Sales Software is 'Entirely Illegal,' Class Claims
CHICAGO (CN) - A software company used its "Text Enhance" malware as a Trojan horse to infiltrate thousands of computers to steal sales leads worth millions of dollars, according to a federal class action.
Dan Halperin sued Affluent Ads dba Leadnomics and its affiliate International Web Services (IWS) dba Amazing Apps.
"Defendant Leadnomics is a sales-lead generator company and has a sister company, defendant IWS, that provides software products and services," Halperin says in the lawsuit.
"Defendants have developed an especially sinister practice in which they utilize malware to act as a Trojan horse and infiltrate thousands of consumers' computers. The malware converts text on Internet websites viewed by consumers into hyperlinks that direct consumers to non-affiliated websites."
Leadnomics and IWS dba Amazing Apps are both based in Philadelphia, according to the complaint.
Halperin, of Cook County, claims Leadnomics designed the Text Enhance malware and used it to infiltrate computers and hijack Internet traffic, with help from its sister company.
Malware refers to software programs that covertly install themselves on computers without users' consent and perform unauthorized tasks, including capturing passwords, recording browsing choices, causing pop-up windows and reporting personal information to servers. Malware also can be used for identity theft and credit-card fraud.
"Consumer Reports estimated that malware cost U.S. consumers $2.3 billion and caused them to replace 1.3 million PC's in 2010," the complaint states. "Another study estimated that in 2006, the worldwide economic damages from malware exceeded $13 billion."
Halperin claims that malware threatens national security and the economy, and is designed to steal Internet traffic, in exchange for millions of dollars in fees.
In a scheme recently uncovered by the FBI, seven people used malware to hijack web traffic and redirect it to their clients' websites, making $14 million in illegal advertising revenue through the use of "pay per click" and "pay per impression" fee models, according to the complaint.
"Defendant Leadnomics specializes in 'lead generation,'" the complaint states. "This is the practice of supplying businesses with viable sales leads for a fee. According to its website, Leadnomics 'generates millions of premium leads every year for financial institutions & insurance companies in the US & UK.' In 2010, Leadnomics reportedly generated some $5.8 million in revenue. In or around 2010, Leadnomics created a sophisticated piece of malware known as Text Enhance.
"Knowing that Text Enhance was entirely illegal, Leadnomics could not inform the public that it created the malware. Indeed, Leadnomics had a reputation to uphold - that of a progressive, cutting-edge technology company. Therefore, Leadnomics put Text Enhance under the umbrella of its relatively unknown sister company - defendant IWS.
"Text Enhance was designed to generate millions of new sales leads. Specifically, Text Enhance was designed to steal web traffic, which monetize. In short, defendants intentionally designed Text Enhance to steal and peddle sales leads for millions of dollars."
Using a "pay per click" or "pay per impression" model, Text Enhance infects consumers' computers, causing ads to appear on web pages they visit. When consumers click on the ads, they are taken to websites of companies pay fees to the defendants, according to the lawsuit.
Halperin says Text Enhance is hard to find and remove, and it affects computers so that they can no longer be used for their intended purposes.
The malware causes computers to slow down, hurts their performance, uses up memory and bandwidth, and causes loss of data, according to the complaint.
Halperin claims consumers waste time and money to detect and remove the malware and to fix the loss of performance and bandwidth.
He claims it harms legitimate businesses whose websites are turned into "billboards for their competition" after they spend hundreds of millions of dollars to drive traffic to them.
Halperin seeks class certification, an injunction and damages for violations of the Computer Fraud and Abuse Act, the Electronic Communications Privacy Act, the Illinois Consumer Fraud Act and the Computer Tampering Act.
He is represented by Joseph Siprut.
Leadnomics did not reply to a request for comment Monday.