Court halts Web `pop-up' advertising of software firm

Company sells program to block its own ads

November 07, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

In a strike against Internet "pop-up" ads, federal regulators announced yesterday that they had won approval in federal court in Baltimore to stop a San Diego company that was selling software over the Internet to block the same pop-up ads it was repeatedly sending to millions of computer users.

The Federal Trade Commission served a temporary restraining order on D Squared Solutions LLC late Wednesday to prevent the company from continuing to bombard Internet subscribers with repeated pop-ups - sent as frequently as every 10 minutes - that instructed users to visit Web sites that sold software to stop those same pop-up ads.

Describing it as a high-tech version of a classic scam, attorneys from the FTC's Bureau of Consumer Protections said D Squared likely made hundreds of thousands of dollars off of unsuspecting and frustrated computer users who bought the software at a cost of $25 to $30.

The order, which was issued by the U.S. District Court in Baltimore on Oct. 30, was sealed until Wednesday to allow the FTC time to serve D Squared's President Anish Dhingra and Jeffrey Davis, an officer and owner of the company, in San Diego.

"It's pretty much high-tech extortion," Mona S. Spivack, an attorney in the bureau's division of marketing practices, said yesterday. "The defendants weren't just interfering with computer use, they were also using coercive tactics to force people into buying pop-up locking software.

"Their consumer victims were beyond frustrated and annoyed. They were deluged with these pop-ups that would crash their software or crash their computers in some instances," Spivack said. "When e-marketers or e-commerce providers try to monkey around with computers to sell things and in the process, interfere with people's computer use, we go after them."

As the U.S. Senate passed a bill last month making it unlawful for spammers to send unsolicited e-mails to computer users, spammers have latched onto a new form of solicitation commonly referred to as "messenger service spam" or "pop-up spam." As long as users are logged onto the network, pop-up spam can appear on computer screens no matter whether the person is using word processing, spreadsheet or financial management applications.

It has become such a problem that last month America Online, on behalf of its customers, turned off the Windows feature used by the pop-ups to infiltrate computers.

Computer security experts praised the FTC yesterday for combating a practice that some predict could undermine consumer confidence in computer use and online purchasing.

"This is particularly egregious," said Bruce Schneier, chief technology officer for Counterpane Internet Security Inc. in California. "I'm not familiar with all the details, but it's like a protection racket. That's like saying, `If I beat you up, you can pay me money to stop me from beating you up in the future.'

"There are proper settings on your computer that will stop pop-ups from appearing," Schneier said. "But most people aren't computer experts so they don't know that. They just want their computer to work so they'll pay for software they don't need. I'm pleased that the FTC is going after stuff like this."

In the case of D Squared, the FTC's Oct. 30 complaint contends that the company was exploiting an administration feature in Microsoft Windows known as "messenger service" to send repeated, unwanted pop-up ads that appeared on computer screens throughout the country.

Messenger service was designed to allow network administrators the ability to alert users to system malfunctions.

Since May, D Squared sent these pop-ups to consumers at 10- to 30-minute intervals that would last for weeks or even months, the FTC complaint alleged. Consumers with constant Internet connections were especially susceptible to the pop-ups that instructed users to visit one of D Squared's 30-plus Web sites that offered software to stop the pop-ups.

"It's a lot worse than spam," said Michael Paris, president of Lockdown Corp., a computer security and privacy company in New Hampshire that offers free software on its Web site to stop pop-ups spam.

"If someone sent you 200 e-mails, you could choose to not open your e-mail or delete them whenever you want to," Paris said. "If someone sends you a pop-up ad, it could crash your computer. There were millions of Internet users harassed by this company."

The FTC alleged that D Squared not only sent pop-ups to consumers, but that it also sold or licensed software so that other companies could send similar pop-ups. D Squared also provided buyers with a database of more than 2 billion unique Internet addresses, the FTC complaint said.

D Squared, if found guilty, could be forced to give back any profits it made or give consumers back the money they lost, Spivack said.

According to market researcher Gartner Inc., spam will account for 60 percent of all e-mail traffic by the middle of next year, potentially threatening the efforts of legitimate marketers to reach potential customers.

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