Court Shutters Spyware Outfit, Freezes Assets

A federal court has shut down a Nevada company " ERG Ventures LLC -- that the Federal Trade Commission accused of spreading spyware and adware on the Internet using the notorious Media Motor program.

Microsoft, meanwhile, has filed a lawsuit charging that a number of ERG Venture's affiliates used screensavers and other software to infect users' PCs.

According to the FTC's complaint, the Reno, Nev.-based company "surreptitiously distributed and installed exploitive software programs onto consumers' computers through a sophisticated and expansive network of affiliates." The malware installed by Media Motor, said the FTC, changed browser home pages, added toolbars that generated pop-up ads -- sometimes sexually-explicit pop-ups -- and attacked users' anti-virus and anti-spyware defenses.

Other charges ran the gamut from allegations of deceptive EULAs (End User License Agreement) to claims that the software would install even if users declined the initial offer.

A U.S. District Court in Reno signed a temporary restraining order against ERG Ventures and froze the company's assets. The FTC, meanwhile, has asked the court to make the order permanent and force the company to part with its profits. By the FTC's accounting, the spyware spreader made more than $1 million in profits in a 12-month span from April 2004 to April 2005. Criminal proceedings have also been instituted against ERG Ventures, and search warrants have been served.

Microsoft, which assisted the FTC in its investigation, has filed its own lawsuit against Timothy P. Taylor, a Tennessee man who is accused of distributing the Media Motor package of spyware and adware as part of seemingly-innocent screensavers. Others were named in the suit.

"These defendants were packaging a broad array of unwanted and intrusive programs with seemingly innocent programs," said Scott Stein, a Microsoft senior attorney, in a statement Tuesday. "They didn't tell users about the numerous hidden programs that would be installed with the screen savers, and provided only an illusory option to stop installation. We have a responsibility to help protect our customers and to do whatever we can to prevent this kind of practice."

The FTC complaint can be downloaded as a PDF file from here.