Pop-up Ad Spammers Settle FTC Charges

An operation that used a feature called the “Windows Messenger Service,” which is part of the Microsoft Windows operating system, to barrage consumers’ computers with pop-up ads for the pop-up blocking software they sold has agreed to settle Federal Trade Commission charges that their marketing methods violated federal laws. The FTC alleged that the defendants’ pop-up ads appeared as frequently as every 10 minutes in the forefront of consumers’ screens, caused consumers to lose data and work productivity, caused applications to freeze, and caused some computers to crash. The settlement bars the defendants from sending Windows Messenger Service pop-up advertisements, selling Windows Messenger Service pop-up blocking software, or selling Windows Messenger Service pop-up sending software. It also prohibits instant message advertising, requires an opt-out mechanism for other kinds of Internet advertising, and bars them from using deceptive return addresses in their e-mail and other advertisements.

In November 2003, a U.S. District Court temporarily halted D Squared Solutions LLC’s pop-up advertising at the request of the FTC. The agency charged that the defendants used the Windows Messenger Service feature, typically used to provide messages about such things as completed print jobs or system shut-downs, to unfairly harass consumers with ads for their Windows Messenger Service pop-up blocking software. The message barrage advertised software costing $25 to $30 that would supposedly block future pop-up ads. According to the FTC, the defendants placed their pop-up ads near the center of users’ computer screens, blocking the users’ work. The ads appeared as long as the users were connected to the Internet, leading to particular trouble for users with DSL lines or cable modems who were continually connected to the Web. The FTC alleged that these users continued to be bombarded by the pop-ups, even when they were not actively surfing the Internet and were working in other applications such as word processing or spreadsheet programs. The agency also alleged that the defendants sold or licensed their pop-up-sending software to other people, enabling others to use the same intrusive and harmful marketing scheme to send millions of additional pop-ups. The agency charged that the practices were unfair and violated the FTC Act. The settlement announced today ends that litigation against D Squared Solutions, LLC, and its principals, Anish Dhingra and Jeffrey Davis.

The settlement will bar the defendants from sending Windows Messenger Service pop-up advertising and from sending instant message advertising. It bars them from advertising, promoting, marketing, or selling Windows Messenger Service pop-up-blocking software or Windows Messenger Service pop-up-sending software. It requires the defendants to provide an opt-out mechanism for electronic advertising and bars them from using deceptive return addresses in their e-mail.

The Commission vote to accept the settlement was 5-0. It was filed in U.S. District Court for the District of Maryland in Baltimore.

NOTE: Stipulated final judgments and orders are for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated judgments and orders have the force of law when signed by the judge.

Copies of the complaint and stipulated final judgment and order 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, 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. 032 3223)
(X040022)