Innovative Marketing, Rogue Vendors Investigated By FTC

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Innovative Marketing, Rogue Vendors Investigated By FTC

Postby TeMerc » Wed Dec 10, 2008 11:07 am

At the request of the Federal Trade Commission, a U.S. district court has issued a temporary halt to a massive “scareware” scheme, which falsely claimed that scans had detected viruses, spyware, and illegal pornography on consumers’ computers. According to the FTC, the scheme has tricked more than one million consumers into buying computer security products such as WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus. The court also froze the assets of those responsible for the scheme, to preserve the possibility of providing consumers with monetary redress.

According to the FTC’s complaint, the defendants used an elaborate ruse that duped Internet advertising networks and popular Web sites into carrying their advertisements. The defendants falsely claimed that they were placing Internet advertisements on behalf of legitimate companies and organizations. But due to hidden programming code that the defendants inserted into the advertisements, consumers who visited Web sites where these ads were placed did not receive them. Instead, consumers received exploitive advertisements that took them to one of the defendants’ Web sites. These sites would then claim to scan the consumers’ computers for security and privacy issues. The “scans” would find a host of purported problems with the consumers’ computers and urge them to buy the defendants’ computer security products for $39.95 or more. However, the scans were entirely false.
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Source: Sunbelt Blog
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Re: Innovative Marketing, Rogue Vendors Investigated By FTC

Postby TeMerc » Wed Dec 10, 2008 3:31 pm

Highlights:

  • Over 1 million PC users have been scammed by Innovative and its affiliates. At $40 a pop, that’s $40 million in ill-gotten revenue.
  • Forget refunds. According to the FTC, “although some consumers later realize they have been defrauded… and attempt to seek refunds, Defendants routinely delay, obstruct and refuse to honor such requests.
  • Innovative bought ads generating over 680 million impressions on MyGeek alone (an advertising network, now AdOn.)
  • When faced with complaints from MyGeek about adware vendors not wanting an advertisement to run on their sites, Innovative offered to not display these adware programs as a threat found.
  • MyGeek finally shut down the relationship over complaints. Not able to continue with MyGeek, Innovative created fake ad agencies purporting to represent legitimate companies, and then placed malvertisements (legitimate Flash-based ads that have been compromised to redirect to malware websites, as Sandi Hardmier has been routinely documenting). This method is what got their ads on mlb.com, nhl.com (remember?), zillow.com, realtor.com and other popular sites.
  • No honor among thieves? Innovative, ironically, is suing father and son Maurice D’Souza and Marc D’Souza over embezzling millions while they worked for Innovative.
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Re: Innovative Marketing, Rogue Vendors Investigated By FTC

Postby TeMerc » Thu Dec 11, 2008 11:06 am

Court Freezes Assets of Alleged 'Scareware' Purveyors
A federal court has frozen the assets of several businesses accused of conspiring to trick more than one million consumers into purchasing and installing "scareware," which uses fake security alerts to frighten consumers into paying for bogus computer security software.

The individuals named in the commission's complaint filed in the U.S. District Court for the District of Maryland were Daniel Sundin, Sam Jain, Marc D'Souza, Kristy Ross and James Reno. The court issued a temporary restraining order that prohibits them from falsely representing that they have run any type of computer analysis, or that they have detected security or privacy problems on a consumer's computer.

The defendants also are barred from using domain names obtained with false or incomplete information, placing advertisements purportedly on behalf of a third party without that party's consent, or otherwise attempting to conceal their own identities. The order also mandates that companies hosting the defendants' Web sites and providing domain-registration services take steps to keep consumers from accessing these Web sites.
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Re: Innovative Marketing, Rogue Vendors Investigated By FTC

Postby TeMerc » Wed Dec 17, 2008 8:15 am

Developments in the FTC v Innovative Marketing et al lawsuit
My regular readers will recall that the temporary restraining order won by the FTC expired on 12 December 2008 at 6.15pm, and that each individual, corporate and relief defendant was ordered to appear before the Court at 3.30pm on that same day to show due cause why a Preliminary Injunction should not be entered. Well, guess what, they didn't turn up at the Court hearing, and they have failed to comply with the requirements of the temporary restraining order.

Jain apparently didn't attend court because his assets are frozen and he can't spend any money. Reno made a similar excuse. The Judge's reaction to the claims is an absolute gem. He said "I understand. The defendants are too culpable to come here to the courtroom.".

Judge Richard D Bennett is also quoted as saying "People are hiding out. ... The time for hiding out will be over as of 4 o'clock next Wednesday.", and promised to issue arrest warrants if his orders are further ignored.
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Re: Innovative Marketing, Rogue Vendors Investigated By FTC

Postby TeMerc » Fri Dec 19, 2008 12:07 am

Developments in the FTC versus Innovative Marketing et al lawsuit
Well well, people have been busy.

Various documents were filed on the 17th, including:

Entry of Appearance on behalf of Mark D'Souza by Counsel Russell D Duncan of Orrick, Herrington & Sutcliffe
Entry of Appearance on behalf of Sam Jain by Counsel Edward Wisneski of Patton Boggs
A joint Response to Order to Show Cause by Sam Jain and Kristy Ross, promising to "fully comply with the terms of the Temporary Restraining Order and Preliminary Injunction by 23 December 2008" and with the FTC not opposing said delay. Jain and Ross content that they were not properly served, but waived their right to service of process and consented to the Court's jurisdiction.
Response to Order to Show Cause by Mark D'Souza, agreeing to the Court's jurisdiction, agreeing that he was properly served, and agreeing to "comply with the requirements of the Temporary Restraining Order and Preliminary Injunction Order as those orders apply to him by 4 p.m. EST on December 23, 2008.".
Mr Reno posted a "response" to the lawsuit on his website, http://bytehosting.com - a Response that I know about because somebody posted a comment to my blog. The response seems to have been taken down, but is still available via Google's Cache at time of writing:
http://209.85.173.132/search?q=cache:qK ... =clnk&cd=1
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Re: Innovative Marketing, Rogue Vendors Investigated By FTC

Postby MysteryFCM » Fri Dec 19, 2008 11:59 am

Just incase the Google cache of the bytehosting.com site vanished, I PDF'd it :)

http://hosts-file.net/misc/bytehosting_com.pdf
Regards

Steven Burn
I.T. Mate / hpHosts
it-mate.co.uk / hosts-file.net

Keeping it FREE!

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Re: Innovative Marketing, Rogue Vendors Investigated By FTC

Postby TeMerc » Wed Dec 24, 2008 12:43 am

Internet company held in contempt of court
Tricia Bishop
A Baltimore federal court judge yesterday held Innovative Marketing Inc., a Belize-based Internet company, in contempt of court for ignoring previous orders commanding it to shut down and hand over financial records. This month, the Federal Trade Commission sued the company, claiming it ran an illegal "scareware" operation that tricked more than a million people into spending $100 million on bogus security software by making them believe their computers were under siege from various viruses and spy programs. In an order signed yesterday, U.S. District Court Judge Richard D. Bennett ordered the business to pay $8,000 for each day it fails to comply with the earlier orders. The company's chief executive and four other defendants, all of whom have had their assets frozen, did not show up for a hearing last week, prompting Bennett to promise he would have them arrested if they didn't respond. All but Innovative Marketing filed paperwork with the court Wednesday and agreed to comply with court orders by Dec. 23.
nwz Baltimore Sun Online
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