FTC wants strong civil penalties for spyware distributors

The Federal Trade Commission today told the Senate Committee on Commerce, Science, and Transportation “a civil penalty may be the most appropriate remedy and serve as a strong deterrent,” to spyware distributors.  

“Legislation authorizing the Commission to seek civil penalties in spyware cases could add a potent remedy to those otherwise available to the Commission,” said FTC Deputy Director of the FTC’s Bureau of Consumer Protection Eileen Harrington. Civil penalties would be enacted when other enforcement options – seeking consumer redress or making the operators give up their ill-gotten gains – are not appropriate or sufficient remedies to deter spyware distributors.

A Senate bill,   S. 1625 Counter Spy Act, is still in the Commerce, Science, and Transportation committee, would give the FTC such power. S. 1625 would protect against the unauthorized installation of computer software, to require clear disclosure to computer users of certain computer software features that may pose a threat to user privacy, and for other purposes.

Spyware and other malware that is downloaded without authorization can cause a range of problems for computer users, from nuisance adware that delivers pop-up ads, to software that causes sluggish computer performance, to keystroke loggers that capture sensitive information, Harrington said.

The FTC has coordinated some law enforcement initiatives targeting spyware with criminal enforcers. “Many of the worst abuses connected with spyware are criminal, and, in appropriate cases, the Commission coordinates closely with the Department of Justice,” Harrington said.

Harrington said that while it is often challenging to locate and apprehend perpetrators who plant spyware on consumers’ computers, the FTC has “successfully challenged the distribution of spyware that causes injury to consumers online,” initiating 11 spyware-related law enforcement actions since 2004.

The FTC has established a federal-state spyware law enforcement task force to discuss issues and trends in spyware law enforcement. The task force consists of representatives from agencies such as the Department of Justice and state attorneys general. Federal criminal and state law enforcement actions are a critical complement to the FTC’s law enforcement actions.

In addition to the FTC’s spyware law enforcement initiatives, the agency has made consumer education a priority.

“In 2005, the Commission and a partnership of other federal agencies and the technology industry launched a multimedia, interactive consumer education initiative, OnGuard Online, along with a Spanish-language version, AlertaenLinea,” Harrington said. The site attracts more than 350,000 unique visits a month, and many other organizations have adapted the materials for their own use.

Currently, under Section 13(b) of the FTC Act, the Commission has the authority to file actions in federal district court and to obtain injunctive relief and equitable monetary relief in the form of consumer redress or disgorgement. It has been the agency’s experience in spyware cases, however, that restitution or disgorgement may not be appropriate or sufficient remedies because consumers often have not purchased a product or service from the defendants, the harm to consumers may be difficult to quantify, or the defendants’ profits may be slim or difficult to calculate with certainty. In such cases, a civil penalty may be the most appropriate remedy and serve as a strong deterrent, Harrington said. 

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