FTC Halts Spyware Operations

The Federal Trade Commission (FTC) halted two spyware operations today through the federal courts. One will have to pay more than 4 million dollars in fines and the other is required to stop collecting consumers personal information.

The FTC alleged that Sanford Wallace and his company, Smartbot.Net, exploited a security vulnerability in Microsoft’s Internet Explorer’s Web browser in order to distribute spyware. Once their program was on a person's computer, they would receive pop ups and even open the computers CD tray with a warning 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!”

The judgement orders Wallace and Smartbot.net to give up $4, 089,500 from their use of this tactic. Spywiper and Spydeleter are the products that they sold for $30 to people using this tactic. The defendants are barred from downloading any program onto people's computers without consent. They are also prohibited from changing the home page on people's browser, redirecting people to web sites that they didn't want to go to, or replacing results in search engines.

In the second case, the FTC charged Odysseus Marketing and Walter Rines for tricking people into installing their software. The software supposedly allowed people to anonymously use peer to peer file sharing. Instead, the spyware changed people's search engine results to place Rines' clients sites at the top of the search results. In an amendment, the FTC charges that people's information was collected, including name, telephone number, email address, and physical address. The information was to be sold. For now, the FTC has barred the defendants from continuing these activities and will seek a fine in court proceedings.

Press release at FTC.gov