In less than two months, online businesses have paid more than $100,000 to scammers who set up a fake distributed denial-of-service gang that has yet to launch a single attack.

The charlatans sent businesses around the globe extortion e-mails threatening debilitating DDoS attacks unless the recipients paid as much as $23,000 by Bitcoin in protection money, according to a blog post published Monday by CloudFlare, a service that helps protect businesses from such attacks. Stealing the name of an established gang that was well known for waging such extortion rackets, the scammers called themselves the Armada Collective.

“If you don’t pay by [date], attack will start, yours service going down permanently price to stop will increase to increase to 20 BTC and will go up 10 BTC for every day of the attack,” the typical demand stated. “This is not a joke.”

Except that it was. CloudFlare compared notes with other DDoS mitigation services and none of them could find a single instance of the group acting on its threat. CloudFlare also pointed out that the group asked multiple victims to send precisely the same payment amounts to the same Bitcoin addresses, a lapse that would make it impossible to know which recipients paid the blood money and which ones didn’t.

Despite the easily spotted ruse, many businesses appear to have fallen for the scam. According to a security analyst contacted by CloudFlare, Armada Collective Bitcoin addresses have received more than $100,000.

“The extortion emails encourage targeted victims to Google for the Armada Collective,” CloudFlare CEO Matthew Prince wrote. “I’m hopeful this article will start appearing near the top of search results and help organizations act more rationally when they receive such a threat.”

Source: http://arstechnica.com/security/2016/04/businesses-pay-100000-to-ddos-extortionists-who-never-ddos-anyone/