FBI Busts $100 Million 'Scareware' Gang

The three men who were indicted are alleged to have been part of an illegal scheme that spanned 60 countries and sold victims $100 million worth of bogus software that purported to fix system problems that apparently didn't exist.From the Chicago FBI field office: "According to a federal indictment returned here against a Cincinnati area man and two other men believed to be living abroad. The charges allege that the defendants, through fake advertisements placed on various legitimate companies' websites, deceived Internet users into falsely believing that their computers were infected with "malware" or had other critical errors to induce them to purchase "scareware" software products that had limited or no ability to remedy the purported, but nonexistent, defects. The alleged scheme is widely regarded as one of the fastest-growing and most prevalent types of Internet fraud.

Two defendants, Bjorn Daniel Sundin, and Shaileshkumar P. Jain, with others owned and operated Innovative Marketing, Inc. (IM), a company registered in Belize that purported to sell anti-virus and computer performance/repair software through the internet and that operated a subsidiary called Innovative Marketing Ukraine, located in Kiev. The company appeared to close down last year after the U.S. Federal Trade Commission filed a federal lawsuit in Maryland seeking to end the allegedly fraudulent practices.

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Like most of these scams, federal officials claim that the company, Innovative Marketing Inc. (IM), lured Internet users to a web site that would serve bogus alerts:

"• the IM scareware site appeared not to be a website at all, but rather a warning message from the computer user's operating system, falsely informing the user of an error and prompting the user to click on a box to address the purported error. Further error message prompts occurred regardless of whether the user clicked the box agreeing to or declining to proceed or attempted to close the error message window;

• the IM scareware displayed an animated graphic image that gave the fake appearance that the computer was being scanned for various errors or viruses. Bogus results falsely showed that critical errors were detected by the fake scan; and

• the IM scareware website then prompted the victim user to download a free trial version of an IM product, falsely promising that the software could repair the nonexistent critical errors. Those who fell for the alleged scam then purchased fake software named "Malware Alarm," "Antivirus 2008," and VirusRemover 2008."

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These types of scams have been increasing during the past couple of years. In January we highlighted how Microsoft customers were being targeted in the post Office Users Targeted In Phishing, Rogueware Attacks as wells as this post from October 2009: Scammers Up Rogueware War.