WASHINGTON (AFX) - The Federal Trade Commission on Wednesday said it reached a $2 million settlement with two California companies and individuals associated with them who were accused of violating federal laws for placing spyware on consumers' computers without their knowledge.
Under the order against Enternet Media Inc., Conspy & Co. Inc., Lida Rohbani, Nima Hakimi and Baback Hakimi, the defendants were permanently prohibited from interfering with a consumer's computer use, including but not limited to distributing software code that tracks consumers' Internet activity or collects other personal information.
At the FTC's request, a federal judge froze the defendants' assets in November and ordered it shut down, an FTC spokeswoman said. The settlement requires the defendants to pay back slightly more than $2 million and includes a suspended judgment of $8.5 million for alleged violations of the FTC Act.
The FTC's case was aided by Redmond, Wash.-based Microsoft Corp., the world's largest software maker, Webroot Software Inc., an anti-spyware firm based in Boulder, Colo., and Mountain View, Calif.-based search engine leader Google Inc., the FTC said.
According to the FTC's complaint, the defendants' Web sites caused 'installation boxes' to pop up on consumers' computer screens that offered free music files, cell phone ring tones, photographs, wallpaper, and song lyrics. In another scheme, the boxes warned that consumers' Internet browsers were defective, and offered free upgrades or security patches.
Consumers who downloaded the supposed freeware or security upgrades did not receive those items, and instead had their computers infected with spyware that could track their Internet activity, change their home page settings, insert new toolbars onto their browsers, and display pop-up ads, even when Internet browsers are not activated.
The defendants, whose software codes were named 'Search Miracle,' 'Miracle Search,' 'EM Toolbar,' 'EliteBar,' and 'Elite Toolbar,' also were permanently prohibited from making misleading representations regarding the performance, benefits, features, cost, nature or effect of any type of software code, file, or content.
A man who identified himself as Baback Hakimi answered the publicly listed phone number for Enternet Media but declined to comment. A man who answered the phone at the Rohbani residence in California said he would give the reporter's contact information to Lida, but she did not call back. A public number for Conspy & Co. could not be found.
The FTC's stipulated final order is for settlement purposes only and does not constitute an admission of a law violation.
Shares of Microsoft were unchanged and closed earlier at $25.61, while Google lost $4.22 to finish at $380.14, both on the Nasdaq.
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