Court orders developer of scareware programs to pay $163 million

In this day and age, most semi-tech savvy computer users know what scareware is. For those that don’t, scareware is not malware, per se, but it is software that make you think like you have a problem on your computer (when you actually don’t) and charge you a large sum of money for the privilege of cleaning up that “problem”.

One of the most notorious scareware operators is (was) a company by the name of Innovative Marketing. Through the use of scareware programs like WinFix and WinAntiVirus, Innovative Marketing was able to pull in roughly $60 million in revenue from 2000 to 2008. They were so successful that it is reported they had 600 employees in 2011; 600 people for the purpose of using scareware programs to scam people out of their money. Well judgement day for Innovative Marketing has arrived.

A Maryland federal court has ordered Innovative Marketing founders Sam Jain and Daniel Sundin, and Innovative Marketing former senior vice president Kristy Ross to pay $163 million in fines. This is a result of a case brought against Innovative Marketing by the Federal Trade Commission on behalf of roughly 3,000 people who were scammed by the company. (Note: Jain and Sundin were ordered to pay the $163 million back in 2010, and Ross is now ordered to be equally liable for that amount.)

FTC’s complaint was originally brought against a total of eight people related to Innovative Marketing. Four of those people already settled while three, including Jain and Sundin, were found guilty due to failure to “appear and participate in the litigation”. So that left Ross as the primary target for the case and, aside from paying the huge fine, Ross has been ordered to “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”. Ross, of course, tried to play the innocent card by claiming she was simply an employee of the company and not a “control person” but the judge dismissed her argument.

Has justice been served? Well hard to say. But at least something has been done.

[via TechCrunch, ArsTechnica | image via Wikipedia]

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  1. himagain

    “Stupidity is incurable”. An old saying but true.
    However these con artists have become so professional over the years….. wait a minute I’m talking about Bankers!!!!

    THIS article is about everyday Internet activities.
    Could all be stopped by enforcing identity checks on Domain buyers and banning spamming.

    Too hard?

    OK – just switch Mum and Dad into Linux and put it inside VBox.

    Anyone noticed that all the big successful breakins are thru Microsoft Servers?

    REALLY on topic: Making the punishment fit the crime:
    This is the first award I’ve ever seen that wasn’t a mosquito bite.
    Making it personal is the key. THEN making the fine at least more than the scam and not allowing it to be tax-deductible!

    Have a nice day people – and remember : most burglars walk in thru open doors – or Windows (r) in this case.

  2. Mike

    It is relatively rare to hear of the government taking action against scams like this–I hope that the government is able to collect. This is one of the only means by which to try to stem the tide.

  3. Rob (Down Under)

    There has been a scam running in Australia for years. (Actually against Australia for years.)
    I have been rung about 4 times in the last 4 years.
    Indian accent, and tells you that Microsoft has detected problems in my PC.
    Over the phone they guide you to look up some Windows error report (log), which has tons of errors.
    They then direct you to their web site to download and run something, that will allow them to access your PC, and fix things.
    Not only do they get that access, but they charge you for the service as well.
    My name is Huggins not Muggins
    I may look like a cabbage, but I am not as green.
    Thus I politely told them, that I know what I am doing with PCs, and that I don’t need their help.
    I really would prefer to tell them to fornicate off, but I reckon it is best not to anger the scam artists.

    I am annoyed that our government does not warn the public about ALL current scams, as the approach those swines are using, would fool many, many people.

    Are you guys getting targeted by that scam ?