Symantec Wins First Round In Scareware Lawsuit

by Wendy Davis, Aug 6, 2012, 6:10 PM

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Siding with Symantec, a federal judge has dismissed a potential class-action lawsuit by a consumer who alleged that the company fraudulently marketed scareware.

Web user James Gross alleged that Symantec's PC Tools duped him into purchasing an unnecessary "registry cleaner" for $29.95 by misrepresenting that his computer was riddled with problems.

But U.S. District Court Judge Charles Breyer in the Northern District of California ruled last week that Gross's allegations were "too vague to be actionable in federal court" because he didn't include Symantec's verbatim statements in his complaint.

"Without direct quotations from the PC Tools Web site or other marketing materials, the court cannot determine exactly how Symantec advertised its products."

The dismissal was without prejudice, which means that Gross can rewrite his complaint and try again. Jay Edelson, the lawyer who represents Gross, says he intends to do so. "The court gave us a blueprint for how to proceed," Edelson says, adding that he has access to Symantec's precise statements. "We have all that information. We're going to re-plead," he says.

The lawsuit dates to January, when Gross filed suit against Symantec. He alleged that he purchased a PC Tools registry cleaner after accepting the company's offer for a free diagnostic scan. The scan allegedly revealed that his computer suffered from low "system health," "privacy health" and "disk health."

But Gross alleged in his lawsuit that the free scan always returned those results, regardless of whether the computer had problems.

Edelson adds that an expert he retained tested Symantec's claims by running the diagnostic scan on brand new computers. Edelson says that in every instance, the scan reported problems.

Georgetown law professor and false advertising expert Rebecca Tushnet says that Breyer's decision reflects a growing judicial trend to require specific allegations at an early stage of fraud lawsuits -- often before consumers have been able to obtain evidence from the companies. "It's a marker indicating how much more courts are asking from plaintiffs," she says.

At the same time, Tushnet says that many consumers can meet that hurdle when suing over official ad campaigns, given that copies of old ads often can be found.

In recent years, Edelson has sued six separate companies for selling scareware. One software vendor that was sued, Ascentive, agreed in March to a $9.6 million settlement. In that case, Ascentive said it would allow people who purchased its software to put in claims for refunds of either $10 or $18, depending on how many products they purchased.

Ascentive also promised to revise its disclosures to consumers as well as its refund policies. The company did not admit wrongdoing as part of the settlement agreement.

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