FTC Settles with Scareware Perpetrators

The FTC has decided to settle with two defendants in a scareware scam for just over $100,000, in lieu of trying to wring out the full $1.9 million levied against them.

In what might be described as an apparent slap on the wrist, the Federal Trade Commission has decided to settle with two defendants in a scareware scam for a mere $116,687, rather than continue to go after them for the full $1.9 million levied against the defendants in an earlier judgement. The reason? The defendants are unable to pay the full amount.

James Reno and ByteHosting Internet Service, LLC, were found to be part of a substantial deceptive online advertising scheme that tricked over a million computer users into buying bogus computer security product based on fake scans that claimed to detect viruses and other malware on consumers’ computers. The software would then ask for money to clean up the systems.

The original judgment against them was for $1.9 million in damages; however, based in inability to pay, the FTC has scaled back the fine to just over $116,000—the amount of money the defendants supposedly earned from the scam. If the defendants are found to be misrepresenting their financial condition, they will again be liable for the full amount.

The defendants are also barred from using “scareware” tactics in future business endeavors or installing malicious programs on users’ computers. We really hope that doesn’t mean it’s perfectly OK for anyone else to install malware or use scareware to promote their enterprises.