FTC Halts Operations Bogus Anti-Spyware Claims, Freezes Assets

An operation that used bogus “scans” and illegal spam to market an anti-spyware program that didn’t work as claimed has had its assets frozen and been barred from making deceptive claims by a stipulated preliminary injunction order issued by a U.S. District Court judge at the request of the Federal Trade Commission. The agency alleges that the operation violated federal laws and has asked the court to permanently bar the deceptive marketing and order redress for consumers.

The FTC alleges that to capitalize on legitimate consumer concerns about spyware and induce consumers to download its anti-spyware product, “SpyKiller,” the operation aggressively and deceptively marketed SpyKiller, using the Web sites of affiliates, banner and pop-up ads, and spam.

The FTC alleges defendants sent pop-up and e-mail messages informing consumers that their computers had been remotely “scanned” and that spyware had been “detected” even though defendants had not performed any such scans. The defendants’ marketing materials urged consumers to access the SpyKiller Web site to get a “free scan” for spyware. While the SpyKiller “scan” was running, the program displayed a status report entitled “Spyware Found on your PC:” that included a category called “Live Spyware Processes.” In fact, the FTC alleges, this category deceptively identified anti-virus programs, word processing programs, or any of the processes running on the system as spyware. Then, even though the “scan” itself was free, consumers had to pay roughly $39.95 to enable SpyKiller’s “removal” capabilities. Defendants promised in their marketing materials that SpyKiller would find and remove “all” spyware, including “all traces” of particular spyware on consumers’ computers. However, the FTC complaint alleges the software failed to remove significant amounts of spyware, including specified spyware defendants claimed on their Web site to remove. The agency alleges that the deceptive claims violate the FTC Act.

The FTC also alleges that spam messages promoting the SpyKiller software contained similar deceptive claims, failed to identify themselves as advertising, used false “from” lines, gave no valid postal addresses, and failed to provide consumers with notice of and the ability to “opt-out,” in violation of the CAN-SPAM Act.

The court entered a temporary restraining order on June 1, 2005, and a stipulated preliminary injunction order on June 14, 2005. The agency is seeking a permanent ban on the deceptive claims and will ask the court to order consumer redress from defendants Trustsoft, Inc. and its Houston, Texas-based principal, Danilo Ladendorf.

The FTC held a workshop in April 2004 titled “Monitoring Software on Your PC: Spyware, Adware, and Other Software.” On March 7, 2005, FTC staff issued a report on the proceedings, and, after reviewing more than 750 comments submitted to supplement the workshop record, the FTC staff has concluded that spyware is a real and growing problem that can impair the operation of computers and create substantial privacy and security risks for consumers’ information. Copies of the report can be found at http://www.ftc.gov/os/2005/03/050307spywarerpt.pdf Consumers who want to learn more about spyware, including how to detect it, and how to prevent it, can go to http://www.ftc.gov/bcp/conline/pubs/alerts/spywarealrt.htm

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Texas.

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 and stipulated preliminary injunction 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. 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. 052-3059)