FTC suspends heavy penalty against scareware defendants
Wednesday, July 1. 2009
The settlement must still be approved by a court
The Federal Trade Commission has suspended the majority of a judgment levied against two defendants accused of selling bogus security software to up to 1 million consumers.
James Reno and his Web hosting company, ByteHosting Internet Service of Ohio, now have to forfeit $116,697, just a fraction of the $1.9 million the judgment had originally required Reno and the company to pay. The settlement must still be approved by a court, the FTC said.
The rest of the penalty was suspended because the defendants wouldn't be able to pay it all, the agency said. However, if it is found that Reno and the company misrepresented their assets, they will have to pay the full amount.
More than $100,000 in assets were frozen after a federal court issued a temporary restraining order in December following the FTC complaint. Among other conditions, the court ordered six people and two companies to stop advertising so-called "scareware" security programs under the names WinFixer, WinAntivirus, DriveCleaner, ErrorSafe and XP Antivirus.
The applications are sold via deceptive pop-up ads that falsely alert people that their PCs have security problems, badgering them with warnings until they buy the software, which can cost around $40.
The FTC complaint asked hosting providers to prevent people from accessing the Web sites that host the programs. The FTC asked the court to force the defendants to forfeit money from the scam and compensate consumers.
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