FTC Reaches Million-Dollar Settlement For Spyware

The Federal Trade Commission accused two California companies and people associated with them for violating federal laws when they attacked consumers' computers with spyware. FTC settled with these companies for $2 million.

The crime of the defendants and their affiliates was that they used their Web sites to construct "installation boxes" that would pop-up on the computer screens of the consumers. At other times the boxes offered a number of "freeware" such as music files, cell phone ring tones, photographs, wallpaper and song lyrics. Sometimes the boxes displayed warnings if the consumers' Internet browsers were faulty, for which they presented free browser upgrades or security patches.

When consumers downloaded the said freeware or security upgrade, their computers got infected with spyware that damaged the computers' functioning. The spyware does many things like tap internet activity, alter the settings on the home page, insert new toolbars onto the browsers, and show pop-up ads even when Internet browsers are dormant. Later consumers found it difficult to uninstall or remove the freeware.

Consumers who tried to remove the freeware via the 'Windows Control Panel' were taken to a Web page asking them to pay $29.95 fee to abort the pop-ups. Eventually many consumers ended up either paying the defendants' fee or hiring a computer technician to regain control of their computers.

The accused companies - Enternet media Inc., Conspy & Co. Inc., and the individuals - Lida Rohbani, Nima Hakimi and Baback Hakimi who created software codes named as "Search Miracle", "Miracle Search", "EM Toolbar", "Elite Bar" and "Elite Toolbar" to spread the spyware were prohibited from spying onto a consumer's PC by an order under the final judgment.

The defendants are no longer allowed to make misleading claims about performance, benefits, features, cost or nature of their software codes. They must also desist from claiming their codes as any type of browser upgrades or provide security software, music, songs, lyrics or ring tones.

By the settlement the defendants must surrender $2.045 million of their ill devised gains and also pay a charge of $8.5 million for allegedly violating the FTC Act. Microsoft, Webroot and Google assisted in the resolution of the case.

Related article: FTC Launches War Against Spyware Distributors

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