"A keylogger runs in the background, recording all the keystrokes of a user and hides it in the machine to be retrieved later. Once a keylogging program is activated, through a command from the hacker, it provides the hacker with personal data such as addresses, account numbers, or passwords—basically any strings of text a person enters."
So says redherring.com
There are as many ways to get infected with this bug as any other; email attachments, downloaded ipod files, IRC, trojans, picture files, etc. etc. They are also designed to evade anti spyware and anti virus software. Just do a quick search on google.com with "keylogger spyware" and you’re offered the ability to spy on any computer.
There is even a case of a spyware company threatening an antispyware company with legal action for listing the keylogger as spyware. (link)
Keyloggers seem particularly created for identity theft. This thing will directly steal your usernames and passwords to email, bank accounts, ebay accounts etc. A tragedy worse than destroyed data. It seems the only way to prevent or identify these threats is to keep scanning with anti-spyware and hope that the arms race is not being won by the spyware writers.
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