An apparently bogus anti-spyware tool is the newest addition to the expanding "ransom-ware" category of malware, Panda Software said Tuesday.

Ransom-ware, the term some have slapped on malicious code that infects a PC, then demands money in return for cleaning up the machine or unlocking suddenly-encrypted documents, is just another example of how hackers are increasingly driven by greed, Luis Corrons, the director of Panda's research lab, said in a press release. Now, said, Corrons, a purported anti-spyware product, SpywareNo, joins the list of ransom-ware.

Surreptitiously downloaded when users visit certain porn or pirate Web sites, SpywareNo exploits vulnerabilities in Microsoft's Internet Explorer to get onto a PC. Once it installs itself, it creates an icon on the desktop and displays a bogus warning that the system's infected with spyware, Corrons said. (It also modifies the Windows Registry to guarantee it runs every time the PC is started, even after the user thinks he's managed to manually delete the program.)

The warnings are as fake as a $3 bill.

The on-screen alert invites users to purchase the full version ($20 for a month's subscription, $60 for an annual plan); only those who pay the ransom see the "threats" disappear.

"If users fail to register, this commercial software will 'detect' threats that don't actually exist on the computer, and which will 'disappear' as soon as users pay for the product," said Panda in its own warning.

In a release posted to the Spyware Warrior anti-spyware message forum, someone claiming to be the public relations manager for SpywareNo took exception with the ransom-ware categorization, and blamed the drive-by-installs on out-of-control affiliates.

"The spyware removal software market is so overcrowded," wrote someone identifying herself as Jessica Simmons. "The competition is very very hard. That is why we direct all our efforts to development itself and have no time and power to advertise our products effectively. We use affiliated advertisers to do this. This is an easy way for us. This way is a very dangerous though. It is a shame that some of our advertisers do not respect the law, but unfortunately we are unable to check them all at the initial stage."

The poster went on to say that SpywareNo "does not install silently or without permission," and that any such instance is due to "those unprincipled advertisers."

End-users commenting to the dslreports.com message forum, however, say different. One said SpywareNo got installed "out of nowhere," while Eric Howes, a graduate student at the University of Illinois, a contributor to the Spyware Warrior site and list, noted "the [SpywareNo] scanner turned up eight listed spyware programs, all 'high risk' in just two seconds. Even a scan of the processes [running in Windows] takes five or six seconds. That's a big red flag," he said. "SpywareNo wasn't actually scanning anything at all.

"Within 48 hours of the first report we had of SpywareNo, we had reports from all over the place," said Howes. "The fact that the reports came from a number of different sources, at about the same time" indicate that it had been seeded on multiple Web sites.

Phony spyware detection isn't a new tactic, said Howes, who compared SpywareNo's approach to others, such as Spywiper and SpyWareAssassin, two products which have been investigated by the Federal Trade Commission.

"They're guilty of unfair practices, just as was SpyWareAssassin," Howes alleges. "But I think Panda is on to something by classifying it as 'ransom-ware.'

"SpywareNo has been irresponsible at best," he added. "I've stopped listening to that 'our affiliates did it' excuse years ago. Even if its' true, they're still responsible."

Attempts to contact SpywareNo, which according to the alleged public relations spokeswoman, is based in Istanbul, were unsuccessful.