By Lesley Fair

It’s one of those “uh-oh” moments every computer user has experienced:  A flashing box announcing “WARNING:  Virus threat detected!”  Is it a legitimate alert generated by security software?  Or could it be “scareware” – malicious pop-ups that exploit concerns about Internet safety by issuing false warnings just to sell software to “fix” the imagined problem?

A law enforcement action filed by the Federal Trade Commission (FTC) highlights how scareware can undermine consumer confidence in online commerce and threaten the operation of legitimate advertising networks.  According to the FTC, the defendants involved in this massive international scheme served up realistic looking – but bogus – security warnings on people’s computers and then conducted “system scans” that invariably detected a host of dangerous files and programs, including viruses, spyware, and what they termed “illegal pornography.”  In one version of the scam, the defendants went as far as to display a series of hard-core images they falsely claimed were found on the computer.  Once the “scan” was complete, consumers were urged to resolve the security issue purportedly found by buying the defendants’ “cleaning” software for $39.95.

Concerned by the alarming messages, more than a million people bought the defendants’ story – and their software.  However, as alleged in the FTC’s complaint, the real-time “scan” was actually a real-time scam aimed at hoodwinking consumers into buying the defendants’ product.  According to the FTC, no actual computer check took place and thus the warnings about viruses, spyware, and pornography were false.

But consumers weren’t the only ones harmed by the defendants’ tactics.  According to the FTC, the defendants used an elaborate ruse that duped Internet advertising networks and popular websites into carrying their advertisements.  Falsely claiming they were placing ads on behalf of legitimate companies and organizations, the defendants allegedly used hidden programming code to redirect consumers to one of their bogus “scan” sites.

Savvy marketers know that once bitten, consumers are twice shy about spending money online.  That’s why you should enlist in the fight against Internet fraud.  Consumers hijacked by ads like this often complain directly to the websites they were viewing at the time.  So evidence that crooks are serving up scams on your site may be as close as your inbox, online forum, or call center log.  Monitor what your customers are telling you and take quick action in response to even a hint that fraud may be afoot. Never underestimate the power of a complaint.

To learn more about scareware, read “Free Security Scan” Could Cost Time and Money at www.ftc.gov.

Lesley Fair is an attorney in the FTC’s Bureau of Consumer Protection.