"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.
"Most major vendors, including Microsoft, have strong corporate values and will not pay for vulnerabilities," Forslof said. "So, making that threat to pay me, or I'll harm your customers, is basically like extortion to them."
DeMott, however, said his company has had some success with its business model.
Over the past four months, the company has seen roughly half of potential customers agree to pay the bug bounty fee, and the other half reject the idea outright. And in one case, a company declined to pay the bug fee but then signed up for VDA's consulting services. To date, two companies have purchased the vulnerabilities that VDA discovered and patched them, DeMott said.
But Ullrich described such customers as "paying for protection."
"There are people who pay protection to the mob. It's really a protection racket," Ullrich said. "I can't see it as a legitimate business model."
Other business modelsBug bounty hunters have a variety of means to generate income, security researchers say.
Auction site WabiSabiLabi, where software companies and security vendors bid on such discoveries, emerged on the scene this summer, amid some controversy that the buyers of the vulnerabilities may be malicious attackers.
Since the Switzerland-based site was announced on Jul. 9, approximately 20 vulnerabilities have been posted on the auction, ranging in price from 200 to 2,600 euros (US$274 to US$3,564), Roberto Preatoni, WSLabis strategic director, said in an e-mail.
"You should take into account that this market just started, therefore we think it's needed to wait at least six months before seeing real values being expressed in it," Preatoni said.
Three vulnerabilities have been sold on the auction site, while six more are currently on the market as their auction time ticks down.
Other compensation methods for bug hunters have included landing lucrative contracts with software vendors to debug their products, and participating in ongoing formal bug reporting programs offered by Tipping Point, iDefense and the Mozilla Foundation.
Back in 2005, Tipping Point launched its program titled the Zero Day Initiative. The program pays money to security researchers for bugs and proof-of-concept code, or working exploits they discover.
Based on the severity of the vulnerabilities and extent to which they are distributed, Tipping Point will pay researchers based on a sliding scale. Forslof noted Tipping Point generally pays more if a researcher has taken the extra effort to develop proof-of-concept code.
"Based on the amount of money (DeMott) wanted for the bug and working exploit, it would have been in line with what we would have offered," Forslof said. "The amount of money he was asking for was not out of line--it's just the way he went about asking for it from LinkedIn."
Once Tipping Point buys bugs and exploits from security researchers, it then validates the information before passing it on to the software vendor for free. Tipping Point then writes filters for its Intrusion Prevention devices based on the information it has validated from the bug hunter.
iDefense, which operates the iDefense Vulnerability Contributor Program (VCP), has a similar concept. The main difference is iDefense, after validating the information and notifying the software vendor for free, uses the information to notify its own client base and build workarounds until the vendor develops a patch.
"The VCP provides researchers with ways to get legally paid for the research they do," Doyle said. He noted the payments can vary from a couple hundred dollars to as much as US$10,000.
DeMott said his VDA Labs is not wedded to its business model and may be open to tweaking it.
"If this business model is not panning out the way we had hoped, then we may focus on government or commercial contracts," DeMott said. "I certainly won't turn down a contract."
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