We all know that free apps are never really free, there’s usually some advertising and possibly a few in-app purchases to generate revenue for developers. Prized app developers Equiliv Investments and Ryan Ramminger had a slightly different approach, by using their app to secretly mine some cryptocurrency, such as Dogecoin or Litecoin, in the background. To make matters worse, the app was advertised specifically as malware free, which rather upset the FTC.
It turns out that Prized broke at least two US laws, the FTC Act and the New Jersey Consumer Fraud Act. To resolve the issue, the app developers settled out of court. They were fined $50,000 in damages, although $44,800 of that amount will be suspended once $5,200 has been paid and conditions are followed. The developers are also banned from created or distributing such software ever again and have been ordered to destroy all the user data that they collected through the app.
“Hijacking consumers’ mobile devices with malware to mine virtual currency isn’t just deplorable; it’s also illegal,” – Jessica Rich, Director of the FTC’s Bureau of Consumer Protection
The situation may not have been damaging to consumers in the usual ways, such as compromising security or data privacy. However, those who installed the app where left with sluggish handsets and a significantly shorter battery life, as mining for cryptocurrency is a processor intensive task.
In order to trick unknowing users into installing the app, Prized offered its users points for downloading apps or playing games, which could then apparently be exchanged for rewards once enough had been collected.
However, the app also mined crytocurrency in the background, despite claiming to include no malware. Unlike cash from your bank, cryptocurrencies, like Dogecoin, are created using complex algorithms that require a fair bit of computational resources to create. By combining the processing power of multiple smartphones, Prized’s developers could sit back and let others do the mining for them. We’re not sure how many people downloaded the app as it no longer appears on Google Play, but the FTC says the number was in the “thousands”.
This case is just the latest in the FTC’s ongoing effort to protect consumers from emerging financial technologies, which recently held a failed board game Kickstarter project to account.