FTC, Washington Attorney General, Sue to Halt Unfair Movieland Downloads

The Federal Trade Commission has filed a complaint in U.S. district court, seeking to halt an operation that downloads software that barrages consumers with pop-ups demanding payment to make the pop-ups go away. The Office of the Attorney General of the State of Washington also has sued the operators. The FTC’s complaint asks the court to order the defendants to give up their ill-gotten gains to provide for consumer redress. A U.S. district court judge denied a request by the FTC to issue a temporary restraining order. Trial on the merits of the case will be scheduled for a later time.

According to papers filed with the court, the defendants downloaded software that repeatedly pelted consumers’ computers with pop-ups, accompanied by music that lasted nearly a minute, and could not be closed or minimized. These pop-ups demanded that consumers pay the defendants $29.95 to end the recurring pop-up cycle, claiming that consumers had signed up for a three-day “free trial” of the defendants’ Movieland Internet download services and did not cancel their “membership” before the trial period was over. Hundreds of consumers complained to the FTC. Most claimed they had never signed up for the “free trial,” never used Movieland’s services, and never even heard of Movieland until they got their first demand for payment.

The FTC’s complaint also alleges the defendants made it difficult or impossible for consumers to uninstall the software. Consumers attempting to remove it through the Windows Control Panel Add/Remove function were redirected to a Web page telling them that they had to pay the $29.95 fee to stop the pop-ups. The only way many consumers could regain control of their computers was to pay the defendants to stop the pop-ups, or pay a computer technician to help them.

The FTC charged that the scheme is unfair and deceptive and violates federal law. The agency’s complaint alleges that demanding payment to fix the problem that the defendants themselves created, and installing disruptive software that cannot be removed through reasonable means, is an unfair practice. In addition, the complaint alleges that the defendants made numerous false statements in an attempt to collect payments from consumers, including that: 1) the computer owner or someone else consented to receiving the pop-up payment demands until they paid; 2) the owner of any computer that receives the pop-ups legally is obligated to pay Movieland; and 3) the owner is obligated to satisfy any contract that any other person entered into while using the computer.

The FTC complaint names Digital Enterprises Inc., d/b/a Movieland.com, a California corporation; Triumphant Videos, Inc., a California corporation; Pacificon International, Inc., d/b/a Vitalix, a California corporation; Alchemy Communications, Inc., a California corporation; Accessmedia Networks, Inc., a Delaware corporation; Innovative Networks, Inc., a California corporation; Film Web, Inc., a Wyoming corporation; Binary Source Inc., d/b/a Moviepass.TV, a California corporation; Mediacaster, Inc., d/b/a Mediacaster.Net, a Delaware corporation; CS Hotline, Inc., a California corporation; Easton Herd; and Andrew Garroni.

The Commission vote to file the complaint was 5-0.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 062-3008)