, Larholm said, lets an attacker create a malicious link, that could be used in an attack. Security vendor Secunia ApS rates the flaw as ‘highly critical’.

So while the flaw affects Internet Explorer users, it appears to be a risk only to those who already have Firefox installed. And to make matters more complicated, if a Firefox user were to click on one of the specially-written links, he would not be affected.

Read more at Larholm.com.

With Microsoft’s monthly patch release expected on Tuesday, scammers are sending out fake security bulletins that attempt to install malicious software on victim’s computers.

The e-mail messages claim to describe a “Cumulative Security Update for Internet Explorer” that fixes a critical security flaw in the browser. It comes with a link entitled “Download this update.”

When users click on this link, they are taken to a server that attempts to install malicious software known as Trojan-Downloader.Win32.Agent.avk.

This Trojan software then attempts to reach out to other computers on the Internet in order to install more programs on the victim’s computer.

The SANS Internet Storm Center received its first and only report of the scam on Thursday night but a second sample has also been posted to the Chinese Internet Security Response Team blog.

SANS volunteer Lenny Zeltser believes that the criminals behind this scam may be gearing up for more activity. The trojan looks for three different servers and two of them have domains that haven’t yet been registered. He suspects the authors of the scam may be planning to register those domains before embarking on a more widespread campaign.

The two e-mail samples contained obvious errors that would be caught by technically savvy users. For example, although the patch Zeltser examined claimed to have been issued in June 2007, it was entitled MS06-4 instead of the more-plausible MS07-004.

Still, these scams need to fool only a small percentage of victims in order to be successful, said Zeltser, information security practice leader at Gemini Systems LLC in New York. “You wonder, does it really matter that there are these strange discrepancies in the way the fake security alert is written,” he said. “People who would notice probably would be the kind of people who wouldn’t click on the link.”

Another tip-off: Microsoft does send out notification e-mail when it publishes security bulletins, but the links in these alerts take users to the bulletins themselves, not to executable downloads