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Spam King Sanford Wallace and his new venture

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A company which makes software that infiltrates users' computers and demands $30 to be removed has been targeted by US authorities.

The US Federal Trade Commission (FTC) is has asked a federal court to shut down the operations of Seismic Entertainment Productions and SmartBot.Net. The FTC action was initiated after it received a complaint from a Washington consumer group, the Center for Democracy and Technology. This is the first time that the FTC has taken action against a company that produces so-called "spyware".

The software exploits a flaw in Microsoft's Internet Explorer to gain access to a computer without the users' knowledge. The spyware interferes with the operation of the web browser, causes CD-ROM trays to slide open, slows down the computer or causes it to stop working entirely. The spyware then invokes a number of pop-up messages which urge consumers to buy programs called Spy Wiper or Spy Deleter to fix the problem for a fee of $30. Regardless of the veracity of the FTC's allegations, this tactic is not unknown among unethical spyware developers.

"There are questions over the ethics of some anti-spyware producers, because they get rid of the competition and then install something themselves," said Conor Flynn, technical director of Rits, speaking to ElectricNews.net. "If you're thinking of using freeware, then do a Google search to get comments and see if there has been any negative feedback from other users."

The FTC cited laws against deceptive-business in its action against New Hampshire resident Sanford Wallace, the principal of both Seismic Entertainment Productions and SmartBot.Net. The FTC asked the court to shut down Wallace's operations and force him to return any money he has made.

Spyware comes in many forms, many of which are relatively harmless. The more benign spyware monitors web usage patterns, which are used for targeted marketing and pop-up ads. The more malicious kind can monitor keystrokes to capture passwords, credit-card numbers and other sensitive data.

Currently there are no federal anti-spyware laws in the US, though legislation is in place in several states. But the US House of Representatives has passed two anti-spyware bills this week and another is pending in the Senate. The Internet Spyware Prevention Act would give the Justice Department $10m to crack down on companies and others that secretly install spyware and those who attempt to dupe victims into releasing personal details and financial information in email scams. Anyone caught installing spyware to change a computer's security settings or steal a victim's personal information could be sentenced up to two years in prison. The other bill would add hefty civil penalties over the use of spyware.

There is no specific law against spyware in Ireland, although the Computer Misuse Act makes provisions for viruses that are written with malicious intent and the disseminators of spyware could face criminal prosecution if the information collected was used for criminal activities. This would include gathering credit card information with a view to committing credit card fraud. Flynn said that stronger anti-spyware legislation is being drafted at the EU level and the Ireland is likely to use this as a basis for its own legislation.

Copyright © 2004, ENN

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