Inside the Microsoft scareware scam

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Inside the Microsoft scareware scam

For more than two years, Microsoft's Digital Crimes Unit has been addressing customer complaints linked to a widespread telemarketing scheme, halted only recently by the US Federal Trade Commission.

Microsoft was one of several companies that telemarketers claimed they were affiliated with to commit the scams.

Based primarily in India, the callers tricked customers into purchasing anti-virus services to remove non-existent malware from their computer. English-speaking consumers in the United States, Canada, Australia, Ireland, New Zealand and the U.K. were allegedly targeted, and other companies, like Dell, McAfee and Symantec, were mentioned in the ruse to convince customers of the calls' legitimacy.

“Microsoft was not made aware of the scams by the FTC,” said Frank Torres, director of consumer affairs and senior policy counsel at Microsoft.

“Rather, in 2010, Microsoft began receiving reports of scammers making phone calls to consumers pretending to represent a legitimate company, such as Microsoft or other companies, in an effort to trick [victims].”

Last week, the FTC announced it froze the assets of numerous businesses that conned tens of thousands of consumers with their scams. The agency filed complaints against two companies in the United States - Finemaestros and Virtual PC Solutions, and India-based companies Pecon Software, Zeal IT Solutions, PCCare247 and Lakshmi Infosoul Services.

Six connected tech support scams were acknowledged by the FTC dating back to at least 2008. The complaint addressed 17 individual and 14 corporate defendants. An FTC news release on the case mentioned that Microsoft and other companies cooperated in the investigations.

Torres said Microsoft does not know how many customers fell for the racket.

In June, Microsoft released the findings of a survey related to the phone scams, which found that the average cost for victims was $US875.

Locally, the Australian Communications and Media Authority (ACMA) chief executive Chris Chapman said half of the 10,000 complaints the regulator received in 2010 relating to the Do Not Call Register were as a result of the phone scams.

FTC Chairman Jon Leibowitz acknowledged the effectiveness of the scams despite that some of the con acts resembled "a bad Bollywood movie".

He and Chapman conceded there was little hope for financial reimbursement to victims and said prevention of scams required consumer education and coordination between international law enforcement agencies. 

Chapman told CRN sister site SC Magazine that the precise cost of IT security scams to the Australian economy was unknown.

The Australian Competition and Consumer Commission estimated the combined cost of a variety of fraud scams during the 12 months to March 2011 at $85 million dollars, up a whopping 35 percent over the previous year.

This article originally appeared at

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