Virus-scan ads that appeared on Android mobile devices while consumers played Angry Birds were the basis of a $1.2 million settlement between Jesta Digital, Inc. and the Federal Trade Commission.

The agency alleged that Jesta Digital – also known as Jamster – designed banner ads similar to the Android operating system’s robot logo to dupe consumers into thinking their device was cautioning them about a potential virus. When consumers clicked on the ad they were taken through a series of landing pages. The screen displayed banners warning “stop mobile virus now” and “protect your android today,” but nothing indicated that more information was below. If a consumer scrolled down, they would have found “the smallest print on the page”  stating “20 downloads for 9.99/mo.”

Ironically, if consumers actually clicked on a “subscribe” button and attempted to download the anti-virus software, the download often failed, the agency said. As evidentiary support for its complaint, the FTC referenced an internal Jesta e-mail which stated the company was “anxious to move [the] business out of being a scam and more into a valued service.” 

According to the complaint, if a consumer clicked anywhere on the pages, they were enrolled in a monthly program for mobile-related content like ringtones, with the monthly charge of $9.99 added to their phone bill. Jesta’s mobile cramming utilized a billing method known as Wireless Access Protocol. The agency explained that WAP captures the consumer’s mobile phone number from the device and then uses it to place the charge on the mobile phone bill – without affirmative consent from the consumer.

To settle charges of violation of Section 5 of the FTC Act, Jesta agreed to a $1.2 million fine and to refund consumers who were billed for any good or service that involved the company’s claim that a device was infected with malware since Dec. 8, 2011.

The company is also prohibited from making deceptive statements about the cost of goods and services, the conditions of a purchase, and viruses and anti-virus software. Express, verifiable authorization prior to placing a charge on a consumer’s mobile phone bill must also be received.

To read the complaint and stipulated final order in FTC v. Jesta, Inc., click here.

Why it matters: In a press release about the case, the FTC noted that the complaint against Jesta was its second mobile cramming case and the first addressing WAP billing and scareware. Mobile “cramming” – the placement of unauthorized charges on a consumer’s phone bill – is an area of interest to the agency, which also held a roundtable on the topic earlier this year.