The case was brought by the Federal Trade Commission. The court
also ordered a halt to another spyware operator’s stealthy
downloads and barred the collection of consumers’ personal
information, pending trial.
The FTC sued both operations charging that the stealthy
downloads of spyware were unfair and deceptive and violated federal
law. Although the companies used different techniques to direct
consumers to their websites and implement the downloads, the FTC
alleged that both operations hijacked consumers’ computers without
the consumers’ knowledge or approval, secretly changed their
settings, and barraged consumers with pop-up ads. The spyware and
other software the defendants installed caused many computers to
malfunction, slow down, or crash, causing consumers to lose data
stored on their computers.
The FTC alleged that Sanford Wallace and his company,
Smartbot.Net, exploited a security vulnerability in Internet
Explorer to distribute spyware. The spyware caused the CD tray on
computers to open and then issued a “FINAL WARNING!!” to computer
screens with a message that said, “If your cd-rom drive’s open …
You DESPERATELY NEED to rid your system of spyware pop-ups
IMMEDIATELY! Spyware programmers can control your computer hardware
if you failed to protect your computer right at this moment!
Download Spy Wiper NOW!” Spy Wiper and Spy Deleter, purported
anti-spyware products the defendants promoted, sold for $30.
A default judgment against Wallace and Smartbot.Net orders them
to give up $4,089,500 in ill-gotten gains. The order also bars them
from downloading spyware onto consumers’ computers; from
downloading any software without consumers’ consent; from
redirecting consumers’ computers to sites or servers other than
those the consumers selected to visit; from changing any web
browser’s default home page; and from modifying or replacing the
search features or functions of any search engine.
A settlement with defendants OptinTrade and Jared Lansky, bars
the same practices. Lansky, an ad broker who disseminated ads
containing Wallace’s spyware, will give up $227,000 in ill-gotten
gains.
In a second case, the FTC charged that Odysseus Marketing and
its principal, Walter Rines, lured consumers to their website by
advertising bogus software they claimed would allow consumers to
engage in anonymous peer-to-peer file sharing.
According to the FTC, the spyware and other software bundled
with it hijacked search engines and reformatted search engine
results, placing Rines’ clients first. The FTC recently amended its
complaint, charging that the defendants also distributed their
spyware by exploiting security vulnerabilities in Internet Explorer
and other applications, and that the defendants’ spyware captured
consumers’ personal information, including their names, addresses,
email addresses, telephone numbers, internet browsing and shopping
history, and information about their online transactions. Once
captured, the amended complaint alleges, the information was
transmitted to the defendants’ internet servers, where they
compiled the information into a database in order to sell access to
the data.
A revised preliminary injunction has been issued against
Odysseus and Rines. It bars them from downloading spyware without
consumers’ consent, and from disclosing, using, or further
obtaining consumers’ personal information, pending trial. The FTC
will ask the court to order a permanent halt to their activities
and order them to give up their ill-gotten gains.
