'Scareware' Scam Leads to $163M Fine, More Crackdowns by FTC

By Ed Silverstein October 05, 2012

Another defendant has gotten a major fine for her alleged role in a “scareware” computer scam that tricked consumers. It comes just as U.S. officials continue their crackdown on virus-cleaning scams.

A federal court imposed a judgment of over $163 million on the defendant, the Federal Trade Commission (FTC) announced this week.

Image via Shutterstock

In addition, the court prevented Kristy Ross from selling computer security software and any other software that interferes with consumers’ computer use, and from deceptive marketing, according to an FTC statement.

Ross claims she was only an employee of Innovative Marketing – a company charged in the case. She added she was not a "control person," and was not aware of the wrongdoing.

The FTC alleges the defendants used computer “scareware” to trick consumers to suspect that their computers were infected with malicious software, and then sold them a software product – even though they had no problem.

In 2008, the FTC charged Ross and six other defendants with conning more than one million consumers into buying software they didn’t need.

The defendants also used ads which showed a “system scan” that always detected malicious files and programs on consumers’ computers, the FTC said.

The bogus product cost consumers $40 to $60. The U.S. District Court in Maryland stopped the scheme.  Defendant Marc D’Souza and his father, Maurice D’Souza, were ordered to give up $8.2 million from company revenue. Two other defendants settled charges. And the FTC got default judgments against three other defendants in the case.

The FTC froze the assets of more alleged scammers, who trick computer users to pay for bogus computer viruses.

The FTC said the operations – mostly based in India – targeted consumers in the United States, Canada, Australia, Ireland, New Zealand, and the United Kingdom.

Five of the six operations used telemarketing “boiler rooms” to call consumers. The sixth put ads on Google which showed up when consumers searched for their computer company’s tech-support telephone number.

Edited by Brooke Neuman

TechZone360 Contributor

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