FTC Wins $163 Million in Scareware Lawsuit

The FTC took down the massive operation which duped over one million people

By Lucian Parfeni on October 3rd, 2012 11:11 GMT

The FTC, the US Federal Trade Commission, doesn't really get involved in online security, but scams, fraud and the likes are more up its alley. Scareware scams are, unfortunately, still common on the web.

People who have little experience with computers are the most likely to get infected with the malware the carries it and are also most likely to fall for the scam.

Scareware works because it's based on a real threat, of getting infected with viruses, trojans and all sorts of other malware. The problem is when the malware advertises itself as the solution to the problem it created.

The FTC has concluded its first fight against scareware vendors and the final defendant in its first case, Kristy Ross, is set to pay some $163 million, EUR126 million in fines and damages for running several of this type of scams.

She was charged with duping over one million people into paying some $40 to $60 (EUR31 - EUR46.4) to fix computer problems they didn't have.

"The FTC charged that the operation used elaborate and technologically sophisticated Internet advertisements placed with advertising networks and many popular commercial websites. These ads displayed to consumers a 'system scan' that invariably detected a host of malicious or otherwise dangerous files and programs on consumers’ computers," the FTC described.

Other defendants in the case settled before this final decision and others were awarded default judgements. The investigation and prosecution involved a massive operation, run by Ukraine-based Innovative Marketing, a very suitable title.

The company was founded in 2002 and it grew to hire some 600 people at one point, in the US, Ukraine, India and other countries.

The FTC filed a complaint about the operation back in 2008 and has been pursuing the case ever since. It charged several people for their involvement, most of them have settled for much less than $163 million. In fact, it's unlikely much of the money will be recovered.
Scareware is one of the many dangers online
   Scareware is one of the many dangers online
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