A small core of ten inter-connected Russian and Ukrainian organisations is behind 30 percent of all mobile malware and 60 percent of the rogue programs exploiting SMS toll fraud, research by security firm Lookout Mobile Security has suggested.

Dubbed operation “Dragon Lady” (a reference to the famous 1960’s US U2 spy-plane programme), the firm said it had uncovered the structure of the Russian mobile malware industry by analysing the complex distribution channels and noticing the commonalities in malware code.

If the size of what they found sounds like a lot of activity for such as small core of criminal organisations, Lookout believes the explanation for their success lies with a business model built on attracting large numbers of self-starting affiliates to distribute the malware.

The 10 businesses or “malware HQs” have created platforms that can be used by affiliates with limited technical knowledge to set up and configure malware distribution with a remarkably high degree of sophistication.

Affiliates simply build campaigns by choosing which type of software ruse they want to use – a fake Flash pop up, Skype add-on, Google Play lookalike site - adding the target OS system, presumably Android. Affiliates received new malware versions every fortnight.

“Malware HQ organizations provide customer support, post regular newsletters, report downtime or new features, and even run regular contests to keep their affiliates engaged and motivated,” said Lookout.

Lookout had seen reports of affiliates making between $700 and $12,000 (£8,000) per month as their cut of the profits from tool fraud, the firm said.

The malware HQs were building the tools for fraud, which were then being executed by as many criminal franchises as they cold each attract. Most likely the HQs weren’t competing with one another and might even be connected to one another Lookout believed.

Why not simply cut out the affiliates and conduct the fraud direct, taking all the profit? The answer seems to be that affiliates are the part of the chain most likely to be detected and blocked; using third parties keeps anti-malware efforts and the law at some distance as well as removing some of an the operation’s day-to-day hassles.

Twitter appeared to be an important means of distributing the malware.

“We reviewed 250,000 unique Twitter handles [accounts] and of those, nearly 50,000 linked directly to these toll fraud campaigns,” said Lookout.

“The victim of the scheme is usually a Russian speaking Android user looking for free apps, games, MP3s or pornography.”

Lookout had noticed the similarity of many SMS toll fraud malware over the last three years, suspecting that a small group of firms was responsible.

Toll fraud emerged as an industry about three years ago, since when it has spread across the globe, even affecting UK users on occasion. The principle is simple; get a rogue program on to a smartphone and then send premium text messages at anything from $10 to $60 a time without the owners’ knowledge. As Lookout confirmed, it is today predominantly a Russian-based crime carried out on Russian victims.

It’s a relatively simple con because payment is collected automatically in some countries without intervention from carriers and users don’t realise anything has happened for days or weeks.