FTC targets scareware scammers

Judge shuts down six scammers and freezes assets after the Federal Trade Commission files suit.

Technologically sophisticated readers may find it difficult to believe the myriad ways in which unsuspecting PC users fall prey to online scams, but it happens all the time.

The Federal Trade Commission on Wednesday cracked down on telemarketers who bilked consumers out of hundreds of thousands of dollars under the guise of fixing their computers. The scammers called consumers and directed them to a utility log on their computers that displays warnings and errors as part of its normal operations. The scammers would then offer to eliminate the "malware" for a fee.

As part of the investigation, FTC agents posed as uneducated consumers and recorded phone calls from scammers. In many instances, the telemarketers threatened that, without purchasing a fix, the user risked a computer explosion.

The FTC Wednesday said it filed charges on Sept. 24 in the Southern District Court of New York to stop the scams. A federal judge then ordered six of the scammers to halt operations and froze $180,000 in assets.

The scammers are largely based in India and mainly targeted English-speaking customers in the United States, Canada, Australia, and United Kingdom, the FTC said.

The FTC also announced that scammer Kristy Ross was fined $163 million for selling fake malware clean-up software. The FTC said more than one million people bought into this scam between 2000 and 2008.

McAfee's Gary Davis, vice president of global consumer marketing, says the company constantly battles scammers and struggled to convince Google to take down McAfee-branded terms not associated with the company.Another scammer also named in the FTC's lawsuit paid Google $1 million for search ads that would direct consumers to call the scammer's toll-free number when searching for McAfee support or PC fixes.

Davis says scammers damage his company's brand "when you call and impersonate McAfee and charge (consumers) for something."

In one instance, a McAfee employee's mother was scammed by someone pretending to be a tech support worker. The telemarketer uninstalled the woman's antivirus software and reinstalled it for a hefty fee.

"When you're targeting people who don't understand the nuances of security and they're very vulnerable, it makes it a real headache," Davis says.

Scareware is actually on the decline, McAfee reported earlier this year, due to crackdowns like the FTC's lawsuits. But another type of threat, ransomware--applications that hold computers or the files stored on them for ransom--is spiking.

"Scammers are always trying to find a new angle to exploit," Davis says.

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