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FTC Stops Scareware Scam

Two companies – Innovative Marketing, Inc., which is incorporated in Belize and maintains offices in Kiev, Ukraine, and ByteHosting Internet Services, LLC from Cincinnati, OH – have been named in an FTC complaint relating to a scareware scam, and the body has obtained a temporary restraining order that effectively freezes their activities.

The FTC complaint alleges that the companies, “along with individuals Daniel Sundin, Sam Jain, Marc D’Souza, Kristy Ross, and James Reno, violated the FTC Act by misrepresenting that they conducted scans of consumers’ computers and detected a variety of security or privacy issues, including viruses, spyware, system errors, and pornography. The complaint also names a sixth individual, Maurice D’Souza, as a relief defendant who received proceeds from the scheme.”

According to the FTC, the defendants “duped Internet advertising networks and popular Web sites into carrying their advertisements. The defendants falsely claimed that they were placing Internet advertisements 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. 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.”

More than a million consumers are believed to have fallen for the scam. The temporary restraining order from the US District Court for the District of Maryland effectively freezes the activities of the companies.