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NY Sues Alleged Spyware Distributor

April 28, 2005

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New York Attorney General Eliot Spitzer has sued one of the nation's leading internet marketing companies, alleging that the firm was the source of "spyware" and "adware" that has been secretly installed on millions of home computers.

The suit against Los Angeles-based Intermix Media, Inc. is the most sweeping case to date involving programs that redirect web addresses, add toolbars and deliver pop-up ads.

"Spyware and adware are more than an annoyance," Spitzer said. "These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers' efforts to remove them from their computers. These issues can serve to be a hindrance to the growth of e-commerce."

Ari Schwartz, the Associate Director of the Center for Democracy and Technology in Washington D.C. said, "One of Internet users' biggest frustrations today is unwanted software that sneaks onto computers without their owner's consent and cannot be uninstalled."

"Companies have gotten away with unethical and illegal software download practices for too long. The practices alleged in this case are widespread on the Internet and we hope that both federal and state authorities follow Attorney General Spitzer's lead in making this a priority," Schwartz said.

The suit follows a six-month investigation in which the Attorney General's office found that the company had installed a wide range of advertising software on home computers without giving consumers proper notice.

Intermix owns and operates a wide range of web sites, including mycoolscreen.com, cursorzone.com and flowgo.com, which advertised "free" software available for download, including screensavers, screen cursors and games.

The Attorney General found that along with these programs, Intermix secretly downloaded a number of ad-delivery programs. One such program was called "KeenValue" and it delivered pop-up ads to its unsuspecting users. Another program, "IncrediFind," redirected web addresses to Intermix's proprietary search engine. Other programs placed advertising "toolbars" on users' screens.

The Attorney General documented at least ten separate web sites from which Intermix or its agents were downloading spyware, providing either no warning or other misleading disclosures. In this way, Intermix and its agents downloaded more than 3.7 million programs to New Yorkers alone, and tens of millions more to users across the nation.

Intermix also went to great lengths to protect the spyware and adware it secretly installed. The programs were hidden in unlikely locations on the computer and could not be removed through a computer's "Add/Remove" function. In addition, the programs omitted "un-install" applications, and even reinstalled themselves after being deleted.

The Attorney General's suit seeks a court order enjoining Intermix from secretly installing spyware, an accounting of all revenues made on these products, and payment of penalties.

The lawsuit arises under the State's General Business Law, which prohibits false advertising and deceptive business practices, and New York's common law prohibitions against trespass. Legislation specifically directed at "spyware" and "adware," including bills applying or strengthening criminal sanctions for its distribution, has been proposed both in Congress and in the New York legislature, as well as legislatures across the country.

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