The first case under the Washington State Computer Spyware Act has been settled with New York's Secure Computer paying $1 million after the Government took it to court. Over 1,000 users of the firm's software can now be refunded what they paid.
Secure Computer sent computer users messages falsely claiming that their machines were infected with viruses, said the state Attorney General's office. It then sold them software which it claimed fixed the problems. That violated the Computer Spyware Act, it said.
"Internet businesses are responsible for ensuring that third-party advertisers and affiliate marketers, as well as their own staff, do not boost sales through misleading pop-up ads, phoney results of so-called ‘free scans,’ bogus hyperlinks or other online trickery,” said Attorney General Rob McKenna.
"This sends a strong message to Internet businesses that they must promote their products ethically and legally. We won’t tolerate deceptive marketing such as ‘scareware’ that preys on consumers’ fears about spyware and online threats," he said.
The company will pay $75,000 in restitution to customers, $200,000 in civil penalties and $725,000 in legal fees according to a consent decree signed by Seattle judge Ricardo Martinez. The company must email all customers telling them of their rights to a rebate, the decree said.
Websites run by the company offered to perform a free 'computer scan' on users' machines to look for spyware.
"Our investigation found that this so-called free scan always detected spyware, even on a clean computer,” said Paula Selis, a lawyer at the Washington Attorney General's office. “In order to remove this falsely detected spyware, users were instructed to pay $49.95 for the full version of Spyware Cleaner. Washington’s spyware law makes it illegal to induce a computer user to download software by falsely claiming the software is necessary for security purposes.”
The Attorney General's office claimed that the software sold by Secure Computer did not only not perform the tasks that it claimed, but that it actually damaged computers on which it was installed. The Attorney General said that the software deleted a computer's hosts files, which tell the computer which websites to block. This action made the computer even more vulnerable to attack, said the Attorney General.