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FTC settles with scareware scammers on reduced terms

10 cents per victim? We've spent the rest

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US consumer watchdogs at the Federal Trade Commission have agreed to settle a lawsuit against rogue security software distributors on reduced terms.

James Reno and ByteHosting Internet Services were found responsible for distributing scareware products that used underhanded methods. The scam foisted software of no utility on the basis it was necessary to fix supposed security problems or remove smut from the PCs of prospective marks. The defendants - found responsible for tricking more than a million punters into buying rogue products including WinAntivirus, ErrorSafe, and XP Antivirus - were ordered to pay $1.9m last year.

Reno pleaded poverty, so the FTC has agreed to take $116K to settle the case, on condition that the defendants first get out of the scareware and second never trade with their co-defendants again. The agreement - which leaves the FTC free to pursue other defendants in the case - is conditioned on the promise that Reno and his firm told the truth about their finances, and is subject to court approval.

It's unclear how much Reno and his firm made from their illicit trade but scareware packages typically sell for upwards of $50, suggesting the whole scam might have easily netted more than $50m. Reno's original fine, much less the final settlement, is only a tiny percentage of this and therefore not much of a deterrent against future would-be scareware moguls.

More on the settlement can be found in an FTC statement here. ®

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