Original URL: http://www.theregister.co.uk/2008/03/04/south_korea_scareware_fraud_charges/

Ex-anti-virus chief in spyware scareware scam charges

Double bluff

By John Leyden

Posted in Security, 4th March 2008 19:17 GMT

The ex-chief of a South Korea-based anti-virus firm has been charged with using bogus security warnings to shift anti-spyware software of questionable value.

Lee Shin-ja, 41, former CEO of Media Port, has been charged with fraud over the alleged distribution of bogus security software to almost four million internet users. Aggressive marketing tactics including the use of fake security warnings were allegedly used to frighten punters into purchasing Media Port's clean-up program Doctor Virus at a cost of 3,850 won ($4) a month. The trial software displayed warnings that systems were infected irrespective of whether they were clean or not.

An estimated 4m South Koreans are reported to have tried the free software, with 1.26m people going on to purchase the full version of the package. Prosecutors allege that Lee hired two computer programmers, who have also been charged, to assist in a scheme that made an estimated 9.2bn won ($9.8m) over the last three years.

Complaints from punters over the effectiveness of the service led to an investigation by the Seoul Metropolitan Police Agency, resulting in the arrest of Lee and her two alleged accomplices for fraud. Lee told journalists that she had left Media Port but made no other comment on the case.

An unnamed spokesperson for Doctor Virus claims the current version of their software is above board. "We solved the problems when prosecutors started the investigation," an unnamed company official told local news outlet JoongAng Daily. "Now, everything is normal."

Local market conditions lead to South Korean users sometimes running multiple security packages, which can play into the hands of the unscrupulous, according to security watchers.

"Unlike many other countries, it's not uncommon for South Korean computer users to run multiple anti-virus programs at the same time - probably because many of their homegrown solutions don't come with an on-access scanner," explained Graham Cluley, senior technology consultant at Sophos. "This environment increases the likelihood that people will download and 'test the water' with a product they stumbled across on the internet. Unfortunately it seems there are cybercriminals desperate for increasing marketshare who are prepared to scare users into making an ill-informed security purchase." ®