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The developer of the app ‘Prized’ was caught using its users’ smartphones and other electronic devices to mine for cryptocurrency, which was damaging for the hardware, with the potential to leave it barely functional. The hardware owners also faced the possibility of increased electricity and data costs, as well as the time and expense of removing the malware. Consumers were promised that the app would allow them to earn points which would be redeemable for prizes and gift cards. In many instances, consumers did not receive the redeemable points that the app promised to deliver.

The Terms of Use of ‘Prized’ contained a provision that the apps “are and will be free of malware, spyware, time bombs, and viruses.” The opposite was true. The New Jersey Division of Consumer Affairs and the FTC combined to investigate complaints about the app. The developers entered into a settlement agreement with the two government agencies, requiring payment of legal and investigative costs, and obliging the developers to report annually for the next 20 years.

They will be required to file financial, personnel and other records annually to ensure compliance with the prohibition on “marketing or selling products that function as malware, and from using misrepresentations in the sale or advertisement of software products”.

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Take away:

  • Website operators should be careful not to breach the representations in their own Terms of Use.

 

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