FTC files suit against alleged spyware distributor

The US Federal Trade Commission (FTC) has filed a legal complaint against two companies that allegedly infected computers with...

The US Federal Trade Commission (FTC) has filed a legal complaint against two companies that allegedly infected computers with spyware and pop-up advertising, then tried to sell spyware-blocking software.

The commission filed a complaint in US District Court in New Hampshire asking for an injunction against Sanford Wallace, owner or president of Seismic Entertainment Products, and SmartBot.Net.

The complaint, alleging the companies have used unfair business practices, accuses both businesses of marketing "purported" anti-spyware software called Spy Wiper and Spy Deleter to internet users through pop-up ads on websites controlled by Seismic Entertainment.

The FTC accuses the defendants of inducing computer users to pay $30 (£16.70) for the anti-spyware software by exploiting holes in the Microsoft Internet Explorer web browser to download various spyware programs to users' computers, causing "an incessant stream of pop-up ads to be displayed".

The unauthorised downloads, which started when computer users went to a website controlled by the companies, could also change the browser's home page to affiliated sites and change its search functionality, according to the FTC.

In some cases, the unauthorised downloads, which started in about November 2003, caused computers to crash and lose data, according to the complaint.

Wallace, in a message on his Default-homepage-network.com website, said, "We believe the US government is attempting to enforce federal laws that have yet to be enacted.

"We feel this is a political move and it is being made at the expense of legal business operations. I am not surprised at all that my companies and I, Sanford Wallace, were picked as the 'poster boy'. I find the timing and target of this action to be extremely convenient and painfully obvious. We deny any wrongdoings and plan to pursue all legal protections, remedies and freedoms."

On 5 October the US House of Representatives passed the SPY ACT (Securely Protect Yourself Against Cyber Trespass), which outlaws computer technology that downloads programs onto users' computers without their permission. The spyware legislation is not yet law.

The FTC complaint asks for an injunction against Wallace and his businesses and asks the judge to consider ordering restitution for "ill-gotten gains".

Grant Gross writes for IDG News Service

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