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FTC Settles Lawsuit with ByteHosting for Running Scareware Advertising Operation

James M. Reno, Chief Executive Officer of ByteHosting Internet Services LLC, have at last settled with the Federal Trade Commission (FTC) following the imposition of charges to participate in a big scareware advertising operation. In the settlement, it is decided that the company will give compensation of $1.8 Million, permanent injunction and cooperation in the prosecution.

In December 2008, FTC filed a lawsuit against ByteHosting Internet Services LLC after it had come to know that the company was involved in a malicious activity of displaying fake computer advisements to netizens. In the advertisements, the company warned users about the detection of a computer virus.

Moreover, the fake advertisements scared computer users of finding 'illegal porn content,' or several hundred pieces of malicious codes on their PCs. One ad even warned the recipient of legal action for having malicious content of his PC or informed other people that the user was addicted to porn sites.

These fake advertisements also contained a web link (beside warning) from where the recipient could purchase an antivirus of his choice from the listed ones that included XP Antivirus, WinFixer, ErrorSafe, WinAntivirus and DriveCleane for $39.95 or above. It is estimated that nearly one million Americans became victims of this scam.

FTC also charged Innovative Marketing, Inc. with ByteHosting Internet Services LLC for its alleged involvement in the same scareware scam. Both the companies were found accused of violating FTC's Act that bans illegal and deceptive business strategies and practices.

In addition to the charges, FTC has been trying to bar both the companies permanently since December 2008 for their scareware marketing to sell products.

In fact, this is not the first time when ByteHosting Internet Services and its Chief Executive Officer 'Reno' are facing charges of employing scareware marketing techniques. In 2004, Symantec sued Reno for using its trademark and intellectual property without permission.

Although this scareware scam seems to have settled, security experts have advised people to purchase antivirus and anti-malware products from trusted and known companies. They have also suggested them to avoid following online advertisements that promote an unknown software.

Related article: FTC Reaches Million-Dollar Settlement For Spyware

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