FTC Calls Jamster a Sleazy Operation

WASHINGTON (CN) - Los Angeles-based Jesta Digital aka Jamster defrauded thousands of people with spam disguised as Android virus warnings and free "Angry Birds" downloads, the FTC claims in court.

The Federal Trade Commission sued the Wilshire Boulevard-based LLC in Federal Court. The FTC says that Jesta admitted it is running a scam in an internal company email. (See below.)

"Since on or about August 2011, Jesta has designed and caused to be disseminated banner ads that are seen by consumers playing the free version of the Angry Birds app on mobile devices using the Android operating system, or are found elsewhere on the Internet. Jesta designed these ads to look like warning messages generated by the Android operating system, alerting consumers that a virus has been detected on their mobile devices," the FTC says in the lawsuit.

"... The banner ads contain a robot image that looks similar to the robot logo for the

Android operating system, state 'virus detected' or identify a number of viruses found on the mobile device, and include a 'remove' button."

The lawsuit replicates screen shots of the deceptive ads and logos, such as "Virus Detected" with a "Remove" button, and "You Have 20 Viruses," with a "Remove button.

"In reality, these warning messages are not generated by the Android operating system; they are advertisements designed and disseminated by Jesta," the lawsuit states.

"Furthermore, Jesta has not scanned the mobile devices before placing these ads. Nor has Jesta actually detected any viruses on the mobile devices.

"Moreover, clicking on the 'remove' button does not actually remove any viruses from the mobile devices.

"Jesta uses the bogus anti-virus scans to dupe consumers into clicking on the banner ads."

People who are suckered into this get new a screen.

"The initially viewable area of the screen ('above the fold') on one or more models of phones includes banners proclaiming 'stop mobile virus now' and 'protect your android today,' along with three graphics that appear similar to the Android robot logo. The page also includes a button labeled 'get now.' The smallest print on the page is the only indication that there is a cost involved with whatever Jesta is marketing, stating '20 downloads for 9.99/mo.'

"Although there is nothing in the initially viewable area of the screen to indicate that further information can be seen by scrolling down, Jesta has provided additional information 'below the fold' (below the initially viewable area) on one or more models of phones," the FTC says.

After replicating another deceptive screen shot, the FTC says: "The below the fold information includes 'click to get 20 downloads for $9.99/month,' yet the screen fails to disclose the nature or purpose of the 20 downloads or whether they have anything to do with removing viruses from the mobile device."

The defendants admitted in an internal email that the whole thing is a scam, the FTC says in the lawsuit: "Consumers who attempt to download and install Jesta's anti-virus software are typically unsuccessful. According to an internal Jesta email, only 372 people out of 100,000 subscribers received a download link they could use to get the software. Moreover, in a January 20, 2012 email from the Vice President of Global Marketing Operations to the Director of Global Marketing, the Vice President explains that the download quota - the percentage of subscribers who downloaded the anti-virus app - had improved to two percent and that Jesta's business was presently a scam:

"'I mentioned to you the work on the SIP flow for the security app that we were marketing in the US. Although the download quota has improved since the handset config was done, it still is only 2%. We wanted to see if we could optimize the download experience after the user subscribes. We are anticipating if more customers are able to get the content that they signed up for that this will lower refunds and churn, and increase lifetimes. I put the attached project overview together for you to see what we are thinking. This is something that is important to ... [Chief Marketing Officer of Jesta] since he is anxious to move our business out of being a scam and more into a valued service.'" (Ellipsis and brackets in complaint.)

The government seeks disgorgement, rescission of contracts, an injunction, penalties and damages for violations of the FTC Act, deceptive trade, misrepresentations, failure to disclose, unfair and deceptive billing, and costs.

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