Washington State Attorney General Rob McKenna has sued three California-based Internet affiliate advertisers.
The advertisers are accused of sending anonymous "Net Send" messages to consumers' computers that simulate Windows operating system warnings, transmitting bundled software that changes Internet browser home pages, and marketing registry-cleaner programs through the use of deceptive free scans.
Hundreds of Washington consumers have purchased products from the defendants, who are accused of violating the state's Computer Spyware Act and Consumer Protection Act.
"Internet advertisers and product sellers can no longer treat the Web as the Wild West where anything goes," McKenna said. "Washington state is leading the battle against online fraud and we will continue to prosecute businesses and individuals who seek to deceive or harm consumers."
The lawsuit filed in King County Superior Court is Washington's fifth case under the state's Computer Spyware Act passed in 2005. The suit brings charges against three companies and their officers:
• Secure Links Networks LLC and CEO Manual Corona, Jr., of Brea;
• NJC Softwares LCC and company officer Rudy O. Corella, of Lake Elsinore; and
• FixWinReg and president HoanVinh V. Nguyenphuoc, of Redondo Beach.
Washington's suit lays out seven causes of action that include sending Net Send messages that:
• Feign the discovery of critical errors on a computer;
• Prevent a computer user from declining the installation of software;
• Modify computer settings;
• Intentionally misrepresent the necessity of new software for security purposes; and
• Mislead consumers into believing that registry-cleaner software has performed indicated repairs.
The state is seeking injunctive provisions. If found liable, each defendant could be fined up to $100,000 per violation of the Computer Spyware Act and $2,000 per violation under the Consumer Protection Act. They may also be required to pay compensation to affected consumers.
"Affiliate marketing is proliferating on the Internet because it's a cheap form of advertising for product sellers," said Assistant Attorney General Katherine Tassi, of the Computer Protection High-Tech Unit. "Companies pay a percentage of the sale price to affiliates who successfully drive consumers to their sites to purchase products or view information."
McKenna said, "Affiliate marketers are able to remain anonymous in many cases, but they're not out of reach of the Attorney General's Office. Neither are product sellers; they can be held liable for the illegal advertising of their affiliates."
The defendants are alleged to have worked together to market each other's products. Corona owns programs called Registry Sweeper Pro and Registry Rinse. Corella owns Registry Doc, Registry Cleaner 32 and Registry Cleaner Pro.
FixWinReg marketed and sold several of the products.
Products were advertised by sending Net Send messages to users' computers. Net Send is a Windows operating system command traditionally used by network administrators to broadcast pop-up messages to computer users about service outages.
These messages resembled system alerts with alarmist wording such as "WARNING! WINDOWS REQUIRES IMMEDIATE ATTENTION. Windows has detected CRITICAL SYSTEM ERRORS. ... FAILURE TO REPAIR AN INVALID OR CORRUPT SYSTEM REGISTRY MAY LEAD TO DATA LOSS OR SYSTEM FAILURE!"
Another version labeled as an "Important Security Bulletin" included an error string and a recommendation that the user immediately scan the system registry.
The messages instructed computer users to download software to fix the errors. By visiting the URL addresses included in the messages, users were redirected to other Web sites owned by the defendants where they were encouraged to download a free trial version of the software that will scan their computer for registry errors.
"The state's investigation showed that the free scan always identified 'critical errors,' but in many cases these so-called errors were harmless files," Tassi said. "In order to remove the errors, consumers were told they must purchase the full version of the software priced at $29.95 and up. The full version of Registry Doc claimed to remove some files that actually remained on the user's computer."
She said users were also given an option to decline installation of an unrelated search toolbar called Twikibar that is bundled with the trial version of Registry Doc.
"We found that even when a user didn't want to install Twikibar, the program installed itself and automatically changed the computer's Internet browser home page," Tassi said. "There's no obvious way to uninstall the toolbar. This is a violation of Washington's Computer Spyware Act, which prohibits transmitting software without a user's consent and modifying computer settings."
McKenna said that the prevalence of online fraud means that consumers, too, must play a role in protecting themselves. They should only download software from reputable businesses and regularly update their anti-virus and anti-spyware programs. When downloading software, consumers should read the small print on customer agreements and legal disclaimers to ensure they only receive and pay for products and services they want.