Software ‘Downloaders’ Settle With FTC

An operation that allegedly downloaded software onto consumers’ computers that spawned pop-up messages demanding instant payment for an expired free trial offer has settled charges with the Federal Trade Commission that it violated federal law.

The consent agreement requires the defendants to provide a way for consumers to remove the software. It also bars future downloads without their consent and requires the defendants to pay more than $500,000 for consumer redress, according to the FTC.

Named as defendants were Digital Enterprises, Inc., d/b/a Movieland.com, a California corporation; Triumphant Videos Inc., d/b/a Popcorn.net, a California corporation; Pacificon International Inc., d/b/a Vitalix, a California corporation; Alchemy Communications Inc., a California corporation; AccessMedia Networks Inc., a Delaware corporation; Innovative Networks Inc., a California corporation; Film Web Inc., a Wyoming corporation; Binary Source Inc., d/b/a Moviepass.tv, a California corporation; Mediacaster Inc., d/b/a Mediacaster.net, a Delaware corporation; CS Hotline Inc., a California corporation; Easton Herd and Andrew Garron.

The Commission amended the complaint to add as defendants Frostham Marketing Inc., a Florida corporation and Longview Media Inc., a California corporation.

In Aug. 2006, the FTC filed a complaint in U.S. District Court for the Central District of California in Los Angeles charging that the operators of the movieland.com, moviepass.tv, and popcorn.net Web sites downloaded software that repeatedly disrupted consumers’ computer use with a sequence of large pop-ups, accompanied by music, that lasted nearly a minute and could not be closed or minimized.

These pop-ups demanded that consumers pay the defendants as much as $99.00 to end the recurring pop-up cycle, claiming that consumers had signed up for a three-day “free trial” to use the defendants’ Internet download services and had not cancelled their “license” before the trial period ended, according to the complaint.

Hundreds of consumers complained about this. Many claimed they had never signed up for the “free trial” and had never even heard of the Internet download services until they got their first demand for payment, according to the FTC.

The FTC also charged that the defendants made it difficult or impossible for consumers to uninstall the software. Consumers attempting to remove the software through the Windows Control Panel Add/Remove function allegedly were redirected to a Web page telling them that they had to pay a fee to stop the pop-ups.

According to the FTC, the only way many consumers could regain control of their computers was to pay the defendants to stop the pop-ups, or pay a computer technician to help them. The FTC charged that the scheme was unfair and deceptive and violated federal law.

The settlement prohibits the defendants from using the Internet to offer “anonymous” free trials with a negative-option feature. It also bars them from misrepresenting that a consumer has consented to receive pop-up payment demands and from misrepresenting that consumers are obligated to pay the defendants, according to the Commission.

The settlement bars the defendants from using the Internet to download software to consumers’ computers without their consent, restricts the number of pop-up windows or banners the defendants’ software can display regarding a consumer’s purported payment obligations, and requires that such pop-ups contain a mechanism to allow a consumer to close them and to silence any accompanying audio, continued the FTC.

The settlement also bars the defendants from attempting to conceal their software from consumers and prevents them from downloading software that automatically reinstalls itself after consumers have removed it, according to the complaint.

In addition, the settlement requires that the defendants’ software programs include a mechanism to allow consumers to remove them and requires that the defendants post uninstall instructions on the movieland.com, moviepass.tv, and popcorn.net Web sites, according to the FTC.

The defendants must also stop the recurring billing enrollment of consumers who have not, within the past 60 days, accessed the content on their Web sites and must e-mail the uninstall instructions to those consumers, said the FTC.

Specifically, the settlement requires the defendants to pay $501,367.95 for consumer redress, according to the FTC. Should the court later find that the defendants misrepresented financial information provided to the Commission, the settlement calls for the court to enter a judgment of $1,801,015.16, according to the FTC.

The defendants will provide the FTC with a database of consumers who are eligible for redress so eligible consumers do not need to contact the FTC to receive redress, according to the Commission.