Lavasoft News - October 2006

FTC Closes the Book on Spyware Op

The people behind an operation that allegedly installed illegal spyware on computers, which according to federal regulators affected 18 million users worldwide, will have to dig deep in their pockets to settle a complaint filed by the U.S. Federal Trade Commission.

In the fall of 2005, at the FTC's request, the operation had its assets frozen and was ordered to shutdown.

This fall, the commission disclosed that a settlement had been reached, requiring two companies and three individuals to give up just over $2 million of their “ill-gotten gains,” along with a suspended judgment of $8.5 million for alleged violations of the FTC Act.

The settlement is said to be the second biggest ever made by the agency, that has been involved in more than a dozen settlements, totalling around $8 million in the past two years.

The California-based defendants, Enternet Media Inc., Conspy & Co. Inc., Lida Rohbani, Nima Hakimi, and Baback Hakimi, have been distributing software under the names Search Miracle, Miracle Search, EM Toolbar, EliteBar, and Elite Toolbar.

The ruling by the U.S. District Court for Central California permanently prohibits the defendants from interfering with consumer computer use, including distributing software that collects information concerning a consumer’s Internet use and personal information, installing advertising software code, hijacking homepages or browsers, or installing dialers.

The defendants are also prohibited from making “misleading representations” about the performance, features, and cost of any type of software, including misrepresenting that code is an Internet browser upgrade, online security software, music, lyrics, or a cell phone ring tone, the FTC said.

The FTC charges that the defendants caused installation boxes to pop up on users’ computer screens, offering a variety of freeware, or security patches and upgrades to fix supposedly defective browsers. Instead of getting freeware or security upgrades, once consumers downloaded the software, their computers were infected with spyware that interfered with computer use and was difficult to uninstall.

The defendants also allegedly used software code to track consumer Internet activities, change home page settings, insert new toolbars, and manipulate browser windows, the agency said.

Click here to view a PDF of the original FTC complaint.

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Spyware infections prompted almost one million U.S. households to replace their computers in the first half of 2006.
-Consumer Reports, State of the Net 2006

The total loss from all cases of fraud referred to the FBI's Internet Crime Complaint Center in 2005 was $183.12 million, with an average loss of $424 per complaint. This is up from $68 million in total losses a year earlier.

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