FTC Wins $163M In Internet Fraud Case
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A federal court in Maryland, at the behest of the Federal Trade Commission, has levied a judgement of $163 million against the final defendant in an internet fraud case involving the use of ‘scareware’. The action was taken against Kristi Ross, a former officer of Innovative Marketing, Inc., but the court found that two of the company’s founders, Sam Jain and Daniel Sundin, were also liable for the amount.
The case began with a complaint filed by the FTC in 2008 against several defendants involved with Innovative Marketing and another company, ByteHosting Internet Services. The companies were accused of using ‘scareware’ advertising tactics to trick consumers into buying their products. Specifically, the pop-up ads used would falsely claim that a scan had detected malicious viruses and spyware on a user’s computer and that they needed to buy the company’s product to remove the infections. The products were marketed under the names WinFixer, ErrorSafe, XP Antivirus, and WinAntivirus and were sold to more than 1,000,000 people for $40 -$60, leading to more than 3,000 consumer complaints being filed with the FTC.
In 2011 two other defendants in the case were fined $8.2 million and another was given a reduced fine of $116,000 after claiming poverty.
The case is part of a general crackdown on Internet marketing scams by the FTC in recent years.
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