Scareware Scammer Hit With $163 Million Fine

A woman whose business intentionally scammed computer users by means of bogus security software has been ordered to pay a $163 million fine.

Kristy Ross was vice president of Innovative Marketing, a firm legally registered in Belize (likely for favorable tax purposes) but actually operating out of Ukraine.

The company has been the subject of legal action by the Federal Trade Commission (FTC) for the past four years. (Source: ftc.gov)

Bogus Security Scan Attracted Customers

Innovative Marketing's business was actually a scareware scam: placing bogus website ads that pretended to scan a user's computer and detect malware. The firm immediately offered to sell the unsuspecting user its security software, priced between $40 and $60.

Unfortunately for buyers -- more accurately, victims -- these programs appear to have been useless.

Experts think more than a million people were tricked into buying bogus security software products like DriveCleaner, FreeRepair, System Doctor, WinAntivirus, WinAntispyware, and Winfixer. (Source: bbc.co.uk)

The FTC has already reached settlements with Innovative Marketing executives Marc D'Souza, Maurice D'Souza, and James Reno, and has obtained default judgments against two other executives: Sam Jain and Daniel Sundin.

The FTC was looking for the most serious punishment against Jain and Sundin as founders of the company, and against Ross, as the person running the scam's day-to-day operations.

Ross Barred from Marketing Software

Attempts to get a default judgment against Ross initially stalled because her lawyers argued there was insufficient evidence she had any control over the business. The issue went to trial in mid-September. Ross didn't make an appearance.

The court has now ruled that Ross did indeed bear responsibility for the scam.

As punishment, she has been barred from selling or marketing computer software, distributing software that interferes with consumers' computer use, or taking part in deceptive marketing.

Along with the other executives, Ross will pay a fine of $163,167,539.95. The amount is based on the total estimated money spent on bogus security software by the scam's victims.