Spitzer Sues Internet Marketer, Alleges Spyware, Adware

New York Attorney General Eliot Spitzer announced a lawsuit yesterday against Intermix Media, claiming the Internet marketing firm's Web sites secretly installed spyware and adware on the computers of unsuspecting consumers.

Spitzer's office said it conducted a six-month investigation of Intermix Media, Los Angeles, and found that free software available for download on its Web sites was secretly accompanied by advertising software. The investigation documented 10 sites that downloaded spyware onto computers, according to the attorney general.

The investigation also found that New Yorkers alone had received 3.7 million programs from the sites and that users nationwide received an additional amount in the tens of millions, Spitzer said.

Spitzer's lawsuit in New York state Supreme Court seeks an injunction against Intermix, an accounting of revenues made by the company on the software and penalties.

Intermix Media denied the charges in a statement. The company's previous leadership created its download applications and business as part of a strategy to create relationships with users by gaining a presence on their desktops, Intermix Media said.

“Intermix does not promote or condone spyware, and remains committed to putting this legacy issue behind it as soon as practicable,” Intermix said. “We expect to continue our discussions with the New York Attorney General's Office and are still hopeful of reaching an appropriate and amicable resolution.”

According to the New York attorney general, users who downloaded Intermix Media's screensavers, cursors and games also got pop-up delivery programs, advertising toolbars and a program that redirected users to Intermix's search engine. The programs were hidden in obscure locations on the computer, could not be removed through Windows' add/remove function, had no uninstall function and could reinstall themselves after deletion, Spitzer's office said.

In response, Intermix Media said its programs are similar to those of other Internet marketers. Intermix discloses the existence of the programs in its downloads through an end-user license agreement that users are asked to read prior to download, the company said.

The company ceased distributing a contextual ad serving application in 2003, Intermix Media said. It began scaling down its download application business in November 2004 and has since suspended distribution of the programs in question, according to the company.

Intermix Media's sites include mycoolscreen.com, cursorzone.com and flowgo.com. Another of its sites, madblast.com, achieved national headlines this month by featuring an animation that crudely satirized the ongoing trial of pop star Michael Jackson on child molestation charges.

The company indicated in its April 12 earnings release to investors that it faced potential costs from a civil action by the New York attorney general.

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