Appeals Court Affirms Ruling in Favor of FTC, Upholds $163 Million Judgment Against ‘Scareware’ Marketer

In a victory for the Federal Trade Commission in its efforts to protect consumers from spyware and malware, a federal appeals court has upheld a district court ruling that imposed a judgment of more than $163 million on Kristy Ross for her role in an operation that used computer “scareware” to trick consumers into thinking their computers were infected with malicious software, and then sold them software to “fix” their non-existent problem.

“This is a huge victory for consumers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “As this case shows, scareware causes enormous economic injury. We remain committed to protecting consumers against this kind of scam.”

In October 2012, in addition to the imposing monetary judgment, the U.S. District Court for the District of Maryland permanently prohibited Ross from selling computer security software and any other software that interferes with consumers’ computer use, and from any form of deceptive marketing. In 2008, the FTC had charged Ross and six other defendants with conning consumers into buying software to remove malware supposedly detected by computer scans. The other defendants either settled the charges or had default judgments entered against them.  

Ross appealed the district court ruling, including its finding in favor of the FTC on the issue of whether Ross was a “control person” who could be held liable for the deceptive practices. On February 25, 2014, the U.S. Court of Appeals for the Fourth Circuit upheld the lower court’s findings, stating, in part, that to rule in her favor “would effectively leave the Commission with the ‘futile gesture’ of obtaining ‘an order directed to the lifeless entity of a corporation while exempting from its operation the living individuals who were responsible for the illegal practices’ in the first place.”

To learn more about these kinds of scams, read the FTC’s “Free” Security Scans.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.