Two defendants charged in a massive scareware scheme will reconcile Federal Trade Commission charges and give up more than $116,000 in assets as part of an original $1.9 million settlement.
The two settling defendants -- James Reno and ByteHosting Internet Services, LLC -- were allegedly part of a massive deceptive advertising scheme that tricked more than a million consumers into buying rogue computer security products, including WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus, according to the FTC's complaint. The scheme allegedly relied on deceptive advertisements featuring bogus computer "scans" that falsely claimed to detect viruses, spyware, and illegal pornography on consumers' computers.
The defendants used an elaborate ruse that duped Internet advertising networks and popular Web sites into carrying their advertisements, according to the FTC's complaint.
The defendants falsely claimed that they were placing Internet ads on behalf of legitimate companies and organizations. But due to hidden programming code that the defendants inserted into the advertisements, consumers who visited Web sites where these ads were placed did not receive them, the FTC said. Instead, consumers received exploitive advertisements that took them to one of the defendants' Web sites. These sites would then claim to scan the consumers' computers for security and privacy issues. The "scans" would find a host of purported problems with the consumers' computers and urge them to buy the defendants' computer security products for $39.95 or more. However, the scans were entirely false, the FTC said
The settlement imposes a judgment of nearly $1.9 million but under a court agreement, all but $116,697 of the judgment will be suspended based on the defendants' inability to pay the full amount, the FTC stated.
The settlement does not affect the FTC's ongoing case against the remaining defendants, such as Innovative Marketing and others in the suit.
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