The firm, not related to legitimate firm Secure Computing, and its president Paul E. Burke, agreed to pay US$725,000 in state attorneys' fees and costs, US$200,000 in civil penalties and US$75,000 in restitution for consumers.
The suit alleged violations of the state's Computer Spyware Act of 2005 as well as federal and state anti-spam laws. More than 1,100 Washington state residents bought Secure Computer's products, according to a news release from the state attorney general's office.
The firm allegedly used various websites, pop-up ads and spam to "warn" users that their PCs were infected with spyware.
PC users were offered a free spyware scan that immediately downloaded a malicious program. Victims were then urged to purchase the full version of Spyware Cleaner for US$49.95.
While the scan failed to detect numerous types of spyware, according to the attorney general's office, it erased a PC's hosts file, used to block web addresses.
The company also offered its Popup Padlock, a duplicate program, in addition to Spyware Cleaner.
Paula Selis, senior counsel for the attorney general's officer, told SCMagazine.com today that the case highlights scammers trying to scare PC users into buying a product.
"What's really important about this case is that it highlights a certain problem called ‘scareware,'" she said. "Spyware has gotten so big that people can be scared into buying something to clean their computers. People can capitalize on that fear and make money from it."
The settlement is a victory for the state's Consumer Protection High-Tech Unit, state Attorney General Rob McKenna said this week in a statement.
"It sends a strong message to internet businesses that they must promote their products ethically and legally. We won't tolerate deceptive marketing such as ‘scareware' that preys on consumer's fears about spyware and online threats," he said.
"Internet businesses are responsible for ensuring that third-party advertisers and affiliate marketers, as well as their own staff, do not boost sales through misleading pop-up ads, phony results of so-called ‘free scans,' bogus hyperlinks or other online trickery."
Contact information for Secure Computer was not immediately available.
Secure Computer, based in White Plains, N.Y. stopped selling its Spyware Cleaner product when Washington state filed suit in January.
The company must now send an email to its customers in Washington state informing them of available refunds.
Microsoft filed a parallel lawsuit against Secure Computer in January, alleging that the firm used deceptive spam, misleading advertising and fake computer scan results to get victims to purchase its product.
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Fake anti-spyware firm settles Washington state suit
By Frank Washkuch, on Dec 5, 2006 3:13PM