WASHINGTON – Regulators are trying to shut down a company they say secretly downloaded spyware onto the computers of internet users, opening them to a flood of pop-up ads, computer crashes and other problems.
The Federal Trade Commission accused Walter Rines of Stratham, N.H., and his company, Odysseus Marketing, of luring computer users with the promise of free software that would make illegal, peer-to-peer file sharing anonymous and hard to trace.
The claim was bogus, the FTC said, and the software was bundled with spyware that was secretly downloaded onto computers. Rines disputes the charges and maintains no wrongdoing.
Spyware has been a growing problem, with calls in Congress for legislation and an increase in enforcement by federal regulators.
At a Senate subcommittee hearing Wednesday, FTC Chairman Deborah Majoras endorsed anti-spyware legislation sponsored by Sen. Gordon Smith, R-Ore., that would make it easier for the FTC to share information and cooperate with foreign law enforcement.
Much of the spyware is being sent from overseas companies or accounts, Majoras said.
The House has already passed anti-spyware legislation.
Spyware describes a broad category of software that can be installed through unsafe e-mails, web pages or can be bundled with software that consumers download to their computers.
According to the FTC, Odysseus used a spyware program called Clientman that spawned downloads of dozens of other programs – tracking one user’s online movements, slowing down computers, bombarding them with pop-up ads and redirecting them to fake search engines that were rigged to show Rines’ clients first.
The agency also said the spyware was nearly impossible to remove. Rines, the FTC said, offered his own "uninstall" tool, but it didn’t work and actually installed additional software.
Rines said he has done nothing wrong and that users were fully aware of what they were downloading.
"There was nothing secretly installed anywhere," he said. "In fact, the users had to click a box that said they read the end-user license agreement."
The FTC said the disclosure about spyware was buried on his web site.
The commission has asked a federal judge in New Hampshire for a temporary restraining order, and plans to seek a permanent halt to Rines’ operation.
The lawsuit is an encouraging step because it can be difficult to track down distributors of spyware, said Ari Schwartz, associate director at the Center for Democracy and Technology, a privacy advocacy group that researches and investigates spyware.
"It’s a big deal," he said. "It shows the FTC can work its way backward down the chain."
The FTC filed its first federal anti-spyware case last fall in New Hampshire against Sanford Wallace, a man known as the "Spam King." It accused him of using spyware programs to infect computers and then selling $30 remedies that the agency said didn’t work.
Wallace and Rines were once partners, the commission said.