App Hijacked Smartphones to Mine Currency, Developer Settles FTC Lawsuit

App Hijacked Smartphones to Mine Currency, Developer Settles FTC Lawsuit
Image: Pixabay
July 1, 2015

A smartphone app developer has agreed to settle charges by the Federal Trade Commission (FTC) and the New Jersey Attorney General that it lured consumers into downloading an app that it claimed would be free of malware.

The main purpose of the app called Prized was actually to load the consumers' mobile phones with malicious software to mine virtual currencies for the developer. The settlement permanently bans Equiliy Investments and associated defendants from creating and distributing malicious software.

The settlement also includes a $50,000 monetary judgement, of which $44,800 is suspended upon payment of $5,200 and compliance with the order.

Equiliv Investments began marketing the Prized app around February 2014, making it available in the Google Play Store, Amazon App Store and others. Thousands of consumers downloaded the app believing they could earn points for playing games or downloading affiliated apps and then spend those points on rewards such as clothes, gift cards and other items. Consumers were promised that the downloaded app would be free from malicious software – malware – or viruses, according to the complaint.

What consumers got instead, was an app that took control of the device's computing resources to mine for virtual currencies like DogeCoin, LiteCoin and QuarkCoin.

Virtual currencies are created by solving complex mathematical equations, and the complaint alleges that the app attempted to harness the power of many users' devices to solve the equations more quickly, thus generating virtual currency for the defendants. The use of that power caused the device's battery to drain faster and recharge more slowly, and to burn through consumers' monthly data plans.

The complaint in the case alleges that the defendants violated both the FTC Act and the New Jersey Consumer Fraud Act. In addition to the ban on creating and distributing malicious software, the court order also requires the defendants to destroy all information about consumers that they collected through the marketing and distribution of the app.