Intermix hit with spyware suit

Spitzer's office, describing the suit as the "most sweeping case to date involving programs that redirect Web addresses, add toolbars and deliver pop-up ads," said it arose from a six-month investigation of Intermix. The probe found that Intermix was installing advertising software on home computers without informing the owners that it was doing so, Spitzer's office said.

In a statement, Spitzer framed the case as an effort to protect consumer privacy online and to aid businesses operating over the Web.

"Spyware and adware are more than an annoyance," he 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."

Los Angeles-based Intermix, owner of community site Myspace.com and other holdings, disputed the charges that its downloadable toolbars spy on consumers. In a statement issued in response to the New York lawsuit, the Internet marketer said it does not "promote or condone spyware" and claimed that its reputation for being a broker of such programs dates to an earlier time in its history.

Intermix said that it no longer downloads software onto computers without notifying people that it is doing so. However, it said in its statement that it only ceased distribution of the applications at issue in the lawsuit earlier this month, when the Spitzer investigation was nearly complete.

"Many of the practices being challenged (in the lawsuit) were instituted under prior leadership, and Intermix has been voluntarily and proactively improving these applications and related consumer disclosure and functionality for some time," the company said. "While the applications and technology at issue in this case, and related standards of business conduct, are continually evolving, Intermix has always been committed to protecting consumer privacy."

According to the New York Attorney General's office, the free software Intermix made available at its Web sites during the investigation, including downloadable screensavers, screen cursors and games, also secretly installed a number of programs that generated advertisements. One program, known as "KeenValue" delivered pop-up ads, according to the lawsuit. Another program, dubbed "IncrediFind," redirected visitors to certain Web addresses to an Intermix-owned search engine, while yet another reportedly embedded advertising toolbars on PC desktops.

The suit also charged that Intermix undertook significant measures to protect the programs it secretly installed, hiding the applications in places on computers where they would be hard to find and sometimes making the software impossible for people to remove.

In the filing, the Attorney General's office said it documented at least 10 individual sites from which Intermix or its agents were distributing spyware with no warning. It contends that Intermix was responsible for dispensing more than 3.7 million malicious programs to New Yorkers alone during the investigation, along with millions of other consumers.

The New York Attorney General is seeking a court order that bars Intermix from secretly installing spyware, an accounting of any revenue the company generated through the spyware and adware applications products, along with financial penalties against the company.

The case was filed under New York's General Business Law, which is aimed at preventing companies from creating false advertising and engaging in deceptive business practices. New York legislators are currently considering a bill that specifically targets distribution of adware and spyware. Congress is scheduled to vote at any time on a proposed anti-spyware bill, but similar legislation failed to pass through the senate in 2004.