Experts at PandaLabs, the anti-malware laboratory at cloud security firm Panda Security, said that users could be infected unknowingly through visiting a hacked web site.
An infected PC will leave the owner unable to open documents, run programs or carry out any tasks. They will then typically see a series of warnings about the infection, along with instructions to buy an anti-virus product called Total Security 2009, which is charged at $AU132.00.
Users who pay the ransom will receive a serial number, which will release all files and executables, allowing them to work normally again, although the fake anti-virus remains on the machine.
"The way this 'rogueware' operates presents a dual risk. Firstly, users are tricked into paying money simply in order to use their computers, and secondly, these same users may believe that they have genuine anti-virus installed on the computer, thereby leaving the system unprotected," said Luis Corrons, technical director of PandaLabs.
"Users are also prevented from using any type of detection or disinfection tool, as all programs are blocked. The only application that can be used is the internet browser, conveniently allowing the victim to pay for the fake anti-virus."