FTC Closes Door on Spyware Operation

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An operation that placed spyware on consumers' computers in violation of federal laws will give up more than $2 million to settle Federal Trade Commission charges.

The order, filed in the United States District Court, Central District of California, names Enternet Media Inc., Conspy & Co. Inc., Lida Rohbani, Nima Hakimi and Baback (Babak) Hakimi, all based in California, whose software codes were "Search Miracle," "Miracle Search," "EM Toolbar," "EliteBar" and "Elite Toolbar."

Under a stipulated final judgment, the defendants are permanently prohibited from interfering with a consumer's computer use, including distributing software code that tracks consumers' Internet activity or collects other personal information, changes their preferred homepage or other browser settings, inserts new advertising toolbars or other frames onto their browsers, installs dialer programs, inserts advertising hyperlinks into third-party Web pages, or installs other advertising software code, file, or content on consumers' computers.

The defendants also are permanently prohibited from making misleading representations regarding the performance, benefits, features, cost, or nature or effect of any type of software code, file, or content, including misrepresenting that the code is an Internet browser upgrade or other computer security software, music, song, lyric or cell phone ring tone.

According to the FTC's complaint, the Web sites of the defendants and their affiliates caused "installation boxes" to pop up on consumers' computer screens. In one variation of the scheme, the boxes offered a variety of "freeware," including music files, cell phone ring tones, photographs, wallpaper, and song lyrics.

In another, the boxes warned that consumers' Internet browsers were defective, and offered free browser upgrades or security patches. Consumers who downloaded the supposed freeware or security upgrades did not receive what they were promised; instead, their computers were infected with spyware that interferes with the functioning of the computer and is difficult for consumers to remove.

The agency's complaint also alleges that the defendants' software code tracks consumers' Internet activity, changes their home page settings, inserts new toolbars onto their browsers, inserts a large side "frame"or "window" onto browser windows that in turn displays ads, and displays pop-up ads, even when consumers' Internet browsers are not activated.

At the FTC's request, a federal judge froze the operation's assets last fall and ordered it shut down.

The settlement requires the defendants to give up $2.045 million of their ill-gotten gains and includes a suspended judgment of $8.5 million for alleged violations of the FTC Act.

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