FTC puts final nail in spyware operation

A federal judge today granted the Federal Trade Commission’s request for a default judgment against a software developer who helped scammers infect millions of computers with spyware. As part of the judgment, the defendant Timothy Taylor must give up $4,595.36, the amount of money he made in the scheme, the FTC said.

Taylor was part of ERG Ventures LLC that last October paid $330,000 to settle a complaint from the FTC that it hid spyware in other software consumers could download for free.  The spyware, Media Motor, once downloaded added software that changed consumers' home pages, tracked their Internet activity, altered browser settings, degraded computer performance and disabled antispyware and antivirus software, the FTC said. Much of the malware installed by the Media Motor program was extremely difficult or impossible for consumers to remove from their computers, the agency said. Microsoft has a lawsuit against the company seeking monetary damages for distributing spyware.

The FTC accused ERG of distributing spyware that infected 15 million computers. The company tricked consumers into downloading spyware by hiding the Media Motor program in other downloads for other software, including screensavers and video files, the FTC said in an October 2006 complaint.

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.

The judgment entered against Taylor bars him 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 judgment also requires Taylor to fully disclose the name and function of all software he installs on consumers’ computers in the future, and to provide consumers with the option to cancel the installation after viewing the disclosure. 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.

A recent report from the IDG News Service said some estimates suggest spyware problems in the U.S. are decreasing, but writers of all kinds of malware are prevailing -- partly because of computer user behavior. (If you want to learn more about antispyware products check out the Antispyware Buyer's Guide).

In addition to problems caused by users, there's a healthy underground market for the kinds of data compromised by spyware and other malware, said Stefan Savage, director of the Collaborative Center for Internet Epidemiology and Defenses at the University of California in San Diego. The center monitored a popular malware-trading IRC forum for about six months in 2006 and found the advertised value of compromised bank accounts offered there was $54 million.  

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Copyright © 2008 IDG Communications, Inc.

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