FTC Seeks to Halt Illegal Spyware Operation

The Federal Trade Commission has asked a U.S. District Court judge to halt an operation that secretly installed spyware and adware that could not be uninstalled by the consumers whose computers it infected. The defendants used the lure of free software they claimed would make peer-to-peer file sharing anonymous. The agency alleges the stealthy downloads violate federal law and asked the court to order a permanent halt to them.

According to the complaint filed by the FTC, Odysseus Marketing and its principal, Walter Rines, advertised software they claimed would allow consumers to engage in peer-to-peer file sharing anonymously. With claims like “DOWNLOAD MUSIC WITHOUT FEAR,” and “DON’T LET THE RECORD COMPANIES WIN,” the defendants encouraged consumers to download their free software. The agency charges that the claims are bogus. First, the software does not make file-sharing anonymous. Second, the cost to consumers is considerable because the “free” software is bundled with spyware called Clientman that secretly downloads dozens of other software programs, degrading consumers’ computer performance and memory. Among other things, this accumulated software replaces or reformats search engine results. For example, consumers who downloaded the spyware may try to conduct a Google or Yahoo! search. Their screens will reveal a page that appears to be the Google or Yahoo! search engine result, but the page is a copy-cat site, and the order of the search results is rigged to place the defendants’ clients first. The bundled software programs also generate pop-up ads and capture and transmit information from the consumers’ computers to servers controlled by the defendants.

The FTC charged that the defendants have an obligation to disclose that their “free” software download caused spyware and adware to be installed on consumers’ computers. But instead, the FTC alleges, they hide their disclosure in the middle of a two-page end-user licensing agreement buried in the “Terms and Conditions” section of their Web site. In addition, the FTC alleges that the defendants deliberately make their software difficult to detect and impossible to remove using standard software utilities. Although the defendants purport to offer their own “uninstall” tool, it does not work. In fact, it installs additional software, according to the FTC’s complaint.

The FTC charges that the practices of Odysseus Marketing and Walter Rines are unfair and deceptive and violate the FTC Act. The agency will seek a permanent halt to the practices.

The defendants are based in Stratham, New Hampshire.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the District of New Hampshire.

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, DC 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. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 042 3205)