FTC zaps spyware scam

The Federal Trade Commission said the company that crammed more then 15 million PCs full of spyware have agreed to pay $330,000 in fines and be monitored by federal authorities for up to eight years. The fine, however, will increase to over $3.5 million if the court finds that the companies have misrepresented their financial status, the FTC said.

In November 2006, the FTC charged ERG Ventures, with tricking consumers into downloading malevolent software by hiding its Media Motor program within seemingly innocuous free software, including screensavers and video files. Once downloaded, the Media Motor program silently activated itself and downloaded “malware” that was intrusive, disruptive, and made it difficult for consumers to use their computers.

The software changed consumers’ home pages, tracked their Internet activity, altered browser settings, degraded computer performance, and disabled anti-spyware and anti-virus software. Many of the malware programs installed by the Media Motor program were extremely difficult or impossible for consumers to remove from their computers. The spyware was linked with various companies, including ERG, Joysticksavers.com and Privateinpublic.com.

The FTC charged that ERG Ventures and its principals violated the FTC Act, which bars unfair and deceptive practices. Specifically, the FTC alleged that the defendants failed to disclose to consumers that the free software they offered was bundled with malware. 

The agency also charged the defendants with using a deceptive End User License Agreement, which gave consumers the option to halt the installation of all software from ERG Ventures, but secretly installed malware whether consumers accepted or rejected the terms of the agreement. The agency also charged the defendants with unfairly downloading software that causes substantial harm to consumers. At the request of the FTC, the U.S. District Court for the District of Nevada froze the defendants’ assets and ordered a halt to their spyware operation pending trial.Whether or not they will pay attention to it, the order permanently bars the defendants from distributing software that interferes with consumers’ computers, including software that tracks consumers’ Internet activity or collects other personal information; generates disruptive pop-up advertising; tampers with or disables other installed programs; or installs other advertising software onto consumers’ computers.

The defendants will also be required to fully disclose the name and function of all software they install on consumers’ computers in the future, and to provide consumers with the option to cancel the installation after viewing the disclosure.