Spitzer Sues Intermix Over 'Spyware'

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Spitzer Sues Intermix Over 'Spyware'

By MICHAEL GORMLEY, Associated Press Writer 52 minutes ago

New York Attorney General Eliot Spitzer on Thursday sued a major Internet marketer, claiming the company installed "spyware" and "adware" that secretly install nuisance pop-up advertisements which can slow and crash personal computers.

Shares of the company, Intermix Media Inc. of Los Angeles, fell 55 cents, or 11 percent, to $4.25 in midday trading on the American Stock Exchange.

Spitzer said the suit combats the redirecting of home computer users to unwanted Web sites and its own Web site that includes ads, the adding of unnecessary toolbar items and the delivery of unwanted ads that pop up on computer screens. After a six-month investigation Spitzer concluded the company installed a wide range of advertising software on countless personal computers nationwide.

"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."

An Intermix spokesman didn't immediately respond to a request for comment.

Spitzer's civil suit accuses Intermix of violating state General Business Law provisions against false advertising and deceptive business practices. He also accuses them of trespass under New York common law.

The company is accused of downloading ads and software that directs ads to a computer based on the user's activities. Spitzer's investigators said the downloads then attach to computers, often slowing their operation and crashing the computers as well as interfering with use of the computer through pop-up ads. Often the downloads were made without notice when a user visited a Web site, played a game or accepted a screen saver. Sometimes the user was asked permission through an often vague reference in a lengthy licensing agreement which could be misleading or inaccurate, investigators said.

Spitzer, after taking on Wall Street and the insurance industry, is taking a harder look at Internet companies he feels are stunting the growth of Internet commerce, or e-commerce.

"We are looking across the industry at these practices because it really does go to the core of e-commerce," said Kenneth Dreifach, chief of Spitzer's Internet Bureau, "Increasingly, people don't feel in control."

The advertisers, which include Fortune 500 companies, aren't targeted.

The programs sometimes omitted "un-install" applications and couldn't be removed by most computers' add/remove function, Spitzer said.

More than 3.7 million downloads were made to New Yorkers alone and although there is no national estimate, Spitzer seeks a nationwide resolution of the case.

"When dealing with these types of online practices, effectively you're talking about a nationwide resolution because it's very difficult if not impossible to isolate your practices based on a state," said Assistant Attorney General Justin Brookman.

Dreifach said negotiations with the company didn't result in a settlement. And more cases are possible.

"One of Internet users' biggest frustrations today is unwanted software that sneaks onto computers without their owner's consent and cannot be uninstalled," Ari Schwartz, the Associate Director Center for Democracy and Technology, "The practices alleged in this case are widespread on the Internet."

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On the Net:

http://www.oag.state.ny.us

http://www.intermix.com