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App maker allegedly hijacked phones to mine digital currency

App maker allegedly hijacked phones to mine digital currency
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A smartphone app developer has settled with a federal regulator over allegations it duped consumers into downloading a “rewards” app that secretly installed software that gathered virtual currency for the developer.  

Makers of the app, known as “Prized,” agreed to the settlement with the Federal Trade Commission (FTC), which brings enforcement actions over unfair or deceptive business practices.

The FTC said the agreement bars the defendants — Equiliv Investments and Ryan Ramminger — from conducting similar scams in the future. It also includes a $50,000 penalty.

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“Hijacking consumers’ mobile devices with malware to mine virtual currency isn’t just deplorable; it’s also illegal,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement. “These scammers are now prohibited from trying such a scheme again.”

The Prized app had been downloaded thousands of times since February, 2014, when it appeared in the Google Play Store and Amazon App Store, the FTC said. Prized claimed that users could play games and download affiliated apps to earn points that could be exchanged for clothes, gift cards and other items.

Instead, the FTC claims the app surreptitiously installed malware that used the device’s computing power to “mine” for cryptocurrencies, including DogeCoin, LiteCoin and QuarkCoin.

Digital currencies are made by computers solving intricate mathematical algorithms, a process known as mining. The app developers were hoping to boost the amount of computing power working to mine cryptocurrencies for them by hijacking as many devices as possible.

Phone users with the Prized app found that their batteries drained faster, their phones charged more slowly and their monthly data usage skyrocketed.

“Consumers downloaded this app thinking that at the very worst it would not be as useful or entertaining as advertised,” said John J. Hoffman, acting New Jersey attorney general, whose office also brought charges. “Instead, the app allegedly turned out to be a Trojan Horse for intrusive, invasive malware that was potentially damaging to expensive smartphones and other mobile devices.”       

Although the defendants agreed to a $50,000 fine to be paid to New Jersey, $44,800 will be suspended upon a $5,200 payment and compliance with the settlement.