FTC Wins $163 Million Judgment Against Scareware Marketer

The FTC yesterday announced that a federal court imposed a judgment of more than $163 million against defendant Kristy Ross and her company Innovative Marketing for using scareware to trick victims into paying to have nonexistent computer problems fixed.

“In 2008, the FTC accused Ross and six other defendants of duping more than one million people into buying their software through deceptive internet advertisements,” writes SC Magazine’s Danielle Walker. “The defendants worked for Innovative Marketing and Cincinnati-based ByteHosting Internet Services. Ross was an employee at Innovative Marketing, a company incorporated in Belize City, Belize, with offices in Kiev, Ukraine.”

“Ross argued she was just an employee of the company and was not a ‘control person,’ and did not have ‘requisite knowledge of the misconduct,’ and therefore bore no personal liability,” writes Ars Technica’s Cyrus Farivar. “The federal judge in the case clearly didn’t buy her argument. In addition to the monetary penalty, the court ruled that Ross ‘shall be permanently restrained and enjoined from the marketing and sale of computer security software and software that interferes with consumers’ computer use, as well as from engaging in any form of deceptive marketing.'”

“This particular operation used elaborate and ‘technologically sophisticated’ Internet ads placed with advertising networks on many popular commercial Web sites,” writes The Next Web’s Emil Protalinski. “The ads displayed a ‘system scan’ to consumers that invariably claimed to detect a host of malware on their computers. The bogus ‘scans’ then urged the victims to buy useless software for $40 to $60 to remove the malware.”

“The fake ‘scareware’ programs included WinFixer, WinAntiVirus, PopupGuard, WinFirewall, InternetAntiSpy, ComputerShield, PC SuperCharger and ErrorSafe,” writes The Hill’s Brendan Sasso.

“Under a settlement announced in 2011, defendants Marc D’Souza and Maurice D’Souza were ordered to give up $8.2 million in profits from the operation,” writes Network World’s Grant Gross. “Marc D’Souza was an officer with the company, while his father Maurice D’Souza was charged as a relief defendant who did not participate in the scam, but allegedly profited from it. Two other defendants previously settled the charges against them, and the FTC obtained default judgments against three other defendants.”

Jeff Goldman
Jeff Goldman
Jeff Goldman has been a technology journalist for more than 20 years and an eSecurity Planet contributor since 2009.

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