Adware/spyware vendor sued over 'invasive' software

New York state has gone on the attack against spyware and adware by filing a lawsuit against a Los Angeles-based marketing company that allegedly installed the "invasive" software onto consumers' computers without proper notice as part of free software downloads. In an announcement Thursday, Attorney General Eliot Spitzer said he had filed the lawsuit against Intermix Media, a 6-year-old Internet marketing company.

The lawsuit alleges that New York consumers received about 3.7 million downloads of free software from the company's Web sites, which offer screensavers, games, cursors and other small programs. It also alleges that consumers were not adequately notified that the software also contained invasive spyware and adware applications that would create pop-up windows, redirect Web browsers to other Web sites and obstruct their online experiences.

"Spyware and adware are more than an annoyance," Spitzer said in the statement. "These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers' efforts to remove them from their computers. These issues can serve to be a hindrance to the growth of e-commerce."

An Intermix spokesman could not be reached for comment today, but the company issued a statement saying spyware and adware distributions were in its past.

"Intermix does not promote or condone spyware, and remains committed to putting this legacy issue behind it as soon as practicable," Christopher Lipp, senior vice president and general counsel at Intermix, said in the statement. "Many of the practices being challenged were instituted under prior leadership, and Intermix has been voluntarily and proactively improving these applications and related consumer disclosure and functionality for some time. In an abundance of caution, we voluntarily ceased distribution of the applications at issue earlier this month."

Lipp said Intermix "has always been committed to protecting consumer privacy."

"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," he said.

The lawsuit alleges that Intermix's actions violated the state's deceptive practices statutes, which allow US$500 fines for each violation. That could lead to fines of up to US$1.85 billion in the case.

Assistant Attorney General Justin Brookman said today that the lawsuit followed a six-month investigation that included undercover computers set up to download software from Intermix's Web sites. The machines were used to determine what the downloads included and to view the disclosures Intermix made about the free software, he said.

Brookman said the company will now have time to respond to the state's lawsuit, which was filed as a "verified petition" that presents the state's allegations and proof. A judge could rule directly on the petition or schedule a hearing to hear both sides, he said.

The case is believed to be one of the first in which a state has taken an adware and spyware company to court to halt the practice, he said.

Accompanying the lawsuit was an affirmation (download PDF) laying out the state's case against Intermix, in which Brookman details how the investigation took place.

The lawsuit alleges that Intermix owns and operates more than 40 Web sites, including mycoolscreen.com, cursorzone.com and flowgo.com, which advertise free software available for download. The programs include spyware and adware such as "KeenValue," which delivers pop-up ads, "IncrediFind," which redirects Web addresses to Intermix's proprietary search engine, and other programs that add advertising toolbars to users' machines.

The lawsuit asks the court to stop the company from continuing the alleged practices.

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