• Spitzer Sues Internet Marketer for Adware
  • April 11, 2006
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • New York State Attorney General Eliot Spitzer sued Internet marketer Direct Revenue and its founders for allegedly secretly installing adware and spyware programs on millions of home computers.

    Spitzer alleged Direct Revenue bundled "adware" programs designed to redirect Web addresses, add toolbars, and deliver pop-up ads on users' computers with "spyware" programs that secretly track user information. The company and its officers deliberately designed the spyware so it would be difficult to detect and remove, and in many cases the software reinstalled itself after consumers removed it from their computers, the AG said. The complaint seeks injunctive relief and $500 per instance of illegally installed software.

    Direct Revenue said through a spokesperson that the company is "mystified" by the lawsuit and that it used practices that it "believed at the time and believe today were appropriate and legal." The company has posted a rebuttal to the Attorney General's charges on its Web site. "Mislabeling our products as 'spyware' does a disservice not only to our company, but also to the public by creating an atmosphere of hysteria, confusion and inaccuracy," the statement reads in part.

    Last month Direct Revenue settled similar charges in a class-action suit in Chicago by agreeing to obtain explicit consent from consumers before installing any software and making it easy for computer users to remove the programs. It also said it wouldn't collect any personal information.

    Significance: The dividing line between adware and spyware is a blurry one, since their definitions tend to be moving targets. But the underlying legal allegation is the same in both cases: the use of deceptive and misleading tactics to install software on users' computers without their knowledge. It is likely Direct Revenue will seek to settle this case as it did with the class-action suit last month.