In a recent report compiled by CNN, it was stated that Richard Wallace - a former investigator at the cybersecurity company Tiversa – had testified in Court that the company routinely engaged in cyber-scare fraud. According to Wallace, in order to incentivize potential clients to purchase Tiversa’s cybersecurity products, it would typically make up fake data breaches. In 2010, Tiversa allegedly scammed LabMD, a cancer testing center in Atlanta, when Wallace tapped into LabMD's computers and “pulled” their medical records. The cybersecurity firm then alerted LabMD that it had been hacked. Tiversa offered LabMD its emergency "incident response" cybersecurity services, and after the offer had been refused, Tiversa threatened to tip off Federal regulators as to the "data breach". Tiversa then reported the breach to the Federal Trade Commission (“FTC”), which in turn filed a complaint against the LabMD.
LabMD decided to challenge FTC’s claim in court. However, the FTC responded to LabMD’s motion to dismiss the complaint by stating that the company is attempting to distract the court from the “voluminous evidence” which was in the possession of the Commission. According to LabMD’s CEO, while the legal battle, which had been commenced as a result of Tiversa’s fraudulent activity continues, LabMD had incurred consequential damages to its reputation, critical damages from the resultant financial burden, forcing it last year to dismiss its 40 employees last year and to cease its operations.